HomeMy WebLinkAbout06/16/2015 05A 1st Quarter 2015 Treasury ReportBUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEMENT
Item No. 5.A.
For Meeting of: June 16, 2015
ITEM TITLE: 1st Quarter 2015 Treasury Report
SUBMITTED BY: Cindy Epperson, Director of Finance and Budget
Tara Lewis, Financial Services Manager
SUMMARY EXPLANATION:
The Treasury Report for the fourth quarter of 2014 is attached and consists of the following:
1. Memo: Summary and Narrative
2. Reports
Cash and Investment Summary
Investment Portfolio — Inventory by Agency
Investment Portfolio — Detail of Activity
Bonded Debt Schedule
Interfund Borrowings and Investments
Resolution: Ordinance:
Other (Specify):
Contract: Contract Term:
Start Date: End Date:
Item Budgeted: Amount:
Funding Source/Fiscal Impact:
Strategic Priority: Public Trust and Accountability
Insurance Required? No
Mail to:
Phone:
APPROVED FOR
SUBMITTAL:
RECOMMENDATION:
City Manager
Accept report.
ATTACHMENTS:
Description
Treasury Narrative Q1-2015
CI Treasury Reports Q1-2015
Upload Date
6/8/2015
6/8/2015
Type
Cover Memo
F. xlniilbiit
Memorandum
To: The Honorable Mayor and Members of City Council
From: Cindy Epperson, Director of Finance and Budget
Tara Lewis, Financial Services Manager
Date: June 5, 2015
Re: 2015 — 1st Quarter Treasury Report: Summary and Narrative
The City's Investment Portfolio
The City's investment activities are governed by State regulations and the City of Yakima's
Investment Policy, as revised September 6, 2011.
The City's Investment Portfolio can be divided into two general categories:
1) A Liquidity Portfolio of overnight investments. This category generally consists of funds
invested in the Local Government Investment Pool (LGIP or "Pool") managed by the State
Treasurer, and currently, a savings account held by a local financial institution.
2) An Investment Portfolio of time deposits and various securities with maturities normally not
to exceed five years except when conditions warrant, and then up to eight years.
The City's Investment Portfolio saw no activity in agency securities at all during the first quarter of
2015. This inactivity is due to two main factors:
1. The callable agency securities in the portfolio are paying interest at rates that are not high
enough to induce an agency to refund (refinance) their bonds. The interest payments the
City receives are generally pretty close to market, but the cost of calling and refunding debt
outweighs the benefit to the respective agency for such securities. As a security gets closer
to maturity, market rates drop below the coupon rate and the agency is likely to call the bond
which will effectively cash the City out. The City can then reinvest the cash or apply it to
current projects. As short term rates (under 3 years) are still pretty close to zero, agencies
have no real incentive to call a bond until its remaining term brings it in to this 2 to 3 year
range of maturity. The City's portfolio has a number of securities that will fall within this
range of maturity in the next few months. Provided rates do not rise dramatically, we should
start to see some activity again. For now, it's a pretty boring report.
2. Cash flow timing has prevented any excess cash from being available to invest during the
first quarter. While sales taxes tend to be fairly stable from month to month with seasonal
impact for the holidays, property taxes come in waves, the biggest being in May for the
taxes that were due to the County by April 30. In anticipation of this influx of cash, the LGIP
was depleted of cash reserve to pay current expenditures in March. As of May receipt of
property tax revenue, the LGIP fund has been replenished and cash set aside for the
upcoming June 1 debt payments. The LGIP withdrawal was the only activity in the City's
entire investment portfolio other than regular interest payments from accounts and securities
since January 1.
Short term rates remain stubbornly close to zero which explains why the LGIP yield is still
lackluster. The 3 month Treasury bill hovers around 1 one hundredth of a percent. (0.01% or
0.001). There has been a brief and slight uptick in moderate (1-3 year) term rates. The 3 year
Treasury is paying almost 1%. Even the 1 year Tbill is bouncing up a bit. We'II see if it holds....
Long term rates (7 to 30 years) have actually fallen slightly.
The effective yield on the City's entire Investment Portfolio remained virtually the same at 1.30% in
the first quarter of 2015. It was 1.29% in the fourth quarter of 2014.
Even the LGIP rate has moved slightly upward from an effective yield of 0.10% to 0.14%. Generally,
with such low yields, only a small emergency balance is kept in the Pool. More cash is being kept
on hand in the City's operations bank accounts because such balances currently earn a higher rate
than the LGIP and to transfer funds in and out adds costs which diminishes the net return even
further. Additionally, the City holds several non -callable securities that are fairly attractive in their
effective yields. We bought them as the market was still sliding in 2012 and again in 2014. These
securities can be quickly sold for cash and still produce above -market yields as needed. They yield
between 1% and 1.37% which is well above market for the 2 to 3 year terms that remain.
The City's Bonded Debt Schedule
Most bond payments of principal are due in November and December with a few scattered
throughout the year. During the first quarter there are no principal payments due so the debt
schedule remained static.
One additional debt is listed on the schedule. The County issued bonds in 2014 to finance the
relocation of the Communications Center. The City's portion, agreed to by Resolution 2014-086 is
listed as bonded debt on the schedule.
The Fiscal Agent for the State of Washington changed in February 2015 from the Bank of New York
Mellon to US Bank. The transition occurred smoothly and the City has received excellent service
from the new agent.
Interfund Borrowings and Investments
REET continues to pay monthly payments to the Equipment Rental reserve fund for the Kiwanis
Park interfund loan.
Fund 471 — Refuse was in a negative cash position at quarter -end. The Fund has been in a difficult
cash position for over a year. Refuse has a very tight operating margin and timing issues
surrounding the billing and collection process continue to cause cash flow issues for the fund.
Terms of the City's Interfund Loan Policy require a fund pay interest whenever a fund has not been
able to repay a loan for any full quarter of the year. Thus far, the fund has been solvent off and on
during each successive quarter and has not been forced into a formal borrowing.
2
City of Yakima
Cash and Investment Summary
March 31, 2015
Description
Qty
Par
Book
Percent of
Portfolio
Average
Yield Q4 '14
Average
Yield Q1 '15
Cash Balances on Hand and in Banks
NA
$ 5,645,477
NA
NA
NA
Local Government Investment Pool (LGIP)
1
$ 542,281
542,281
1%
0.10%
0.14%
Federal Agency Coupon and Discount
19
50,540,000
49,319,123
92%
1.34%
1.33%
Other Investments
2
3,238,206
3,590,823
6%
1.13%
1.13%
Total Invested
22
$ 54,320,487
$ 53,452,228
100%
1.29%
1.30%
Summary of Investment Activity
Book Balance Purchases Interest Maturities, Calls Book Balance
1/1/2015 & Deposits Reinvested & Withdrawals 3/31/2015
Local Government Investment Pool (LGIP)
Federal Agency Coupon and Discount
Other Investments
$ 1,541,963 $
49,319,124
3,590,648
- $ 319 $ 1,000,000 $ 542,281
- - - 49,319,124
175 - 3,590,823
Totals
$ 54,451,734 $
- $ 493 $ 1,000,000 $ 53,452,228
Page 1 of 5
Y akim a.5585.1. TSO_Q 1 _2015. xl s x
City of Yakima
Investment Portfolio - Inventory by Agency
March 31, 2015
Agency Inv#
Expected
Call Most
Face Value Price Coupon Step Yield Maturity Settle Next Call Type Likely Call
Federal Farm Credit Bank
FFCB 1462 2,000,000 2,000,000 1.290
FFCB 1481 1,000,000 998,844 0.690
1.290 9/25/18 9/25/12 4/25/15 Amer 9/25/15
1.000 5/1/17 5/30/14 5/1/15 Amer 5/1/17
FFCB Totals and Avera
3,000,000 2,998,844
1.193
Federal Home Loan Bank
FHLB 1466 2,000,000 1,998,940 1.150 1.210 7/25/18 2/6/13 7/25/15 Qrty 1/25/16
FHLB 1467 2,000,000 1,994,456 0.850 1.000 10/30/17 2/6/13 7/30/15 Qrty 10/30/15
FHLB 1470 2,000,000 2,000,000 1.000 Step to 2.5% 1.000 6/20/18 6/20/13 6/30/15 Qrty 6/20/15
FHLB 1474 3,000,000 2,995,014 0.750 0.890 4/17/17 12/3/13 6/17/15 Amer 7/17/15
FHLB Totals and Avera 9,000,000 8,988,410 1.010
Federal Home Loan Mortgage Corporation
FHLMC 1480 1,660,000 1,654,394
1.200 1.422 6/12/18 05/27/14 6/12/15 Qrty 12/12/15
FHLMC Totals and Ave 1,660,000 1,654,394 1.422
Federal National Management Association
FNMA 1460 5,000,000 4,737,030 1.100 1.100 6/1/17 6/28/12 6/1/17 NC 6/1/17
FNMA 1468 2,000,000 2,000,000 1.200 1.200 4/18/18 4/18/13 4/18/15 Qrty 10/18/15
FNMA 1469 3,000,000 2,991,678 1.000 1.094 12/20/18 5/20/13 8/20/15 Qrty 11/20/16
FNMA 1475 2,000,000 1,985,500 1.300 1.753 7/30/18 12/13/13 7/30/15 Qrty 7/30/15
FNMA 1476 2,000,000 1,978,940 1.640 2.309 9/26/19 3/19/14 6/26/15 Qrty 9/26/15
FNMA 1477 2,400,000 2,394,468 1.200 1.777 2/22/18 3/19/14 8/22/15 Qrty 8/22/15
FNMA 1479 2,000,000 1,992,388 1.625 1.884 8/28/19 5/27/14 8/28/15 Qrty 8/28/15
FNMA 1484 2,000,000 1,997,730 1.625 1.870 8/28/19 12/19/14 8/28/15 Qrty 8/28/15
FNMA Totals and Aver. 20,400,000 20,077,734 1.528
Financing Corporation
FICO 1454 722,000 678,045 1.200 1.200 5/2/17 2/2/12 5/2/17 NC 5/2/17
FICO 1455 2,356,000 2,199,953 1.348 1.348 4/6/17 2/29/12 4/6/17 NC 4/6/17
FICO 1457 2,146,000 1,995,422 1.340 1.340 10/6/17 4/25/12 10/6/17 NC 10/6/17
FICO 1464 3,630,000 3,435,105 1.049 1.049 2/8/18 10/31/12 2/8/18 NC 2/8/18
FICO 1478 1,366,000 1,297,155 1.320 1.320 5/2/18 5/27/14 5/2/18 NC 5/2/18
FICO 1482 2,100,000 1,998,482 1.373 1.373 8/3/18 12/19/14 8/3/18 NC 8/3/18
FICO 1483 4,160,000 3,995,580 1.290 1.290 2/8/18 12/19/14 2/8/18 NC 2/8/18
FICO Totals and Avera 16,480,000 15,599,741 1.261
Other Investments
LGIP LGIP 542,281 542,281 0.142
YFED 1473 175,221 175,221 0.400
CNTY 1442 500,000 565,490 5.000
CNTY 1471 2,295,000 2,582,127 5.000
YF -CD 1447 267,985 267,985 2.050
Other Totals and Avera 3,780,487 4,133,105
0.142 NA NA NA NC NA
0.400 NA 7/1/13 NA NC NA
1.500 7/1/15 8/19/11 7/1/15 NC 7/1/15
1.000 9/1/16 6/24/13 9/1/16 NC 9/1/16
2.100 8/31/18 2/28/15 8/31/18 NC 8/31/18
1.002
Coupon Steps
Coupon
Steps
Investment #
Rate up to:
2013
2016
2016
2017
2017
1470
June, Dec 20
1.000%
1.125
1.250%
1.500%
2.500%
Page 2 of 5
Yakima.5585.1.TSO_Q1_2015.xlsx
City of Yakima
Investment Portfolio - Detail of Activity
Quarter Ending March 31, 2015
Agency
Beginning Additions and Calls and Ending Date of
Inv# Face Value Purchases Maturities Face Value Activity
Federal Farm Credit Bureau
FFCB 1462 2,000,000 2,000,000
FFCB 1481 1,000,000 1,000,000
FFCB Totals 3,000,000 - - 3,000,000
Federal Home Loan Bank
FHLB 1466 2,000,000 2,000,000
FHLB 1467 2,000,000 2,000,000
FHLB 1470 2,000,000 2,000,000
FHLB 1474 3,000,000 3,000,000
FHLB Totals 9,000,000 - - 9,000,000
Federal Home Loan Mortgage Corporation
FHLMC 1480 1,660,000
1,660,000
FHLMC Totals 1,660,000 - - 1,660,000
Federal National Management Association
FNMA 1460 5,000,000 5,000,000
FNMA 1468 2,000,000 2,000,000
FNMA 1469 3,000,000 3,000,000
FNMA 1475 2,000,000 2,000,000
FNMA 1476 2,000,000 2,000,000
FNMA 1477 2,400,000 2,400,000
FNMA 1479 2,000,000 2,000,000
FNMA 1484 2,000,000 2,000,000
FNMA Totals 20,400,000 - - 20,400,000
Financing Corporation
FICO 1454 722,000 722,000
FICO 1455 2,356,000 2,356,000
FICO 1457 2,146,000 2,146,000
FICO 1464 3,630,000 3,630,000
FICO 1478 1,366,000 1,366,000
FICO 1482 2,100,000 2,100,000
FICO 1483 4,160,000 4,160,000
FICO Totals 16,480,000 - - 16,480,000
Other Investments
LGIP (State Pool) LGIP 1,541,963
Yakima Federal Savings YFED 175,046
Grays County Bonds 1442 500,000
Cowlitz County Bonds 1471 2,295,000
Yakima Federal CD 1447 267,985
319 (1,000,000) 542,281
175 175,221
500,000
2,295,000
267,985
Other Investment Totals
4,779,994
493 (1,000,000) 3,780,487
Grand Totals
$ 55,319,994 $ 493 $ (1,000,000) $ 54,320,487
Page 3 of 5
Y akima.5585.1. TSO_Q1 _2015. xlsx
City of Yakima
Bonded Debt Schedule - by Project Group
Quarter Ending March 31, 2015
General Obligation Bonds
9/7/2004 11/1/2019
5/8/2007 5/1/2026
8/28/2009 12/1/2018
8/28/2009 12/1/2024
8/28/2009 12/1/2032
6/17/2003 12/1/2023
8/28/2008 12/1/2021
5/8/2007 5/1/2022
12/1/2005 12/1/2015
8/28/2008 12/1/2019
5/8/2007 5/1/2022
5/8/2007 5/1/2017
6/20/2013 6/20/2028
6/9/2014 6/1/2024
6/17/2014 12/1/2034
PFD Convention Center II
PFD Convention Center III
PFD Capitol Theatre
PFD Capitol Theatre
PFD Capitol Theatre
Sundome Expansion
Fire Apparatus
Fire Station
Parks and Recreation
Infrastructure Projects
Downtown Futures
River Road
Street Project Demonstration
Street Resurfacing Project
Comm Center Move
Refunded 1996 issue
Partial refunding of 2002 issue
Tax exempt portion
Build America Bonds (Taxable)
Build America Bonds (Taxable)
Deferred Interest -Maturity $2.5M
Ladder Truck
Remodel Facility
Parks improvements
Ped crossing, street, infrastructure
Renovate downtown improvements
River Road improvements
Various City street improvements
Streets improvements
City portion of County GO Bonds
4,175,000
4,910,000
2,055,000
1,755,000
3,225,000
1,430,528
760,000
815,000
755,000
2,190,000
1,490,000
1,765,000
5,000,000
13,140,000
1,716,500
1,830,000
4,330,000
1,130,000
1,550,000
3,225,000
647,665
445,000
500,000
90,000
1,075,000
905,000
615,000
4,556,530
13,140,000
1,716,500
Subtotal General Obligation Bonds
$45,182,028
$35,755,695
$0
Certificate of Participation - State of Washington
8/22/2013
8/22/2013
6/1/2011
3/19/2013
6/1/2019
6/1/2019
12/1/2020
7/1/2023
Police Vehicles
Fire Air Packs
Fire Apparatus
Fire Apparatus
74 Take-home vehicles
70 Air Packs
Two trucks purchased
One truck
$4,173,190
$459,602
$576,847
$310,414
$3,533,597
$389,163
$366,732
$284,905
Subtotal Certificates of Participation
$5,520,054
$4,574,397
$0
Revenue Bonds
5/31/2012
6/5/2008
6/5/2008
9/4/2004
11/1/2023 Wastewater
11/1/2027 Wastewater
11/1/2018 Water
9/1/2034 Irrigation
Refunded 2003 $10,155,000 issue
Refunded 1998 issue
9,400,000
5,440,000
1,883,951
5,215,000
8,765,000
4,095,000
835,000
4,090,000
Subtotal Revenue Bonds
$21,938,951
$17,785,000
$0
Grand Total
$72,641,033
$58,115,092
$0
Page 4 of 5 Yakima.5585.1.TSO_Q1_2015.xlsx
City of Yakima
Interfund Borrowings and Investments
Quarter Ending March 31, 2015
Description
Original Beginning Ending
Balance Balance Issued Retired Balance
Investment Held by:
Local Improvement District Bonds/Notes $ 1,432,509 $ 337,296
REET 1 - Upper Kiwanis Park
600,000 397,424
$ - $ 337,296 Equipment Rental
25,694 371,730 Equipment Rental
Funds in Negative Cash Position at Quarter End
Ending Cash
Balance
Cash Extended by:
Fund 471 - Refuse
(390,560) General Fund, Wastewater
The Refuse Fund continues to be in a negative cash position off and on during the first quarter of 2015. The Interfund Loan policy states that a fund in a negative
position for more than a calendar quarter will be subject to interest to be repaid to the fund making the loan. To date the fund has managed to repay all loans within
each calendar quarter and has not triggered the interest requirement. The Refuse Fund operates very close to the margin and is no longer able to meet its own
expenses each month without help from other funds. A rate study is underway and will likely result in a proposal to Council in the near future. Borrowed cash was
repaid by mid-April.
Page 5 of 5
Yakima.5585.1.TSO_Q1 _2015.xlsx