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Home My WebLink AboutFS 2011-08-16 COMPLETE AGENDA PACKETCity of Tukwila Distribution: K. Hougardy Finance and Safety D Hernandez 3. D. Robertson Committee A. Ekberg Mayor Haggerton S. Hunstock O Kathy Hougardy, Chair C. o'Raherty O Joan Hernandez S. Kerslake K. Mate] O Dennis Robertson AGENDA TUESDAY, AUGUST 16 2011 CONFERENCE ROOM #3, 5:00 PM Item Recommended Action Page 1. PRESENTATION(S) 2. BUSINESS AGENDA a. Investment Report for 2nd Quarter of 2011. a. Information Only Pg.1 Peggy McCarthy, Acting Finance Director 3. ANNOUNCEMENTS 4. MISCELLANEOUS Next Scheduled Meeting: Wednesday, September7, 2011 S The City of Tukwila strives to accommodate individuals with disabilities. Please contact the City Clerk's Office at 206 433 -1800 or (tukclerk @tukwilawa.gov) for assistance. x City of Tukwila Jim Haggerton, Mayor INFORMATIONAL MEMORANDUM TO: FROM DATE: Mayor Haggerton Finance and Safety Committee Peggy McCarthy, Acting Finance Director August 10, 2011 SUBJECT: Second Quarter 2011 Cash Investment Report &1 *114 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 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 Activitv Comvonents. During the second quarter, City -wide cash and investment balances increased by $877,007 from $47.7 million at March 31, 2011 to $48.6 million at June 30, 2011. Cash and cash equivalents increased $5.5 million from $28.5 million to $34.1 million and investments decreased $4.6 million from $19.2 million to $14.5 million. The decline in investments and the increase in cash and cash equivalents was due largely to the three certificates of deposit that matured and were redeemed in the second quarter, as follows: Certificates of Deposit that Matured and were Redeemed in the Second Quarter Financial Institution Face Amount Yield First Savings Northwest $2,000,000 2.31% Sound Community Bank 1,500,000 2.22% Charter Bank 1,500,000 1.98% Additionally, a $500,000 Federal Home Loan Mortgage Corporation callable, step -up bond was purchased. The current yield on the bond is 1.5% which steps up to 3.00% if the bond is not called on 1- 1-13. Portfolio Performance. The portfolio weighted average yield declined from 1.08% at the first quarter end to .82% at the second quarter -end. The decline was due to two main factors. The yield on certificates of deposit declined from 1.7% at March 31, 2011 to 1.37% at June 30, 2011 because the certificates maturing in the second quarter had relatively high yields with a weighted average of 2.18 Additionally the yield on cash and cash equivalents declined from .37% at March 31, 2011 to .27% at Jule 30, 2011. INFORMATIONAL MEMO Page 2 The Local Government Investment Pool (LGIP) rate declined from .23% to .16% and the Columbia Bank money market account rate declined from .34% to .25 Investment income calculated on the portfolio existing at quarter -end was $400,785. A total of $118,694 in investment income has been recorded into the accounting records through the second quarter and annual earnings are expected to reach $200,000 to $250,000, exceeding budgeted investment income of $177,397. Investments are held to maturity so changes in market value have no long -term realized effect on the portfolio performance. However, it is noteworthy that because of the decline in interest rates, 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 $104,437 at June 30, 2011. In future quarters, the market value could decline if interest rates increase or confidence in the credit worthiness of the bonded agencies and municipalities declines. Policv Compliance and Liquidity Analvsis. The portfolio profile met all the investment policy parameters at quarter -end, thus remaining in compliance with policy. In the next twelve months, $760,056 of investments is due to mature. At June 30, 2011, $34.9 million of the portfolio balance was available for inmiediate use, $45 million was available for use within five years and $3.6 million would be available in five to ten years. Based on the liquidity analysis, $5.8 million was available for longer term investing at quarter -end. Attractive agency step -up and callable bonds and possibly shorter term municipal bond issues will be considered for potential investments in the third quarter. Fund Cash Investment Balances. The General Fund realized a $4.4 million increase in cash and investment balances in the second quarter with three fund groups realizing a decline in cash and investment balances. The special revenue fund group realized a $1.1 million decline due to expenditures in the Fund 104, Arterial, Street, for the two large arterial street projects, the Southcenter Parkway Extension project and the Southcenter Access project (Klickitat); and due to the purchase of the Police Command Vehicle in the Fund 109, Drug Seizure. The capital project fund group realized a $513,461 decline because of purchases made out of the Fund 303, General Government Improvements, to equip the Police Colmrland Vehicle and to purchase the new phone system. The enterprise fund group realized a $1.9 million decline due to expenditures for the Andover Park West emergency sewer project, budgeted use of existing reserves to fund 2011 operations, and the timing of the surface water billings which produce positive cash flow in the quarters in which the semi annual billings occur, the first and the third quarters for billings in January and July, and produce negative cash flow in the non billing quarters, the second and fourth quarters. Investment Environment. Interest rates dropped in the second quarter and are expected to remain low in the near future. The yield on the benchmark 2 year Treasury note declined from .78% at March 31, 2011 to .46% at June 30, 2011 and is at .17% today. RECOMMENDATION Presentation is for information only. ATTACHMENTS Cash and Investment Report as of June 30, 2011 Policy Compliance Liquidity Analysis as of June 30, 2011 Cash and Investment Balances by Fund at June 30, 2011 Yield curve and Treasury Rates at March 31, 2011 and June 30, 2011 H: \Invst \2011 \Q2 2011 \InfoMemo Invstmnt Rprt 6 -30 -11 b.docx 2 CITY OF TUKWILA CASH INVESTMENT REPORT June 30, 2011 Rating 17,253,039 Agency Issuer Moodys Investment Tyoe CASH CASH EQUIVALENTS 6,628,006 US Bank Depository Washington State Treasurer LGIP Investment Pool Regal Bank Money market Columbia Bank Money market Total Cash Cash Equivalents 0.25% INVESTMENTS 34,145,966 Certificates of Deposit 0.27% (a) Purchase Maturity Term Par Book Balance Yield to Annualized Date Date Yrs Value Purchase Price Maturity Return Various (b) 17,253,039 17,253,039 0.50% Various (b) 6,628,006 6,628,006 0.16% Various (b) 250,000 250,000 0.99% Various (b) 10,014,922 10,014,922 0.25% 250,000 34,145,966 34,145,966 0.27% 55,000 10,492 2,475 25,037 93,004 US Bank Certificate of Deposit 02/15/2010 02/15/2013 3.0 3,450,000 3,450,000 1.44% 49,680 Sterling Bank Certificate of Deposit 02/16/2010 08/16/2011 1.5 250,000 254,122 1.20% 3,000 Sound Community Bank Certificate of Deposit 03/04/2011 03/04/2014 3.0 3,000,000 3,013,607 1.40% 42,000 Sound Community Bank Certificate of Deposit 11/15/2010 05/15/2012 1.5 503,414 505,934 0.75% 3,776 CERTIFICATES OF DEPOSIT TOTAL 2.8 7,203,414 7,223,663 1.37% 98,456 Agencies FNMA Step -up US agency 02/22/2011 02/22/2016 5.0 1,000,000 1,000,000 1.50% (e) 15,000 Federal Home Loan US agency 03/2312011 09/23/2014 3.5 1,500,000 1,500,000 1.75% 26,250 Mortgage Corp FHLMC) Federal Home Loan Bank US agency 03/30/2011 12/30/2013 2.8 500,000 500,000 1.35% 6,750 FHLMC Step -up US agency 06/30/2011 06/30/2016 5.0 500,000 500,000 1.50% M 7,500 TOTAL AGENCIES 4.0 3,500,000 3,500,000 1.59% 55,500 Taxable Municipal Bonds City of Marysville, sinking Al LTGO Refunding 11/23/2010 12/01/2017 5.5 535,000 602,531 3.37% 20,305 2014 -2017, ave 5.5 years Washington State Aa3 Lodging Tax Bonds 11/30/2010 07101/2016 5.6 500,000 507,969 3.60% 18,287 Convention Center Facility UW Biomedical Center AA1 Revenue Bonds 12/14/2010 07101/2017 6.6 500,000 506,932 4.05% 20,531 UW Biomedical Center AA1 Revenue Bonds 12/14/2010 07/01/2019 8.6 500,000 506,248 4.70% 23,794 Douglas County, ESD, Aal UTGO 12/23/2010 12/01/2020 8.9 1,135,000 1,157,359 4.55% 52,660 sinking 2018 -2020, ave 9 yrs Port of Anacortes Al LTGO 12/17/2010 09/01/2020 9.7 340,000 326,742 5.00% 16,337 Educational Servic District 03/23/2011 12/01/2012 1.7 185,000 191,179 1.00% 1,912 TOTAL MUNICIPAL BONDS Total Investments TOTAL CASH, CASH EQUIVALENTS INVESTMENTS 7.3 3,695,000 3,798,960 4.05% 153,825 4.3 14,398,414 14,522,623 2.12% 307,781 1.3 48,544,380 48,668,589 0.82% 1 400,785 1i% 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. (f) Steps up to 3.00% on 1 -1 -13 if not called. 3 CITY OF TUKWILA CASH INVESTMENT REPORT Policy Compliance Liquidity Analysis June 30, 2011 (h) Represents largest one month decline in portfolio balance over the most recent 36 month period doubled; or the equivalent of a 100% cushion. As of Report Date Portfolio POLICY Available Available Available in of Total MAXIMUM Portfolio Within 1 Year Within 5 5 10 Years Liquidity Analysis Maturity Diversification Yes Amount 6,628,006 Years 75.0% Funds immediately available 34,145,966 34,145,966 34,145,966 Yes Fixed Maturity Investments, maturing in: 3,519,541 7.2% 50.0% Yes Other financial institutions Third quarter 2011 16.0% 254,122 Yes Total 48,668,589 Fourth quarter 2011 Portfolio First quarter 2012 Policy Amount of Total MAXIMUM Second quarter 2012 Depository 505,934 35.5% insured by PDPC Yes Investments maturing in 1 year or less 6,628,006 760,056 760,056 760,056 Money market Investments maturing in 1 -3 years 21.1% 7,154,786 Yes 7,154,786 7,223,663 Investments maturing in 3 -5 years insured by PDPC 3,000,000 US Agency 3,000,000 7.2% Investments maturing in 5 -7 years Yes 1,617,432 3,798,960 7.8% 1,617,432 Investments maturing in 7 -10 years Total 1,990,349 100.0% 1,990,349 Investments maturing in more than 1 year 13,762,567 Weiqhted Averaqe Maturites: Years and less than 10 years. Certificates of deposit 2.8 Current portfolio yield TOTALS 48,668,589 34,906,022 45,060,808 3,607,781 Municipal bonds 7.3 72% 93% 10% Investment Policy Parameters POLICY LIMIT PORTFOLIO Policy Met? Total Portfolio Funds available within 1 year 30.0% min 72% Yes 3.5 Funds available within 5 years 80.0% min 93% Yes Funds available in 5- 10 years 20.0% max 10% Yes Liquidity Requirements and Funds Available for Investing: into the Total Portfolio weighted average maturity. Funds immediately available 34,145,966 Restrictions designations: Southcenter Parkway Project 4,331,034 Klickitat Project 10 Operating liquidity (h) 14,000,000 Liquidity threshold 28,331,034 Funds available for longer term investing 5,814,932 (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 20,703,039 42.5% 50.0% Yes Washington State Treasurer 6,628,006 13.6% 75.0% Yes Columbia Bank 10,014,922 20.6% 50.0% Yes Sound Community Bank 3,519,541 7.2% 50.0% Yes Other financial institutions 7,803,082 16.0% 50.0% Yes Total 48,668,589 100.0% Portfolio POLICY Policy Investment Mix Amount of Total MAXIMUM Met? Depository 17,253,038.60 35.5% insured by PDPC Yes State Investment Pool 6,628,006 13.6% 75.0% Yes Money market 10,264,922 21.1% insured by PDPC Yes Certificate of Deposit 7,223,663 14.8% insured by PDPC Yes US Agency 3,500,000 7.2% 75.0% Yes Municipal Bonds 3,798,960 7.8% no limit specified in policy Yes Total 48,668,589 100.0% Weiqhted Averaqe Maturites: Years Performance Analvsis Certificates of deposit 2.8 Current portfolio yield 0.82% Agency bonds 4.0 Benchmarks: Municipal bonds 7.3 6 month treasury 0.17% Total Investments 4.3 2 year treasury 0.78% Total Portfolio 1.3 Local Govt Invst Pool 0.16% 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. El CITY OF TUKWILA CASH INVESTMENT REPORT June 30, 2011 Cash Investment Balances By Fund and Fund Group r wal"o 4-790MM 7,190,534 General 000 GENERAL General Total 502 INSURANCE Special Revenue 101 HOTEL/MOTEL TAX Internal Service Total 103 STREET 611 104 ARTERIAL STREET 640 105 CONTINGENCY 11,113, 235 107 FIRE EQUIP. CUM. RESERVE 14,132 109 DRUG SEIZURE FUND Special Revenue Total 2,009,071 Debt Service Total 2,044,018 (54,920) Capital Project 301 LAND ACQ. REC. PARK DEVLPMN 742,794 302 FACILITY REPLACEMENT 168,919 303 GENERAL GOVERNMNT IMPROVEN 7,801,149 304 FIRE IMPACT FEES Capital Project Total 927,038 Enterprise 400 UTILITY ON ACCT (overpayments) 0 401 WATER 402 SEWER 0 411 FOSTER GOLF COURSE 3,450,001 412 SURFACE WATER Enterprise Total 500,000 7,190,534 Internal Service 501 EQUIPMENT RENTAL 733,893 502 INSURANCE 7,544,094 503 INSURANCE LEOFF 1 Internal Service Total (0) Fiduciary 611 FIREMEN'S PENSION 884,605 640 AGENCY FUND Fiduciary Total 11,113, 235 1,362,586 Grand Total 14,132 as fives ments Balances Equivalents 06,30 -11 6,690,534 500,000 7,190,534 6,690,534 500,000 7,190,534 497,927 497,927 733,893 733,893 7,544,094 1,362,586 8,906,680 1,457,271 (0) 1,457,270 884,605 1,780,494 884,605 (4,555) 0 (4,554) 11,113, 235 1,362,586 12,475, 821 14,132 (168,529) 14,132 2,836,346 2,009,071 4,845,418 2,044,018 (54,920) 2,044,018 742,794 38,306 742,794 168,919 168,919 5,792,078 2,009,071 7,801,149 13,664 13,664 927,038 3,450,000 4,377,038 1,209,792 0 1,209,792 (169,408) (169,408) 2,575,702 0 2,575,702 4,556,788 3,450,001 8,006,789 1,612,544 2,191,179 3,803,723 1,038,317 5,009,786 6,048,103 1,725,536 0 1,725,536 4,376,397 7,200,966 11,577,363 1,477,965 1,477,965 124,837 124,837 1,602,802 1,602,802 34,145,966 $14,522,623 48,668,590 Balances ,�Chenge�iri 03- 3111Ip rBalances �N` 2,787,994 4,402,541 2,787,994 4,402,540 695,976 (198,049) 670,123 63,770 10,276,985 (1,370,305) 890,346 566,924 804,457 80,148 283,337 (287,891) 13,621,224 (1,145,403) 9,470 4,662 4,787,800 57,618 2,051,032 (7,015) 1,310,446 (567,652) 165,331 3,588 8,314,610 (513,461) 21,000 (7,336) 4,924,592 (547,554) 1,780,494 (570,702) (274,854) 105,446 3,505,819 (930,117) 9,957,051 (1,950,262) 3,972,253 (168,529) 5,953,383 94,720 1,706,648 18,889 11,632,283 (54,920) 1,430,674 47,291 38,306 86,531 1,468,980 133,822 47,791,612 876,978 9 CITY OFTUKW|LA CASH INVESTMENT REPORT Treasury Rates and Yield Curves June 3U Rates at March 31, 2011 Rates at June 30, 201 Term Rate Term Decline Decline 3mo 0.0996 -0�08Y6 -89% 3mo 8�0196 8mo 0.17% '0.0796 '4196 Smo _0.1096 1/ O.20�� 'U�08Y6 '31Y6 �/r O�18�� 2y[ 0.7896 -0.3296 -4196 2y[ 0.48Y6 3Yr 1�25�� 'U4596 '3O96 3Yr 0�80�� 5Yr 2.28% '04496 '20Y6 5Yr 17696 10Yr 3�4496 '0�2896 '896 1OYr 3�1S96 Yield Curve at June 3O.2O11 Yield Curve at March 31,2O11 n o zn z ,.5 us� v 5 +a zo� c ,a us |~�vmmn| r --21m12o Today