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Home My WebLink About06/07/2011 14C 1st Quarter 2011 Treasury Report • BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. jG For Meeting Of 5 -17 -2011 ITEM TITLE: City of Yakima — 1 Quarter 2011 Treasury Report SUBMITTED BY: Rita DeBord, Finance Director CONTACT PERSON/TELEPHONE: Rita DeBord, Finance Director / 575 -6070 Tara Lewis, Financial Services Officer / 576 -6639 SUMMARY EXPLANATION: The Treasury Report for the first Quarter of 2011 consists of the following: ( • Investment Portfolio - Summary • Investment Portfolio - Detailed Inventory by Agency • Investment Portfolio — Detail of Activity • Report of Cash Balances • Schedule of Outstanding General Obligation & Revenue Bonds • LID Cash Balances, & LID Bonds & Notes Payable • • LID Bonds /Notes Payable vs. LID Guaranty Fund (1) Refer to page 4 for a description of Treasurer's Reports. Continued on next page... Resolution Ordinance Other (Specify) Report Contract Mail to (name and address): Phone: Funding Source APPROVED FOR SUBMITTAL:�� =�� City Manager STAFF RECOMMENDATION: Accept Report BOARD /COMMISSION RECOMMENDATION: N/A COUNCIL ACTION: • 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 3/24/09. Snapshot of the Portfolio The City's Investment Portfolio can be divided into two general buckets: 1) A Liquidity Portfolio of overnight investments.. 2) A Security Portfolio of investments in various securities with maturities out to five years. The effective yield on the City's entire Investment Portfolio for the quarter ending 3/31/11 was 1.14 %, up slightly from .99% in the fourth quarter yet still Tess than the 1.37% earned in the third quarter of 2010. It should be noted that the yield in the third quarter was slightly buoyed by . investing in bonds with an expected short call period. The strategy rests on the expectation that the bonds will be called due to a higher coupon rate than the market interest rates. The risk associated with such a strategy is that if the rates rebound suddenly, the bonds will not be called and the bonds will go to maturity at a rate lower than market. Due to this risk, the City has used this strategy in a limited manner. In the fourth quarter, as rates are starting to even out, some of these callable bonds have in fact, not been called and are therefore expected to go to maturity. Rates were mostly level in the first quarter of 2011 with minor adjustments both up and down throughout the period. Rates are expected to begin rising, but at a very slow pace. The Liquidity Portfolio is invested predominately with the State of Washington Investment Pool and was 35% of the total portfolio as of 3/31/11. The yield continues to be very low at 0 approximately 20 basis points (i.e. 0.20 %). As funds have been needed for operations, draws from the pool have not been replaced due to the cost of transferring funds relative to the low interest rates. Currently, the cost of wiring funds to and from the pool makes it less attractive as a tool for very short term investing (less than 30 days). As rates begin to rise in the bond market it is likely the City can realize slightly higher return by investing in shorter term bonds to keep sufficient liquidity in the portfolio. The Security Portfolio currently comprises 65% of the total with an average yield of 1.63 %, compared to 1.46% and 1.86% in the fourth and third quarters of 2010 respectively. It is made up of predominately US Government Agency callable securities, along with a legacy $10,000 investment in a FNMA Mortgage Backed Security ("MBS"). Average yields on the Security Portfolio have stabilized as bonds with higher returns have already been called during the fall and early winter. The current portfolio is earning slightly higher than market rates, but not so much so that calls are attractive to the issuing agencies. Investment Composition Strategy The City looks to maintain an Investment Portfolio with a Liquidity Portfolio sufficient to cover cash flow needs and provide a cushion for unusual and emergency expenditures. The Security Portfolio contains predominately callable US government agency securities. Callable agency securities serve three purposes: (1) The City earns a higher coupon (yield) than it would have earned from a non - callable security with the same maturity date and same issuer; • (2) The actual experienced maturity of a callable security is usually shorter than its stated maturity due to its inherent call features. Calls on existing securities allow for a certain amount Page 2 of 4 1St Qtr 2011 Treasury Rpt of investment flexibility which can lead to higher current interest income much sooner than if the securities were non - callable; (3) By buying US Agency callable securities, the City's security investments have the direct or implied backing of the US Government and as such, any of the City's securities could be sold immediately at current market prices for cash if the need arose. The City owns securities issued by US government- backed entities such as the Federal Home Loan Bank ( "FHLB "), Freddie Mac ( "FHLMC "), Fannie Mae ("FNMA"), and Federal Farm Credit ( "FFCB "). While the public stock of FHLMC and FNMA are currently suffering, they do have lines of credit with, investment by, and the support of the US Treasury. The City's risk of Toss due to credit exposure from any of these agencies is thought to be miniscule. The City does not invest in any Structured Investment Vehicles (SIV's), Collaterized Mortgage Obligations (CMO's), or Collateralized Debt Obligations ( CMO's). These types of investments, along with certain asset - backed. Commercial Paper have much higher price and demand volatility. The City has not purchased these types of instruments. • • Page 3 of 4 1St Qtr 2011 Treasury Rpt Description of Treasurer's Reports • Investment Portfolio - Summary This report shows a summary of investments by type including the percentage of each category relative to the total portfolio. A summary of activity shows by category the balances at the beginning of the reporting period, activity that occurred during the quarter and ending balances as of the report date. • Investment Portfolio — Detailed Inventory by Agency This report lists all of the City's major security investments excluding funds in the State of Washington Investment pool as of the report date. • Investment Portfolio — Detail of Activity This report contains detailed lists of security purchases, maturities and calls during the reporting period. • Report of Cash Balances A list of cash balances in each of the City's major bank accounts. • Schedules of General Obligation & Revenue Bonds Payable This report indicates principal payments made during the reporting period, and the current balances of the City's bonded debt. • LID Cash Balances, & LID Bonds &Notes Payable A Local Improvement District is an instrument utilized by citizens to fund specific local community improvements. This report identifies outstanding obligations relative to Local Improvement Districts' bonds and notes payable. • LID Bonds /Notes Payable vs. LID Guaranty Fund Once a Local Improvement District bond or note is issued, there is a required minimum reserve which the City must maintain so long as the bond or note is outstanding. This report compares the current Local Improvement Districts outstanding debt to the required reserve balance. • Page 4 of 4 1St Qtr 2011 Treasury Rpt City of Yakima Investment Portfolio - Summary March 31, 2011 Percent of Average Average Investment Type Par Book Quantity Portfolio Yield Q1 '11 Yield Q4 '10 Local Government Investment Pool (LGIP) $ 15,571,087 $ 15,571,087 1 35% 0.23% 0.24% Federal Agency Coupon Bonds - Callable 28,970,000 28,950,140 14 65% 1.63% 1.46% Federal Nat'l Mortgage Assoc. -1986 Non - callable 8,333 8,333 1 0% 5.19% 5.19% Totals $ 44,549,420 $ 44,529,560 16 100% 1.14% 0.99% Book Balance Purchases Interest Maturities, Calls Book Balance Summary of Activity 1/1/2011 & Deposits Reinvested & Withdrawals 3/31/2011 Local Government Investment Pool (LGIP) $ 18,562,076 $ 9,011 $ 3,000,000 $ 15,571,087 Federal Agency Coupon - Callable 29,503,928 1,996,700 - 2,550,488 28,950,140 Federal Nat'l Mortgage Assoc. -1986 Non - callable 8,655 - - 322 8,333 Totals $ 48,074,659 $ 1,996,700 $ 9,011 $ 5,550,810 $ 44,529,560 • TSO e t TL Page 7 2011 - 10arter O. • ,. ... ' City of Yakima Investment Portfolio - Inventory by Agency March 31, 2011 , Expected Call Most Agency Fund Inv# Face Value Price Coupon Step Yield Maturity Settle Next Call Type Likely CaII Federal Farm. Credit Bank FFCB 896. 1403 $ 2,370,000 $ 2,368,815 1.750 1.783 7/8/14 7/19/10. 7/8/11 Amer 7/8/14 FFCB 896 1406 1,500,000 1,500,000 1.750 1.750 8/4/14 8/4/10 5/4/11 Qtry 8/4/14 FFCB 896 1426 1,000,000 998,500 2.540 2.693 3/30/16 3/31/11 .3/30/12 Amer 3/30/12 FFCB Totals and Average 4,870,000. 4,867,315 1.960 Federal Home Loan Bank , • FHLB 896 1411 250,000 249,875 1.720 1:731 5/26/15 9/2/10 7 days Amer 5/26/15 FHLB 896 1412 3,000,000 2,999,250 1.450 1.456 9/2/14 9/2/10 7 days Amer 9/2/14 FHLB 896 1421 5,000,000 5,000,000 1.250 1.250 12/13/15 12/13/10 4/13/11 Monthly 12/13/15 FHLB 896 1422 2,000,000 2,000,000 2.125 2.125 12/14/15 12/14/10 4/14/11 Monthly 5/15/11 FHLB 896 1424 2,000,000 2,000,000 1.550 1.550 12/3/14 12/3/10 6/3/11 Qtry 6/3/11 FHLB Totals and Average 12,250,000 12,249,125 1.502 Federal Home Loan Mortgage Corporation FHLMC 896 1420 2,000,000 1,996,500 1.700 1.736 11/16/15 11/16/10 4/16/11 Monthly 11/16/15 FHLMC 896 1418 . ..2,000,000 1,999,000 0.800 0.816 11/4/13 11/04/10 8/4/11 1x 11/4/13 FHLMC Totals and Avera 4,000,000 3,995,500 1.276 Federal National Management Association FNMA 896 1399 470,000 470,000 2.000 Step 2.960 7/14/15 7/14/10 4/14/11 Qtry . 4/14/11 FNMA 896 1400 2,000,000 2,000,000 1.750 Step 1.750 7/27/15 7/27/10 7/27/11 Qtry 7/27/15 FNMA 896 1405 380,000 .380,000 1.875 Step 1.875 8/4/15 8/4/10 5/4/11 Qtry 5/4/11 FNMA 896 1419 2,000,000 2,000,000 1.000 1.000 11/26/13 11/26/10 5/26/11 Qtry 11/26/13 FNMA 896 1423 2,000,000 1,990,000 1.125 Step 2.068 10/29/15 11/22/10 4/29/11 Qtry 10/29/15 FNMA 896 1426 1,000,000 998,200 2.000 ' 2.500 2/10/15 3/31/11 8/10/11 lx 8/10/11 FNMA Totals and Averag . 7,850,000 7,838,200 1.813 . Grand Total $28,970,000 $28,950,140 1.632. • Coupon Steps Inv # To: 2010 2011 2012 2013 2014 2015 1399 Jul 14 NA NA 2.000% 2.500% 3.000% 3.75/4.75% 1400 Ju127 NA .1.750% NA 2.250% 3.000% 4.000% 1405 Aug 4 NA 1.875% 2.125% 2.375% 2.875% 3.250% 1423 Oct 29 NA NA 1.125% 1.625% 2.500% 3.500% TSO Report TL Page 2 of 7 2011 - 1st Quarter City of Yakima III Investment Portfolio - Detail of Activity For the Quarter Ended March 31, 2011 Coupon Beginning Calls and Ending Date of AgencyFund Inv# Rate Face Value Purchases Maturities Face Value Activity Federal Farm Credit Bureau FFCB 896 1403 1.750 $ 2,370,000 $ - $ - $ 2,370,000 FFCB 896 1406 1.750 1,500,000 1,500,000 FFCB 896 1426 2.540 1,000,000 1,000,000 3/31 /11 FFCB Totals 3,870,000 1,000,000 - 4,870,000 Federal Home Loan Bank FHLB 896 1411 1.720 250,000 250,000 FHLB 896 1412 1.450 3,000,000 3,000,000 FHLB 896 1421 1.250 5,000,000 5,000,000 FHLB 896 1422 2.125 2,000,000 2,000,000 FHLB 896 1424 1.550 2,000,000 2,000,000 FHLB Totals 12,250,000 - - 12,250,000 Federal Home Loan Mortgage Corporation FHLMC 896 1415 1.750 500,000 (500,000) - 1/28/11 FHLMC 896 1418 0.800 2,000,000 2,000,000 FHLMC 896 1420 1.700 2,000,000 2,000,000 FHLMC Totals 4,500,000 - (500,000) 4,000,000 Federal National Management Association FNMA 896 1399 2.000 470,000 470,000 Ill FNMA 896 1400 1.750 2,000,000 2,000,000 FNMA 896 1405 1.875 380,000 380,000 FNMA 896 1416 0.800 1,000,000 (1,000,000) - 3/28/11 FNMA 896 1417 1.000 1,045,000 (1,045,000) - 3/29/11 FNMA 896 1419 1.000 2,000,000 2,000,000 FNMA 896 1423 1.125 2,000,000 2,000,000 FNMA 896 1425 2.000 1,000,000 1,000,000 FNMA Totals 8,895,000 1,000,000 (2,045,000) 7,850,000 Grand Totals $29,515,000 $ 2,000,000 $ (2,545,000) $28,970,000 TSO Report TL Page 3 of 7 2011 - 1st Quarter CITY OF YAKIMA II I REPORT OF CASH BALANCES March 31, 2011 Key Bank $ 7,585,269 Bank of New York (Fiscal Agent)(1) - U.S. Bank (Housing loan repayments) 225,466 Yakima Federal Savings and Loan Association (Housing) 168,462 Bank of America (Claims Control) 900,776 U. S. Bank (Payroll Control) 13,097 Inmate Trust - Key Bank 11,631 III Inmate Welfare Key Bank 7,906 Municipal Court - Key Bank 132,170 Petty Cash (2) 3,475 Police - Special Investigations(2) 7,500 Change Funds (3) 3,780 Travel Advance 5,000 Total Cash On Hand and In Bank Accounts 3/31/11 $ 9,064,532 1 Balance is zero as all coupons and principal has been paid to bond holders. 2 Represents impressed amounts. Cash on hand plus receipts for paid items equals this amount per Resolution 82008 -32 (Updated as R2011 -58, April, 2011) 0 3 Change for customers established by Resolution R2008 -32 (Updated as R2011 -58, April, 2011) TSO Report TL Page 4 of 7 2011 1st Quarter CITY OF YAKIMA Schedule of General Obligation and Revenue Bond Activity For the Period 1/1/2011 through 3/31/2011 GENERAL OBLIGATION BONDS Original Beginning Principal Amount Ending Fund Date Issued . Description Outstanding Final Payment Balance Redeemed Issued Balance 272 6/10/2002 PFD Convention Center I - refunded $ 1,280,000 6/1/2012 $ 460,000 $ - $ - $ 460,000 283 6/17/2003 Series B . Law and Justice - 1994 refunded 4,155,000 12/1/2013 1,455,000 - 1,455,000 284 9/7/2000 Fire - 1995 Refunded 2,300,000 12/1/2014 1,080,000 - 1,080,000 281 11/30/2001 Parks and Recreation 755,000 2/1/2015 415,000 - 415,000 281 5/7/2003 River Road / 16th Fruitvale 1,765,000 5/1/2017 1,315,000 - 1,315,000 272 8/28/09 Series A PFD Capital Theatre Expansion - tax exempt 2,055,000 12/1/2018 1,700,000 - 1,700,000 287 8/31/2000 PFD Convention Center II - 1996 refunded 4,175,000 11/1/2019 3,125,000 - 3,125,000 281 8/27/2004 Infrastructure Projects 2,190,000 12/1/2019 1,810,000 - 1,810,000 281 8/27/2004 Fire Truck 760,000 12/1/2021 655,000 - 655,000 281 8/27/2004 Fire Station 92nd Facility 815,000 5/1/2022 690,000 - 690,000 281 5/7/2003 Downtown Futures 1,490,000 5/1/2022 1,260,000 - 1,260,000 281 6/17/2003 Series A Sundome Expansion 1,430,528 12/1/2023 1,055,687 - 1,055,687 272 8/28/09 Series B PFD Capital Theatre Expansion - BABs, taxable 1,755,000 12/1/2024 1,755,000 - 1,755,000 272 5/7/2003 PFD Convention Center III- 2002 Partial refunded 4,910,000 5/1/2026 4,880,000 - - 4,880,000 272 8/28/09 Series B PFD Capital Theatre Expansion - BABs, taxable 3,225,000 12/1/2032 3,225,000 - - 3,225,000 subtotal $ 33,060,528 $ 24,880,687 $ - $ - $24,880,687 REVENUE BONDS Original Beginning Principal Amount Ending Fund Date Issued Description Outstanding Final Payment Balance Redeemed Issued Balance 493 12/2/2003 Series A Wastewater $ 7,390,000 11/1/2014 $ 2,585,000 $ - $ - $ 2,585,000 484 6/4/2004 Water /Wastewater - 1998 refunded 1,516,049 11/1/2018 525,000 - 525,000 486 614/2004 Water - 1998 refunded 1,883,951 11/1/2018 1,555,000 - 1,555,000 493 12/2/2603 Series B Wastewater 10,155,000 11/1/2023 10,155,000 - 10,155,000 488 6/4/2004 Wasterwater 5,440,000 11/1/2027 4,975,000 - 4,975,000 491 9/1/2000 Irrigation 5,215,000 9/1/2034 4,580,000 - 4,580,000 subtotal $ 31,600,000 $ 24,375,000 $ - $ - $24,375,000 (I Grand Total $ 64,660,528 $ 49,255,687 $ - $ - $49,255,687 TSO Sit erp Pag 7 2011 - Order 0 0 0 LID CASH BALANCES LID BONDS AND NOTES PAYABLE As Of Quarter Ending March 31, 2011 As Of Quarter Ending March 31, 2011 LID Current LID Original LID Bond/Note Amount New LID LID Bond/Note Invested By District District Bond Beginning Quarter Bonds/Notes Districts Ending Quarter No. Cash Balance Assessment Balance Paid Added Balance 1056 - S 7th, 8th, 9th 8,050.60 218,481.02 67,000.00 0.00 0.00 67,000.00 Equipment Rental 1057 - N 84th & Hawthorne 609.87 179,550.01 77,500.00 0.00 0.00 77,500.00 Equipment Rental 1058 - N 95th, 94th Place 211.29 160,868.69 63,000.00 0.00 0.00 63,000.00 Equipment Rental 1060 - 85th and Kail 0.00 375,880.89 201,076.35 0.00 0.00 201,076.35 Equipment Rental 1061- Simpson Lane 35,627.98 497,727.90 409,000.00 0.00 0.00 409,000.00 Equipment Rental Totals $44,499.74 $1,475,260.46 $817,576.35 $0.00 $0.00 $817,576.35 Tso Report erp Page 6 of 7 2011 - 1st Quarter • City of Yakima LID BONDS / NOTES PAYABLE vs. LID GUARANTY FUND March 31, 2011 Outstanding Bonds and Notes Payable (1) $817,576.35 x 10% 10% of Outstanding Balance $81,757.64 Guaranty Fund #221 Balance $79,986.59 10% of Outstanding LID's Bonds and Notes Payable ($81,757.64) - Amount above (below) targeted minimum (2) ($1,771.05) (1) This is an investment by the City's Equipment Rental Fund. (2) The shortfall in the minimum guarantee balance will be satisfied over time and since there are no external investors who rely on this guarantee fund, this timing difference is not significant. Tso 1111L Pa 7 2011 - lifter