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02/19/2019 06E 4th Quarter 2018 Treasury Report to\'4\lyy tbxk ik 1 PPP d g. P A P 1 PPi • ittYlltYlt.\ta. BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEM ENT Item No. 6.E. For Meeting of: February 19, 2019 ITEM TITLE: 4th Quarter 2018 Treasury Report SUBMITTED BY: Steve Groom, Director of Finance and Budget SUMMARY EXPLANATION: The Treasury Report for the fourth quarter of 2018 is attached and consists of the following: 1. Memo: Summary and Narrative 2. Reports • Cash and Investment Summary • Investment Portfolio- Inventory by Agency • Chart- Distribution of Cash and Investments • Chart- Investment Portfolio Diversification by Issuer • Investment Portfolio - Detail of Activity • Bonded Debt Schedule • I nterfund Borrowing Summary ITEM BUDGETED: NA STRATEGIC PRIORITY: Public Trust and Accountability ir APPROVED FOR SUBMITTAL: lir City Manager STAFF RECOMMENDATION: Accept report. BOARD/COMMITTEE RECOMMENDATION: ATTACHMENTS: Description Upload Date Type 2 D 4th Quartrr 2012 Treas ury Rrport 10412019 Cover Memo 3 1 N zot rY FINANCE To: Mayor and City Council Cliff Moore, City Manager From: Steve Groom, Finance Director Jennifer Morris, Financial Services Officer Date: January 24, 2019 Re: 2018 — 4th Quarter Treasury Report The City's Investment Portfolio The City's investment activities are governed by State regulations and the City of Yakima's Investment Policy. All investments are in full compliance with the City's Investment Policy, State Statues and City Municipal Code. Execution of each investment transaction contemplated ongoing cash flows from city operations, debt obligations, liquid and maturing securities, and contingencies to meet the City's future cash flow requirements. The City's Investment Portfolio consists of three general tiers which coincide with the primary considerations of prudent investing: 1) The Safety portion of the Portfolio consists of funds invested in the Local Government Investment Pool (LGIP, or State Pool) managed by the State Treasurer, available same- day. This allows for seasonal fluctuations, primarily the April/October inflows of Property Tax and the outflows of debt service and capital projects. 2) The Liquidity portion of the Portfolio consist of demand deposit (essentially checking) accounts at banks which are qualified public depositaries, protected above FDIC-insured balances through the actions of the Washington State Public Deposit Protection Commission (PDPC). Depository account levels continue to be maintained at adequate levels to ensure availability. 3) The Yield portion of the Portfolio consists of a diversified portfolio of Agencies, Treasuries and/or other authorized investments with staggered maturities of up to five years. Based on analysis of historical cash reserves and budgetary planning, this segment will not be subject to seasonal spending and continues to be safely invested long-term. Total Cash and Investments at Quarter-end total $92.6 million: $9.3 million in depository banks, $32.8 million in the State Pool, and $50.5 million invested. Calls or Maturities. During last quarter two investments matured. • $3,000,000 FNMA (1 .00% yield) matured on December 20, 2018 • $3,192,000 FICO (1 .41 % yield) matured on December 27, 2018 Purchases. The City's Investment Portfolio increased by four purchases: • $1 ,000,000 FHLB (2.68% yield) to mature November 15, 2019 • $1 ,000,000 FHLB (3.125% yield) to mature September 9, 2022 • $1 ,000,000 FAMCA (2.80% yield) to mature September 19, 2023 • $1 ,000,000 FHLB (2.93% yield) to mature December 28, 2023 Current Rates. As of December 31, 2018, the yield curve is extremely flat, due to market uncertainty; the difference between the 1-month Treasury at 2.44% and the 5-year Treasury at 2.51% is a mere 7 basis points. The 30-day yield of the State Pool was at 2.299%. 4 FINANCE Economic Outlook. The Federal Reserve has raised the rate 25 basis points four times since late 2015. In 2018 the Feds have raised the rate 3 times this year. On December 19'h the Federal Reserve raised its benchmark rate from 2.00% to 2.25%, the highest it has been since October of 2008, but lowered its projections for future increases. As of this printing, the fixed income market is experiencing extreme uncertainty, evidenced by a yield curve that is extremely flat. Strategy Notes. The City of Yakima's investments are not typically actively traded, meaning that no attempt to "buy low and sell high" or "time the market" is made. Investments purchased with the intent of providing investment income are intended to be held to maturity, relying on following a prudent course of action for income rather than predicting market direction. No securities were considered, due to prevailing circumstances, to be sold prior to maturity during the last quarter. Debt Activity All debt payments were paid out as scheduled. A comprehensive city-wide debt report was presented to City Council and has been added to the annual Budget document for clarity and transparency. Interfund Borrowings and Investments Ordinance 2013-011, authorizes the Director of Finance and Budget to execute temporary interfund loans to be subsequently reviewed and approved by Council Resolution. Public Safety Communications, Fund 151. Currently the fund is making interest-only payments, the principal payment of$150,000 was made in 2018 as budgeted. Fire Capital, Fund 332. Interest is not required to be paid since Fire Capital is fully supported by the General Fund. The Millsite Project, Fund 323. Interest payments will be made until such time as financing is secured or the loan is otherwise repaid. 2 City of Yakima Cash and Investment Summary December 31,2018 Percent of Average Average Description Qty Par Book Portfolio Yield Q3'18 Yield Q4'18 Cash Balances on Hand in Banks NA $ 9,297,534 NA NA NA Local Government Investment Pool (LGIP) 1 $ 32,751,940 $ 32,751,940 39% 2.02% 2.24% Investment Portfolio 21 51,850,000 50,544,848 61% 1.81% 1.94% Other Investments 2 - - 0% 0.20% 0.00% Total Invested 24 $ 84,601,940 $ 83,296,788 100% 1.86% 2.06% Book Balance Purchases Interest Maturities,Calls Book Balance Summary of Investment Activity 10/1/2018 &Deposits Reinvested &Withdrawals 12/31/2018 Local Government Investment Pool (LGIP) $ 17,600,116 $ 15,000,000 $ 151,824 $ - $ 32,751,940 Investment Portfolio 52,580,205 4,015,492 - 6,050,849 50,544,848 Other Investments - - - - - Totals $ 70,180,321 $ 19,015,492 $ 151,824 $ 6,050,849 $ 83,296,788 Page 1 of 7 TSO Q4 2018 City of Yakima Investment Portfolio-Inventory by Agency December 31,2018 Expected Days to Call Most Agency Inv# Face Value Price Coupon Step Yield Maturity Maturity Settle Next Call Type Likely Call Farmer Mac FAMCA 1508 1,000,000 1,010,972 3.050 2.801 9/19/23 1,723 12/19/18 8/19/19 NC 9/19/23 FAMCA Total and Average Yield 1,000,000 1,010,972 2.801 Federal Farm Credit Bank FFCB 1489 3,000,000 2,996,247 1.250 1.290 8/19/19 231 6/3/16 8/19/19 Amer 8/19/19 FFCB 1496 2,015,000 1,994,713 1.470 1.740 2/17/21 779 4/6/17 2/17/21 1C-NC 2/17/21 FFCB 1498 3,000,000 2,993,640 1.950 2.000 3/14/22 1,169 10/6/17 3/14/20 Amer 3/14/22 FFCB 1504 4,000,000 3,990,400 2.970 3.023 4/10/23 1,561 6/14/18 4/10/19 Amer 4/10/23 FFCB Total and Average Yield 12,015,000 11,975,000 2.120 Federal Home Loan Bank FHLB 1492 2,030,000 1,994,020 1.500 1.880 11/9/21 1,044 12/14/16 12/14/19 Amer 11/9/21 FHLB 1506 1,000,000 988,149 1.375 2.680 11/15/19 319 12/10/18 11/15/19 Amer 11/15/19 FHLB 1507 1,000,000 1,003,225 3.100 2.933 12/28/23 1,823 12/28/18 12/28/19 Amer 12/28/23 FHLB 1509 1,000,000 1,013,146 3.125 2.750 9/9/22 1,348 12/19/18 12/1/18 Amer 11/9/21 FHLB Total and Average Yield 5,030,000 4,998,540 2.426 Resolution Funding Corporation RFCSP 1493 3,203,000 2,999,859 1.716 1.716 10/15/20 654 12/14/16 10/15/20 NC 10/15/20 RFCSP 1495 2,137,000 1,995,637 1.821 1.821 1/15/21 746 04/06/17 1/15/21 NC 1/15/21 RFCSP 1497 5,248,000 4,999,507 1.581 1.581 7/15/20 562 06/01/17 7/15/20 NC 7/15/20 RFCSP 1499 1,000,000 945,156 1.730 1.730 1/15/21 746 10/06/17 1/15/21 NC 1/15/21 RFCSP 1500 2,667,000 2,499,062 2.200 2.200 1/15/21 746 01/25/18 1/15/21 NC 1/15/21 RFCSP 1502 2,122,000 1,999,174 2.250 2.250 10/15/20 654 02/14/18 10/15/20 NC 10/15/20 RFCSP 1503 3,139,000 3,037,265 1.990 1.990 10/15/19 288 02/14/18 10/15/19 NC 10/15/19 RFCSP 1505 2,160,000 2,099,535 2.479 2.479 10/15/19 288 08/17/18 10/15/19 NC 10/15/19 RFCSP Total and Average Yield 21,676,000 20,575,196 1.923 Federal National Management Association FNMA 1488 3,000,000 2,999,970 1.500 1.500 5/22/20 508 6/3/16 2/22/19 Qrty 5/22/20 FNMA 1490 2,000,000 1,995,048 1.500 1.552 6/30/21 912 6/30/16 3/30/19 Qrty 6/30/21 FNMA 1491 2,000,000 1,997,896 1.500 1.520 12/30/21 1,095 630/16 3/30/19 Qrty 12/30/21 FNMA 1494 2,010,000 1,995,172 1.350 1.560 7/28/20 575 12/14/16 1/28/19 Qrty 7/28/20 FNMA 1501 1,000,000 997,351 2.300 2.380 7/30/21 942 2/14/18 1/30/19 Qrty 7/30/21 FNMA Total and Average Yield 10,010,000 9,985,437 1.614 Financing Corporation FICO 1485 2,119,000 1,999,702 1.460 1.460 9/26/19 269 10/2/15 9/26/19 NC 9/26/19 FICO Total and Average Yield 2,119,000 1,999,702 1.460 Other Investments LGIP LGIP 32,751,940 32,751,940 2.241 2.241 NA 1 NA NA NC NA Other Total and Average Yield 32,751,940 32,751,940 2.241 Grand Totals $ 84,601,940 $ 83,296,788 2.069 Average Expected Yield Page 2 of 7 TSQ Q4 2018 City of Yakima Distribution of Cash and Investments as of 12J31/2018 Depository Banks, .................... $9,297,534 10% ................. 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Investment Local Government Portfolio Investment Pool 0 50 544 848 55% o 32 751 540 35 0 $ I City of Yakima Investment Portfolio Distribution by Issuer �s of 12J31/2O18 FAMCA, 1,a00,000, 2/° FICO, 2,119,000, 4%.... FHLB, 5,030,Oa44 kitties 0, 10°t° tke iit sit. Ifi_okti RFCSP 21 676 a0a 42% FNMA 10 a1a aa0 191° FFCB, 12,015,a0a, 23% 9 City of Yakima Investment Portfolio -Detail of Activity December 31,2018 Beginning Additions and Calls and Ending Date of Agency Inv# Face Value Purchases Maturities Face Value Yield Q4'18 Farmer Mac FAMCA 1508 - 1,000,000 1,000,000 FAMCA Total - 1,000,000 - 1,000,000 Federal Farm Credit Bureau FFCB 1489 3,000,000 3,000,000 FFCB 1496 2,015,000 - 2,015,000 FFCB 1498 3,000,000 3,000,000 FFCB 1504 4,000,000 - 4,000,000 FFCB Total 12,015,000 - - 12,015,000 Federal Home Loan Bank FHLB 1492 2,030,000 - 2,030,000 FHLB 1506 - 1,000,000 1,000,000 FHLB 1507 - 1,000,000 1,000,000 FHLB 1509 - 1,000,000 1,000,000 FHLB Total 2,030,000 3,000,000 - 5,030,000 RFCSP 1493 3,203,000 3,203,000 RFCSP 1495 2,137,000 - 2,137,000 RFCSP 1497 5,248,000 - 5,248,000 RFCSP 1499 1,000,000 1,000,000 RFCSP 1500 2,667,000 2,667,000 RFCSP 1502 2,122,000 2,122,000 RFCSP 1503 3,139,000 3,139,000 RFCSP 1505 2,160,000 - 2,160,000 RFCSP Total 21,676,000 - - 21,676,000 Federal National Management Association FNMA 1469 3,000,000 (3,000,000) - FNMA 1488 3,000,000 3,000,000 FNMA 1490 2,000,000 2,000,000 FNMA 1491 2,000,000 2,000,000 FNMA 1494 2,010,000 2,010,000 FNMA 1501 1,000,000 1,000,000 FNMA Total 13,010,000 - (3,000,000) 10,010,000 Financing Corporation FICO 1485 2,119,000 2,119,000 FICO 1486 3,192,000 (3,192,000) - FICO Total 5,311,000 - (3,192,000) 2,119,000 Other Investments LGIP(State Pool) LGIP 17,600,116 15,151,824 - 32,751,940 Other Investment Totals 17,600,116 15,151,824 - 32,751,940 Grand Totals $ 71,642,116 $ 19,151,824 $ (6,192,000) $ 84,601,940 Page 5 of 7 LSO Q4 2018 City of Yakima Bonded Debt Schedule-by Project Group December 31,2018 Date Issued Maturity Description Note Amount of Issue Current Balance Payments General Obligation Bonds 9/7/2004 11/1/2019 PFD Convention Center II Refunded 1996 issue $ 4,175,000 $ 335,000 ; $ 335,000 5/8/2007 5/1/2026 PFD Convention Center III Partial refunding of 2002 issue 4,910,000 3,110,000 ; - 8/28/2009 12/1/2018 PFD Capitol Theatre Tax exempt portion 2,055,000 - 8/28/2009 12/1/2032 PFD Capitol Theatre Build America Bonds(Taxable) 4,980,000 4,980,000 ; - 6/17/2003 12/1/2023 Sundome Expansion Deferred Interest-Maturity$2.5M 1,430,528 317,934 ; - 8/28/2008 12/1/2021 Fire Apparatus Ladder Truck 760,000 205,000 ; 65,000 5/8/2007 5/1/2022 Fire Station Remodel Facility 815,000 270,000 ; 0 8/28/2008 12/1/2019 Infrastructure Projects Ped crossing,street,infrastructure 2,190,000 230,000 ; 225,000 5/8/2007 5/1/2022 Downtown Futures Renovate downtown improvements 1,490,000 490,000 ; - 6/20/2013 6/20/2028 Street Project Demonstration(Refunded) Various City street improvements 3,500,000 3,351,672 ; 148,328 6/9/2014 6/1/2024 Skeet Resurfacing Project Streets improvements 13,140,000 8,640,000 ; - 6/17/2014 12/1/2034 Comm Center Move City portion of County GO Bonds 1,716,500 1,465,000 - 12/22/2015 12/1/2035 Soccer Complex City portion of SOZO Sports Complex 5,000,000 - , - 9/24/2018 12/1/2035 Soccer Complex(Refunded) City portion of SOZO Sports Complex 4,440,127 4,440,127 ; - 9/24/2018 7/1/2035 2018 Aquatic Center YMCA City portion of Aquatic Center 8,009,873 8,009,873 ; - Subtotal General Obligation Bonds $ 58,612,028 $ 35,844,606 $ 773,328 Certificate of Participation-State of Washington 8/22/2013 6/1/2019 Police Vehicles 74 Take-home vehicles $ 4,173,190 $ 769,792 ; $ - 8/22/2013 6/1/2019 Fire Air Packs 70 Air Packs 459,602 84,779 ; - 6/1/2011 12/1/2020 Fire Apparatus Two trucks purchased 576,847 131,948 62,193 3/19/2013 7/1/2023 Fire Apparatus One truck 310,414 173,521 ; - 9/28/2017 6/1/2027 Energy Project LED Street Lighting 2,189,736 2,052,534 ; - Subtotal Certificates of Participation $ 7,709,790 $ 3,212,575 $ 62,193 Revenue Bonds 5/31/2012 11/1/2023 Wastewater Refunded 2003$10,155,000 issue $ 9,400,000 $ 5,185,000 ; $ 930,000 6/5/2008 11/1/2027 Wastewater 5,440,000 3,070,000 ; 3,070,000 6/5/2008 11/1/2018 Water Refunded 1998 issue 1,883,951 220,000 ; - 9/4/2004 9/1/2034 Irrigation 5,215,000 3,530,000 ; - Subtotal Revenue Bonds $ 21,938,951 $ 12,005,000 $ 4,000,000 Grand Total $ 88,260,769 $ 51,062,181 $ 4,835,521 Page 6 of 7 TSO Q42018 City of Yakima Interfund Borrowing December 31,2018 Original Beginning Ending Description Balance Balance Issued Retired Balance Yield Q4'18 Local Improvement District Bonds/Notes $ 1,432,509 $ 100,450 $ - $ 807 $ 99,643 Equipment Rental Reserve Fund 153- Public Safety Communications 450,000 450,000 - 150,000 300,000 Equipment Rental Reserve Fund 332- Fire Capital 640,000 1,100,000 - - 1,100,000 General Fund Fund 323- Millsite Project - 500,000 - - 500,000 REET Fund 151 - Public Safety Communications- Interfund Loan The Public Safety Communications Fund borrowed from the Equipment Replacement and Reserve Fund to provide working capital while they recover from the excess cash outflow caused by the move to the new Communications Center last year.The fund has been currently paying interest only on the debt while their cash balance recovers.In 2018 a payment of $150,000 principal payment was made leaving a balance of$300.000. Fund 332- Fire Capital The Fire Capital fund borrowed$640,000 cash at the end of 2016 from Equipment Rental to finance the down payment on two fire apparatus that were under construction.The Fire Department took delivery of the apparatus and final payment was made in August 2017. Although an external financing through the LOCAL program had been anticipated,it was determined at that time that the flexibility of an Interfund loan was preferred and it was thus executed according to City policy. This first loan was refinanced through the General Fund in January and a second loan of$460,000 was executed to make the final payment in August.No interest is being charged on this loan since Fire Capital is normally funded entirely by the General Fund. Fund 323- Millsite(LIFT) The Millsite project borrowed$500,000 from REET until such time as official financing can be secured.At that time the loan from REET will be repaid.A Statement of Official Intent for the reimbursement has been executed to meet bond requirements. Page 7 of 7 TSO Q4 2018