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HomeMy WebLinkAbout11/05/2013 05B 3rd Quarter 2013 Treasury ReportBUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. For Meeting of: 11/5/2013 IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII ITEM TITLE: SUBMITTED BY: SUMMARY EXPLANATION: 3rd Quarter 2013 Treasury Report. Cindy Epperson, Director of Finance and Budget Tara Lewis, Financial Services Manager The Treasury Report for the third quarter of 2013 is attached and consists of the following: 1. Memo: Summary and Narrative 2. Reports • Cash and Investment Summary • Investment Portfolio -Detailed Inventory by Agency • Investment Portfolio — Detail of Activity • Bonded Debt Schedule • Schedule of Interfund Borrowings and Investments Resolution: Ordinance: Other (Specify): Contract: Contract Term: Start Date: End Date: Item Budgeted: Amount: Funding Source/Fiscal Impact: Strategic Priority: Insurance Required? No Mail to: Phone: APPROVED FOR SUBMITTAL: City Manager RECOMMENDATION: Accept report ATTACHMENTS: Description Upload Date Type 2013 Q3 Summary and Narrative 10/22/2013 Cover Memo 2013 Q3 Treasury Reports 10/22/2013 Presentation Memorandum To: The Honorable Mayor and Members of City Council From: Cindy Epperson, Director of Finance and Budget Tara Lewis, Financial Services Manager Date: November 5, 2013 Re: 2013 — 3rd 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) 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 effective yield on the City's entire Investment Portfolio for the quarter ending 9/30/13 remained fairly steady at approximately 1%. The $5 million street bond proceeds were invested in the Pool and are currently being spent down. Due to the abysmal rate of return, only a small emergency pot of money is kept in the Pool. More cash is being kept on hand in the City's operations bank accounts because such balances currently earn approximately twice the rate of the LGIP. Interest rates are starting to trend upwards, but mostly due to the Federal Government's inaction with regard to the debt ceiling and federal budget. This rise in rates will make the debt market more expensive for the City as we approach the need for a revenue bond issue for the upcoming and ongoing Wastewater projects and a possible general obligation issue for street improvements. It will also keep our current investments from being called thus degrading the liquidity we have experienced over the past three years where 5 year investments were being called in as little as 90 days from the date of issue. The LGIP yield has continued its downward slide, but it is about as close to zero as it can get. It is essentially an overnight pool so one cannot expect much in this market. It yielded about 0.12% this quarter as opposed to 0.14% in the second quarter. The LGIP is considered to be a very poor investment and is utilized solely for emergency cash needs and currently, to keep designated loan proceeds separate from other cash holdings. Overnight rates in our bank accounts yield a higher rate than LGIP and so we have been maintaining larger balances there than we have done historically. We have also acquired a savings account at a local savings and loan that is no longer needed by our HUD loan program. The rate of return is better than any overnight rate available and as long as that is true we will keep the account open as part of our Liquidity Portfolio. The City's Bonded Debt Schedule There are some additions to the Debt Schedule. Two additions have been made to the State of Washington Certificate of Participation bond issue section of the report. Known as the LOCAL program, this debt option was used to finance the new Police take-home vehicles and the airpacks for the Fire Department. Financing was achieved at a total rate of 1.67% (includes all fees and August 20, 2013 issuance costs). This compares with about 3% to 6% that the City has to pay for its own issuance of debt in the marketplace. Not only is the rate lower with the State's program, but there are no additional fees involved as with a regular bond issue. Unfortunately the State will not allow participation for infrastructure projects and so we can only take advantage of this option when buying or building equipment, land or structures. Monthly payments on the Street Project Demonstration began in July. Most other principal payments occur in June or December and so there was not a lot of activity on existing debt. Interfund Borrowings and Investments The most significant item to note is the payoff of the interfund loan made by Equipment Rental to the Irrigation Capital Fund. The cost for this interfund loan of $1.433 million amounted to less than $10,000 in interest over a 16 month period with no other tangible costs. A bond issue would have generated 4 or 5 times that amount in issuance fees and interest costs would be ongoing for years at a much higher rate. Although the Irrigation project is not completed, it is anticipated that such interfund borrowing will continue to keep the City out of the expensive debt markets with regard to an Irrigation debt issue as the Department schedules its work over a period of several years with a "pay-as-you-go" strategy. Refuse was temporarily in a negative cash position at the end of the quarter. For a particular fund to be in a negative cash position for a few days or weeks is not an unusual occurrence due to the uneven flows of revenues and expenditures throughout the year. General Fund loaned cash to cover excess expenditures. The cash balance in the Refuse fund was positive again by October 1 and remains healthy as of this report date. As per the City's Interfund Loan Program, adopted earlier this year, the General Fund will begin to charge interest if a loan continues over more than one calendar quarter. 2 City of Yakima Cash and Investment Summary September 30, 2013 Description Qty Par Book Percent of Average Portfolio Yield Q2 '13 Average Yield Q3 '13 Cash Balances on Hand and in Banks Local Government Investment Pool (LGIP) Federal Agency Coupon and Discount Other Investments NA 1 $ 4,316,336 19 40,996,000 2 3,219,176 $ 8,363,396 4,316,336 40,330,047 3,571,793 NA 9% 84% 7°/0 NA NA 0.12% 1.21% 0.51% Total Invested 22 $ 48,531,511 $ 48,218,176 100% 1.03% 1.06% Summary of Investment Activity Book Balance 7/1/2013 Purchases & Deposits Interest Maturities, Calls Reinvested & Withdrawals Book Balance 9/30/2013 Local Government Investment Pool (LGIP) Federal Agency Coupon and Discount Other Investments $ 8,804,001 $ 46,008,927 2,000,000 3,397,617 173,882 $ 2,613 $ 4,490,278 294 7,678,880 $ 4,316,336 40,330,047 3,571,793 Totals $ 58,210,545 $ 2,173,882 $ 2,907 $ 12,169,158 $ 48,218,176 Page 1 of 5 PDFConvert.3254.1.TSO_Q3_2013.xlsx City of Yakima Investment Portfolio - Inventory by Agency September 30, 2013 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 1.290 9/25/18 9/25/12 11/25/13 Amer 9/25/18 FFCB Totals and Avera 2,000,000 2,000,000 1.290 Federal Home Loan Bank FHLB 1456 2,000,000 2,289,700 5.630 2.050 6/13/16 3/12/12 6/13/16 NC 6/13/16 FHLB 1466 2,000,000 1,998,940 1.150 1.160 7/25/18 2/6/13 10/25/13 Qrty 7/25/18 FHLB 1467 2,000,000 1,994,456 0.850 0.910 10/30/17 2/6/13 10/30/13 Qrty 10/30/17 FHLB 1470 2,000,000 2,000,000 1.000 Step to 2.5 % 1.200 6/20/18 6/20/13 12/20/13 Qrty 6/20/17 FHLB Totals and Avera 8,000,000 8,283,096 1.355 Federal Home Loan Mortgage Corporation FHLMC 1453 2,000,000 2,001,920 1.300 FHLMC 1463 3,000,000 3,000,000 1.000 1.280 1/30/17 01/30/12 1/30/14 Qrty 1/30/17 1.000 1/17/18 10/17/12 10/17/14 lx 1/17/18 FHLMC Totals and Ave 5,000,000 5,001,920 1.112 Federal National Management Association FNMA 1452 1,000,000 1,000,000 0.850 0.850 12/5/14 12/5/11 12/5/13 lx 12/5/14 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 1461 2,000,000 2,008,310 0.900 0.900 9/27/16 6/28/12 3/27/14 lx 9/27/16 FNMA 1468 2,000,000 2,000,000 1.200 1.200 4/18/18 4/18/13 1/18/14 Qrty 4/18/18 FNMA 1469 3,000,000 2,991,678 1.000 1.050 12/20/18 5/20/13 5/20/14 Qrty 12/20/18 FNMA 1472 2,000,000 2,000,000 1.700 1.700 7/10/18 7/10/13 7/10/14 Qrty 7/10/14 FNMA Totals and Aver 15,000,000 14,737,018 1.141 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 1458 2,142,000 1,999,488 1.250 1.250 11/30/17 5/21/12 11/30/14 NC 11/30/17 FICO 1464 3,630,000 3,435,105 1.050 1.050 2/8/18 10/31/12 2/8/18 NC 2/8/18 FICO Totals and Avera 10,996,000 10,308,013 1.218 Other Investments LGIP LGIP 4,316,336 4,316,336 0.120 NA NA NA NA NC NA 174,176 174,176 0.400 0.400 NA 7/1/13 NA NC NA 500,000 565,490 5.000 1.500 7/1/15 8/19/11 7/1/15 NC 7/1/15 2,295,000 2,582,127 5.000 1.000 9/1/16 6/24/13 9/1/16 NC 9/1/16 250,000 250,000 2.050 2.100 3/30/16 8/31/11 2/28/15 NC 2/28/15 YFED YFED CNTY 1442 CNTY 1471 YF -CD 1447 Other Totals and Avera 7,535,511 7,888,129 0.510 (excludes LGIP) Coupon Steps Coupon Steps Investment# Rate up to: 2013 2016 2016 2017 2017 1470 June, Dec 20 1.000 1.125 1250% 1500% 2500% Page 2 of 5 PDFC onvert.3254.1.TS0_Q3_2013.xlsx City of Yakima Investment Portfolio - Detail of Activity Quarter Ending September 30, 2013 Agency Yield Beginning Additions and Calls and Ending Date of Inv# Rate Face Value Purchases Maturities Face Value Activity Federal Farm Credit Bureau FFCB 1462 1.290 2,000,000 2,000,000 FFCB Totals 2,000,000 2,000,000 Federal Home Loan Bank FHLB 1456 2.050 2,000,000 2,000,000 FHLB 1466 1.160 2,000,000 2,000,000 FHLB 1467 0.910 2,000,000 2,000,000 FHLB 1470 1.200 2,000,000 2,000,000 FHLB Totals 8,000,000 8,000,000 Federal Home Loan Mortgage Corporation FHLMC 1453 1.280 2,000,000 2,000,000 FHLMC 1463 1.000 3,000,000 3,000,000 FHLMC Totals 5,000,000 5,000,000 Federal National Management Association FNMA 1445 1.420 4,000,000 FNMA 1448 1.000 1,750,000 FNMA 1452 0.850 1,000,000 FNMA 1460 1.100 5,000,000 FNMA 1461 0.900 2,000,000 FNMA 1468 1.200 2,000,000 FNMA 1469 1.050 3,000,000 FNMA 1472 1.700 2,000,000 (4,000,000) - (1,750,000) - 1,000,000 5,000,000 2,000,000 2,000,000 3,000,000 2,000,000 7/10/13 FNMA Totals 18,750,000 2,000,000 (5,750,000) 15,000,000 Financing Corporation FICO 1450 1.020 2,000,000 FICO 1454 1.200 722,000 FICO 1455 1.348 2,356,000 FICO 1457 1.340 2,146,000 FICO 1458 1.250 2,142,000 FICO 1464 1.050 3,630,000 (2,000,000) 722,000 2,356,000 2,146,000 2,142,000 3,630,000 8/8/13 FICO Totals 12,996,000 (2,000,000) 10,996,000 Other Investments LGIP (State Pool) LGIP 0.120 8,804,001 Yakima Federal Savings YFED 0.400 Grays County Bonds 1442 1.500 500,000 Cowlitz County Bonds 1471 1.000 2,295,000 Yakima Federal CD 1447 2.050 250,000 2,613 (4,490,278) 4,316,336 174,176 174,176 7/1/13 500,000 2,295,000 250,000 Other Investment Totals 11,849,001 176,789 (4,490,278) 7,535,511 Grand Totals $ 58,595,001 $ 2,176,789 $ (12,240,278) $ 48,531,511 Page 3 of 5 PDFConvert.3254.1.TSO_Q3_2013.xlsx City of Yakima Bonded Debt Schedule - by Project Group Quarter Ending September 30, 2013 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 6/17/2003 12/1/2013 9/7/2004 12/1/2014 8/28/2008 12/1/2021 8/28/2008 5/1/2022 8/28/2008 12/1/2019 5/8/2007 5/1/2022 5/8/2007 5/1/2017 6/20/2013 6/20/2028 12/1/2005 2/1/2015 PFD Convention Center II PFD Convention Center III PFD Capitol Theatre PFD Capitol Theatre PFD Capitol Theatre Sundome Expansion Law and Justice Center Fire Station Fire Apparatus Fire Station Infrastructure Projects Downtown Futures River Road Street Project Demonstration Parks and Recreation Refunded 1996 issue Partial refunding of 2002 issue Tax exempt portion Build America Bonds (Taxable) Build America Bonds (Taxable) Deferred Interest -Maturity $2.5M Refunded 1994 issue Ladder Truck Remodel Facility Ped crossing, street, infrastructure Renovate downtown improvements River Road improvements Various City street improvements Parks improvements 4,175,000 4,910,000 2,055,000 1,755,000 3,225,000 1,430,528 4,155,000 2,300,000 760,000 815,000 2,190,000 1,490,000 1,765,000 5,000,000 755,000 2,500,000 4,595,000 1,325,000 1,755,000 3,225,000 841,654 500,000 560,000 555,000 550,000 1,455,000 1,000,000 800,000 4,928,791 260,000 0 0 0 0 0 0 0 0 0 0 0 0 0 71,209 0 Subtotal General Obligation Bonds $36,780,528 $24,850,445 $71,209 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 $4,173,190 $459,602 $472,526 $310,414 $0 $0 $0 $0 Subtotal Certificates of Participation $5,520,054 $5,415,733 $0 Revenue Bonds 12/2/2003 5/31/2012 6/5/2008 6/5/2008 9/4/2004 11/1/2014 Wastewater 11/1/2023 Wastewater 11/1/2027 Wastewater 11/1/2018 Water 9/1/1934 Irrigation Refunded 2003 $10,155,000 issue Refunded 1998 issue $7,390,000 9,400,000 5,440,000 1,883,951 5,215,000 $1,060,000 9,355,000 4,555,000 1,210,000 4,220,000 $0 0 0 0 125,000 Subtotal Revenue Bonds $29,328,951 $20,400,000 $125,000 Grand Total $71,629,533 $50,666,178 $196,209 Page 4 of 5 PDFConvert.3254.1.TSO_Q3_2013.xlsx City of Yakima Interfund Borrowings and Investments Quarter Ending September 30, 2013 Description Original Balance Beginning Balance Issued Retired Ending Balance Investment Held by: Local Improvement District Bonds/Notes Irrigation Capital Fund REET 1 - Upper Kiwanis Park $ 1,432,509 514,000 600,000 $ 508,500 67,000 549,804 67,000 $ 508,500 25,195 524,609 Equipment Rental Equipment Rental Equipment Rental Funds in Negative Cash Position at Quarter End Ending Cash Balance Cash Extended by: Fund 471 - Refuse (133,294) General Fund Refuse cash was fully expended at the end of the quarter due to timing issues. The cash balance is positive again as of the date of this report. An interfund loan is not necessary. Page 5 of 5 PDFConvert.3254.1.TSO_Q3_2013.xlsx