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HomeMy WebLinkAbout11/17/2009 11A 3rd Quarter 2009 Treasury Report BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT „ • Item No. II For Meeting of 11-17-2009 ITEM TITLE: - 3rd Quarter 2009 Treasury Report SUBMITTED BY: Finance Department 411 CONTACT PERSON/TELEPHONE:. Rita DeBord, Finance Director / 575-60710 • Jon Lorberau, Treasury Services Officer / 575-6024 SUMMARY EXPLANATION: The Treasury Report for the third Quarter of 2009 consists of the following: ( • Investment Portfolio - Summary by General Type • Investment Portfolio -Detail of Investments by Issuer ( • Invesiment Portfolio - Activity Report /Purchases and Calls/Maturities • Bank Cash Balance Report • City of Yakima - Schedule of Outstanding General Obligation & Revenue Bonds • LID Cash Balances, & LID Bonds & Notes,Payable • LID Warrants Payable • LID Bonds/ Notes Payable vs. LID Guaranty Fund (1) Refer to page(s) 3 & 4 for a description of Treasurer's Reports. (2) Refer to page(s) 3 & 4 for a description of Treasurer's Reports. • Economic Overview: During the first three quarters of 2009 the national economy continued to heal slowly. The October employment report showed a somber lost of -190,000 additional jobs which raised the official unemployment rate to 10.2%. While a lagging indicator, job growth is all important to long term financial health: To Put . this number in perspective, due to immigration and new entries into the work force, +125,000 to +150,000 jobs need to be created each month in order • for US employment to be neutral. Continued... 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 70UNCIL ACTION: • • • • • • • Government stimulus spending seems to have been the main economic prop so far in 2009 at a long term cost From January to October 2009; Federal government initiatives have increased the US deficit by $1.4 Trillion. This cash, along with consumer savings, shifted into the financial markets, creating a sharp rally in stocks and bonds throughout the first three quarters of 2009. The coming 4th quarter will be a real test of any recovery effort. People are staying home, paying down debt, and increasing their savings instead of buying goods and services. Business defaults have increased, the commercial and residential markets continue to suffer, and over 460 Banks on FDIC's problem list are trying to avoid joining the 120 banks closed by • , the FDIC so far this year • The national economic health picture has specific impacts to the City, of Yakima. Consumer entrenchment has already shown up as declines in the City's sales tax revenues and•the government's historical reduction in Fed Funds to 0% to .25% has steadily reduced the yields on every type of investment in the City's investment portfolio. The City's Investment Portfolio The City invesLinent activities are governed by the City of Yakima's Investment Policy, as revised 3/24/09. • While some would suggest a V-shaped recovery is underway, we have a more cautious view: .„ without strong consumer and continued federal spending during the important 4th quarter retail sales season and into 2010, the slow US economic recovery could continue well into'2010. Risk/ Reward Considerations • • The Fed seems to be committed to keeping interest rates low in the near term to protect the economy. The issue facing all investment Managers is that once the Fed .raises rates all existing bond investments will suffer from market price drops and sub-market returns. To be clear, the City can earn higher interest income only by investing its cash for longer periods of time. If it 'does, the Portfolio runs the risk of being locked into those yields as • current market rates rise, which decreases the market value of those holdings and reduces future earnings potential. While most believe that the US government will not raise rates until late 2010 or beyond, it is very probable that they could raise rates as early as 1st Quarter of 2010. The Chairman of the - FOMC was quoted on October 9th, 2009 saying the Fed is ready to tighten (raise rates) monetary policy when the economy improves - that day, yields on•US Treasury 2 year notes rose from .88% to .99% . • • Market professionals have a way to invest in the probability of when the Fed might act - right now, March 2010 Fed Fund Futures are implying a 10%-33% chance that the Fed will raise rates by then. . • 2 of 5 Snapshot of the Portfolio - 9/30/09 • The City's Investment Portfolio can be divided into two general buckets: a Liquidity Portfolio of overnight investments and a Security Portfolio of investments in various securities with maturities out to five years. The City's current investment strategy is to stay predominately liquid by limiting the amount of its term investments in bonds. In previous quarters, the City targeted about 60% of its portfolio in the Liquidity Portfolio/overnight funds, to both insure that there were adequate funds to meet continuing cash-flow needs and funds were available for any unexpected expenditures. Being conservative does have a cost: the City's portfolio yield has steadily declined during 2009 as market yields declined throughout all maturity sectors and security types. For this reason, the City will look to invest up to 505-55% of its cash in securities with an average Investment Portfolio stated maturity of 2.5 years. The underlying reason for the decline in the City's Investment Portfolio yield is attributable to the decline in all investment yields since the FOMC lowered the overnight target rate on Fed Funds to 0.00% to .25% on December 16th, 2008: o The decline in yield on the City's biggest holding - the Liquidity portfolio. . • 2.39% at 9/30/-08, • 1.03% at 3/31/09, • .42% at 9/30/09. o A decline in yield of the longer maturity Security portfolio. • 4.01% at 9/30/08 • 3.54% at 3/31/09 • 2.913% at 9/30/09 The effective yield - Oil the City'S POrtfoliO 9/30/2009was 1.23%. The Liquidity Portfolio is invested predominately with the State of Washington Investment Pool arid was 68.3% of the total portfolio as of 9/ 30/09. The Security Portfolio is comprised of securities that are held with a third party custodian and is comprised of mostly US Government Agency callable securities ($18rnni or 30.9% of total investments), $499,746 in one Municipal Bond (.8% of total portfolio) which matures in December, 2009, and a legacy $14,000 investment in a FNMA MBS security. 4th Quarter 2009 The City will look to maintain an Investaient Portfolio with a mix of 45-50% in a Liquidity . Portfolio and 50%-55% in its Securities Portfolio. he target Portfolio percentage:45-50% for the Liquidity portfolio for 4th Quarter is slightly less than that was used for-previous quarters but still sufficient tOlund anticipated early-2010 • 3 of 5 construction projects, provide an adequate cash cushion for the rest of 2009 and into 2010, and for fiscal surprises. The Security Portfolio will continue to use callable US government agency securities as the, primary investment security. 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. This allows for investment flexibility as well as higher current interest income. (3) Any of the City's securities could be sold immediately, at market prices, for cash if the need arose. The City is not invested in any Structured Investment Vehicles (SIV's) or Collateralized Debt . Obligations (CDO's). These types of investments, along with certain asset-backed Commercial Paper have niuch higher price and demand volatility. The City has not purchased these types of instruments. The City holds securities issued by US government-backed entities such as the Federal Home Loan Bank ("FHLB"), Freddie Mac ("FHLMC"), Fannie Mae ("FNMA"), Farm Credit ("FCCB"), municipal securities, and other Government Sponsored or controlled Enterprises. While the public stock of many of these entities' are currently suffering, they do have lines of credit, investment and support of the US Treasury. The City's risk of loss due to credit exposure from any of these agencies is thought to be negible. • 4 of 5 Description of Treasurer's Reports • Investment Portfolio - Summary by General Type This report shows investment position totals by category of investment, the percentage of the portfolio invested and market values. • Investment Portfolio - Detail of Investments in Securities by Issuer This report lists all of the City's major security investments, including funds in the State of Washington Investment pool. • Investment Portfolio - Activity Report/Purchases and Calls/Maturities This report shows the activity of security purchases and sales/maturities/calls of positions and callable bonds in the report period. • Report of Cash Balances This report is a listing of the 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 Warrants Payable Local Improvement District warrants are utilized until a project is complete, at - - - which time a bond- or- note- is issued. - This report identifies- any outstanding - warrants. • 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. 5 of 5 . . • • ,:•:.',0'•:.:if4t • . . • , . ' . ' . ..V* . . .. . • City of Y, ,na• Portfolio - • . • City of Yakirna . :Lc., North Second Street ( 1 •, . . •s. 6-1V-,?-7.1 . Sunimary by Type Yakima, WA 98901 (509)576-6639 ' . • . • • . • September 30, 2009 . . . . . . . _ • . . . . . . ' • Number of Par • % of Average Average Days Security Type ' • Investments Value ..Book Value Portfolio vim 365 ., to Maturity Local Government investment Pool 1 39,765,372.08 ' 39,765,372.08 68.25 0.420 • • 1 Federal Agency Coupon - Callable 14 . - 18,000,000.00 ' 18,000,000.00 30.89 2.913 1,021 Municipal Bonds 1 500,000.00 499,745.49 0.86 r 5.032 61 . -- Total and Average 16 58,265,372.08 58,265,117.57 100.00 1.230 ' . 317 • . , . . . . r • . . . • 1 • . ' . .. . . 1 • . . . . . • ■ . . . . . . . . . I . • ■ ' . . . . . • . . . 1 \ • . • . • ■ . • . . . . , . 1 1 . . . • • . . . . • . ■ . . • . . • . .' . . . . I . . ' . . 1 . . ■ . . . • ' . ■ ■ • . . . • . . . . ' . • ' . • . . . . , . . . .• , 1 • . . • . . . . . • . . ' . . . . • • . . ■ . . . ■ ■ . ' '. • . . . , • . .. . . . . „ . . . . . . . ' . . . . ' l . . . . . . ■ ' 1 . . ■ . . . . ■ ' r . . . . ' . • * ' ■ Portfolio BONC . . . . . . AF . ' . . . . . ST (PRF_ST) SymRept 5.4: Run Date: 10/15,2009 - 1435 . . , . • . . • Report Ver. 5.0( . . . . . . .. i . . . . t . . . . ' • , ,,:,.0 - , . . • . ..1..it1' . . . . . . , City of Yakima ■=1' V.,_i.j i ' . °It '' . City of Yakima' Portfolio . 129 North Second Street Investments by Issuer - ; . Yakima, WA 98901 ... \ 1 1 0 0 , ....•-,.-= : ',; Active Investments . (509)576-8639 . Sorted by Fund . . . . . . September 30, 2009 . . . . ' Investment Current - . . 'Market YTM Redemption Days To Call . . CUSIP Investment # Security Type , , Class ,* - Book Value Rate Market Value Date , 365 Date Maturity Date Collateral Federal Farm Credit Bank ' . . , • • . . . 31331GDF3 1 337 Federal Agency Coupon - Callable Fair . ' 1,000,000.00 4,250 1,030,940.00 09/30/2009 4.250 10/15/2009 14 10/15/2009 31331GWS4 1350 Federal Agency Coupon - Callable Fair 2,000,000.00 1.590 2,000,620.00 09/30/2009 1.590 11/28/2011 788 Subtotal and Average 3,000,000.00 3,031,560.00 2.477 2 530 . .' . , Federal Home Loan Bank . 3133XSGS1 1339 Federal Agency Coupon - Callable Fair 1,000,000.00 3.750 1,002,196.00 09/30/2009 3.750 10/27/2011 756 10/27/2009 3133XPRE6 1318 . Federal Agency Coupon - Callable . Fair 1,000,000.00 3.100 . 1,023,130.00 09/30/2009 3.100 08/25/2010 328 3133XSBV9 1334 Federal Agency Coupon - Callable Fair 1,000,000.00 4.300 1,000,630.00 09/30/2009 4.300 10/07/2009 6 10/07/2009 3133XSC89 "1335 Federal Agency Coupon - Callable Fair 2,000,000.00 3.375 ' 2,000,620.00 09/30/2009 3.375 10/06/2009 5 10/06/2009 • 3133X5N95 1342 Federal Agency Coupon - Callable Fair 1,000,000.00 3.150 , 1,029,690.00 09/30/2009 3.150 11/23/2011' . 783 05/23/2010 . . Subtotal and Average 6,000,000.00 6,056,260.00 3.508 313 Federal Home Loan Mortgage Co. 3128X8WY4 1346 Federal Agency Coupon - Callable Fair 1,000,000.00 3.050 1,001,550.00 09/30/2009 3.050 10/22/2009 21 10/22/2009 3128X8XP2 1347 Federal Agency Coupon - Callable Fair 2,000,000.00 2.100 2,002,220.00 09/30/2009 2.100 07/27/2012 1,030 10/27/2009 ' 3128X8YT3 1348 Federal Agency Coupon - Callable Fair 1,000,000.00 3.000 ' 1,002,200.00 09/30/2009 3.000 10/30/2009 29 10/30/2009' . Subtotal and Average 4,000,000.00 4,005,970.00 2.563 527 ' Federal Nat'l Mtg. . . • Assoc. ‚ 3136FHQU2 1349 Federal Agency Coupon -Callable Fair 2,000,000.00 1.750 2,003,760.00 09/30/2009 1.750 11/18/2011 778 . 3136FHG41 1352 Federal Agency Coupon - Callable Fair 1,000,000.00 3.050 1,000,000.00 09/30/2009 3.050 10/02/2009 1 10/02/2009 3136FHK46 1353 Federal Agency Coupon - Callable Fair 1,000,000.00 4.150 1,000,000.00 09/30/2009 4.150 10/08/2009 7 10/08/2009 3136FHQ24 1354 Federal Agency Coupon - Callable Fair 1,000,000.00 3.000 1,007,500.00 09/30/2009 3.000 07/08/2013 1,376 10/08/2009 Subtotal and Average 5,000,000.00 5,011,260.00 2.740 588 . . . UTGO's 378892PY 1282 Municipal Bonds , Fair 499,745.49 4.700 502,470.00 03/31/2009 5.032 12/01/2009 61 Subtotal'and Average 499,745.49 502,470.00 5.032 61 State of Washington L.G.I.P. SYS1050 1050 Local Government nt Pool Amort 39,765,372.08 0.420 39,765,372.08 09/30/2009 0.420 1 Portfolio BOND AP . .;- Run Date: 10/1' 7:24 1 . .F_DI) SyrnRept 6 42 Report Ver. 5.00 , * . ' . City o' ia.Portfolio Invet by Issuer Sorted by Fund Page 2 Investment Current Market VTM Redemption Cali CUSIP Investment # Security Type Class Book Value Rate Market Value Date 365 Date Date Collateral Subtotal and Average 39,765,372.08 39,765,372.08 0.420. 1 Total and Average 58,265,117.57 58,372,892.08 1.230 147 i • • • • • I i Portfolio BOND AP Run Date: 10/15/2009 - 14:24 DI (PRF_Di} SymRept 6.42 Report Ver. 5.00 City of Yakima . -14/1 City of Yakima Portfolio 129 North Second Street 11114 Activity Report Yakima, WA 98901 'X•tkA.:•''''' ...i.+.4';•". (509)576-6639 Sorted By Issuer ----:---.,---..-?:•- July 1, 2009 - September 30, 2009 . . Par Value Par Value Percent ' - Beginning Current Transaction Purchases or Redemptions or Ending CUSIP investment # issuer Of Portfolio . Balance Rate Date Deposits Withdrawals Balance Issuer: Federal Farm Credit Bank Federal Agency Coupon - Callable Subtotal and Balance 3,000,000.00 3,000,000.00 Issuer Subtotal 5.149% ' 3,000,000.00 . 0.00 . 0.00 3,000,000.00 • . Issuer: Federal Home Loan Bank Federal Agency Coupon - Callable i * ' 3133XPW75 1319 Federal Home Loan Bank , 3.000 08/25/2009 0.00 • 250,000.00 3133XTH41 1344 Federal Home Loan Bank 2.250 09/23/2009 0.00 ' 2,000,000.00 Subtotal and Balance 8,250,000.00 0.00 , 2,250,000.00 6,000,000.00 ' Issuer Subtotal 10198% 8,250,000.00 0.00 - - 2,250 000.00 6,000,000.00 • Issuer: Federal Home Loan Mortgage Co. , . . , .... Federal Agency Coupon - Callable , . , . Subtotal and Balance 4,000,000.00 , 4,000,000.00 ,. . Issuer Subtotal 6.865% ' 4,000,000.00 ' 0.00 , 0.00 4,000,000.00 Issuer: Federal Nat'l Mtg. Assoc. • ' . . Federal Agency Coupon - Callable . . . 31398ASQ6 1340 Federal Nati Mtg, Assoc: , 4:000 07/07/2009' 0.00 1,000,000.00 3136FHJ97 1351 ,Federal Nat'l Mtg. Assoc. ' 2.250 09/29/2009 . 0.00 1,000,000.00 3136FHG41 1352 Federal Nat'I Mtg. Assoc. ' 3.050 07/02/2009 1,000,000.00 0.00 3136FHK46 1353 Federal Narl Mtg. Assoc. ' 4.150 07/08/2009 1,000,000.00 . 0.00 3136FHQ24 1354 Federal Nat'I Mtg. Assoc. : 3.000 07/08/2009 1,000,000.00 0.00 , . Subtotal and Balance . . 4,000,000.00 . 3,000,000.00 2,00.0,000.00 5,000,000.00 . a , . Issuer Subtotal 8.581% 4,000,000.00 . 3,000,000.00 2,005,000.00 5,000,000.00 • ' ' . . Portfolio BOND , . . AP 'F_DA) SymRept 6.42 Run Date: 115' 18:59 ' ' . t Report Ver 5 DO t City r 'na Portfolio • Report Page 2 July 1, 200t - oeptember 30, 2009 Par Value Par Value Percent Beginning Current Transaction Purchases or Redemptions or Ending CUSIP Investment # Issuer of Portfollo Balance Rate Date Deposits Withdrawals Balance - Issuer: UTGO's Municipal Bonds Subtotal and Balance 500,000.00 500,000.00 Issuer Subtotal 0.858% 500,000.00 0.00 0.00 500,000.00 Issuer: State of Washington L.G.I.P. Local Government Investment Pool SYS1050 1050 State of Washington L.G.LP 0.420 17,255,760,02 5,029,867.73 Subtotal and Balance 27,539,479.79 17,255,760.02 5,029,867.73 39,765,372.08 Issuer Subtotal 68.249% 27,539,479.79 17,255,760.02 5,029,867.73 39,765,372.08 Total 100.000% 47,289,479.79 20,255,760.02 9,279,867.73 58,265,372.08 • • Portfolio BOND AP Run Dale: 11/03/2099 - 16:59 DA (PRF DA)'SymRepl 6.42 Report Ver. 5.00 CITY OF YAKIMA BANK CASH BALANCE REPORT September 30th, 2009 BANK BALANCE OUTSTANDING WARRANTS Key Bank 419,361.88 0.00 Bank of New York (Fiscal Agent)(1) 0.00 0.00 U.S. Bank (Housing loan repayments) 579,763.37 0.00 Bank of America (Housing Rehab) 63,668.33 0.00 Yakima Federal Savings and Loan Association (Housing) 163,718.47 0.00 Bank of America (Claims Control) 1,207,178.47 (1,207,178.47) U. S. Bank (Payroll Control) 9,208.18 (9,208.18) Inmate Trust - Key Bank 10,093.42 0.00 Inmate Welfare - Key Bank 11,881.90 r. .10 Municipal Court - Key Bank 157,141.35 Petty Cash (2) 3,475.00 0.00 Police - Special Investigations(2) 7,500.00 0.00 Change Funds (3) 3,780.00 - 0.00 Travel Advance 4,800.00 0.00 Total Cash On Hand and In Bank Accounts 6130109 $2,641,570.37 ($1,216,386.65) 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 R2008-32 3 Change for customers established by Resolution R2008-32 qtr cash bal/tab • • • • • . • • • • CITY OF YAKIMA SCHEDULE OF GENERAL OBLIGATION • . • AND REVENUE BOND ACTIVITY For the Period 07/01/2009 through 09/30/2009 PREVIOUS AMOUNT AMOUNT ENDING FUND DESCRIPTION BALANCE REDEEMED ISSUED BALANCE GENERAL OBLIGATION BONDS 272 PFD CONVENTION CENTER - unrefunded $675,000 $0 $0 $675,000 272 PFD CONVENTION CENTER - refunded . 4,890,000 0 0 4,890,000 272 PFDCAPITOL 11-1EATRE 0 . .0 7,035,000 7,035,000 281 PARKS AND RECREATION 560,000 0 0 560,000 281 FIRE/DOWNTOWN/RIVER ROAD 3,545,000 0 0 3,545,000 281 2008 LTGO INFRASTRUCTURE/FIRE TRUCK 2,895,000 0 0 2,895,000 283 LAW & JUSTICE/I-82 Refunded 2,360,000 ' 0 0 2,360,000 284 FIRE - refunded 1,5;15,000 0 • 0 1,545,000 287 CONVENTION CENTER - refunded 3,720,000 0 0 3,720,000 • 281 SUNDOMIE EXPANSION 1,298,052 . 0 0 1,298,052 SUB-TOTAL 21,488,052 0 7,035,000 - 28,523,052 ••• • REVENUE BONDS 484 WATER/WASTEWATER - refunded 1,510,000 0 0 1,510,000 486 WATER - refunded 1,875,000 0 0. 1,875,000 488 WASTEWATER 5,365,000 0 0 5,365,000 491 IRRIGATION 4,805,000 110,000 0 4,695,000 493 WASTEWATER 14,170,000 0 0 14,170,000 SUB-TOTAL 27,725,000 110,000 0 27,615,000 GRAND TOTAL $49,213,052 $110,000 $7,035,000 $56,138,052 • • • erp 11/5/2009 2:56 PM LID CASH BALANCES LID BONDS AND NOTES PAYABLE As Of Quarter Ending September 30, 2009 As Of Quarter Ending September 30, 2(109 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 1055. -2,203.12 182,759!24 4,500.00 0.00 0.00 4,500.00 Equipment Rental 1056 - 30,724.77 2t8 ,481J02 125,400.00 0.00 0.00 125,400.00 Equipment Rental 1057 20,731.44 179,550:01 100,000.00 0.00 0.00 100,000.00 Equipment Rental 1058 32,552.37 160,868.'69 104,700.00 0.00 0.00 104,700.00 Equipment Rental Totals $81,805.46 $784,410.,91 $334,600.00 $0.00 $0.00 $334,600.00 ERP 11/,` 7:04 PM erp-22 I -289-345-rpt2009.xls Page, City of Yakima • LID WARRANTS PAYABLE' AS OF QUARTER EN SEPTEMBER 30, 2009 Balance Amount Amount Account Number Previous Quarter Issued Redeemed Balance 21101.059 $5,408.56 $0.00 $0.00 $5,408.56 Englewood Terrace 21101.060 • $229,283.80 $4,924.50 $234,208.30 85th and Kale 21101.061 $459,179.69 $19,193.74 $478,373.43 Simpson Lane Total Warrants Payable $693,872.05 $24,118.24 $0.00 • $717,990.29 (1) Costs to LID in progress for which final assessment has not been confirmed. E R P T 1/5/2009 2:10 PM erp-221-289-345-rpt2009 xls Page 1 of 1 City of Yakima LID BONDS / NOTES PAYABLE vs. LID GUARANTY FUND AS OF QUARTER ENDING SEPTEMBER 30, 2009 Outstanding Bonds and Notes Payable $334,600.00 10% of Outstanding Balance $33,460.00 Guaranty Fund-221 $79,802.87 10% of Outstanding LID's Bonds and Notes Payable ($33,460.00) Amount above (below) statutory minimum $46,342.87 ERP 11/5/2009 2:05 PM erp-221-289-345-rpt2009.xls Page 1 of 1