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Home My WebLink About2009/06/09 Item 5 CITY COUNCIL AGENDA STATEMENT ~\{t.- CITY OF ~ - (HULA VISTA JUNE 9, 2009, Item~ ITEM TITLE: TIfYESTMENT REPORT FOR THE QUARTER ENDED MARCH 31, 2009 DIRECTOROFFmf!C /TREASVRER~ CITY MANAGER ASSISTAl"JT CITY' ANAGER <7 '/ SUBi\UTTED BY: REVIEWED BY: 4/5THS VOTE: YES D NO ~ SUlVIMARY Transmitted herewith is the City's investment report for the quarter ended March 3 1,2009. To meet the reporting requirements set forth in the California Government Code Sections 53600 el seq. and the City of Chula Vista Investment Policy, a separate report was distributed to the City Council as an informational item. ENVIRONMENTAL REVIEW The Environmental Review Coordinator has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a "Project" as defined under Section 15378 (b)(4) of the State CEQA Guidelines; therefore, pursuant to Section l5060(c)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no environmental review is necessary. RECOMMENDATION Council accept the report. BOARDS/COMMISSION RECOMMENDATION Not applicable. DISCUSSION The total cash and investment portfolio as of March 31, 2009 was $186,001,303. This is a decrease of approximately $2,804,205 from December 31, 2008 to March 31, 2009. For the quarter ended March 31,2009, the earned interest yield was 2.747%, a decrease from the 3.404% reported for the quarter ended December 31, 2008, reflecting reinvestment in a lower interest rate environment and of maturing securities purchased in periods of higher interest rates. The weighted average maturity as of March 31, 2009 was 2.11 years which was the same as last 5-1 JUNE 9, 2009, Ite~ Page 2 of2 quarter. The weighted average maturity remains sufficiently liquid to enable the City to meet all operating requirements which might be reasonably anticipated. DECISION iVIAKER CONFLICT Staff has determined that the action contemplated by this item is ministerial, secretarial, manual, or clerical in nature and, as such, does not require the City Council members to make or participate in making a governmental decision, pursuant to California Code of Regulations section I 8702.4(a). Consequently, this item does not present a conflict under the Political Reform Act (California Government Code S 87100, et seq.). FISCAL IMPACT , Considering the projected timing of cash receipts and disbursements, including the proceeds from the Tax and Revenue Anticipation Note borrowing and the structure of the Pooled Investment Portfolio, the City should be able to comfortably meet overall cash flow needs over the next six months. There is no direct fiscal impact by this action. A TT ACHMENTS A. Investment Report for the Quarter Ended March 31, 2009 Prepared by: N. Mandery. Treasury Manager. Finance Dept. 5-2 ~~~ ~ ~~~..:E CITY OF CHULA VISTA Finance Department Investment Report for the Quarter Ended March 31, 2009 June 9, 2009 Honorable Mayor and City Council I am pleased to present this report of investment activity for the quarter ended March 31, 2009 in compliance with the reporting requirements as set forth in the California Government Code Sections 53600 et seq. and the City of Chula Vista Investment Policy. The information presented in this report highlights the investment activity for the quarter ended as well as provides a comparison to the quarters ended June 30, 2008 and March 31, 2008. Market Overview The Federal Open Market Committee (FOMC) maintained the key Fed Funds rate at a target range of 0.00% to 0.25% which is the lowest rate on record. It is expected that weak economic conditions will keep this rate low for some time. Weak holiday sales, falling home prices, and increasingly high unemployment rates are all contributing factors. Two-year Treasuries yielding 0.76% at the beginning of the quarter climbed slightly to 0.80% at the end of the quarter as the markets move toward a slow recovery. The Federal Reserve and the U.S. Treasury have instituted various programs to help stabilize the financial industry such as increasing the FDIC insurance on bank deposits and guaranteeing the timely payment of principal and interest on certain corporate bonds issued under their Treasury Liquidity Guarantee Program (TLGP). The affects of these programs are just starting to be felt as there are indications that the economy is beginning to stabilize at very low levels. Portfolio Composition The table below provides a summary of the City's total investment portfolio as of March 31,2009. The Investment Portfolio ($179,281,781) CashlTime Deposits ($6,719,522) and Bank Trustee/Fiduciary Funds ($151,973,881) continue to be invested in accordance with the Government Code, bond covenants and the Council Investment Policy as adopted on February 17, 2009. 5-3 Honorable Mayor and City Council Investment Report Quarter ended 3/31/2009 Page 2 of5 Summary of Cash and Investments as of March 31,2009 %of Investment Type Par Value Market Value Book Value Portfolio Investment Portfolio Federal Securities 120,000,000 120,443,537 119,975,200 34.81% Pooled Investments 55,281,781 55,445,359 55,281,781 16.04% Camorate Bonds 4,000,000 4,072,200 3,992,960 1.16% Subtotal 179,281,781 179,961,096 179,249,941 50.85% Cash/Time Deposits $6,719,522 $6,719,522 $6,719,522 1,95% Total Cash & Investments Held by the City $186,001,303 $186,680,618 $185,969,463 53.96% Held by Bank Trustee/Fiduciary Funds (1) U. S. Government 56,418,464 66,844,183 56,418,464 16.37% Investment Agreements 25,868,339 25,868,339 25,868,339 7.51% Mutual Funds 55,645,569 55,645,569 55,645,569 16.14% Cash with Fiscal Agents 0 0 0 0.00% Restricted Cash 14,041,510 14,041,510' 14,041,510 4.07% Total Held by Bank Trustee/Fiduciary Funds $151,973,881 $162,399,600 $151,973,881 44.09% Total Portfolio $344,694,706 $355,799,740 $344,662,866 100.00% (1) Reflects bond proceeds held by trustee in accordance with bond covenants. The graph below provides a snapshot of the portfolio composition by investment type for that portion of the portfolio not held by the bank trustee or in a fiduciary fund, Portfolio Composition as of March 31,2009 US Government Agency 66.93% Corporate Coupon Bonds 2.23% ~ LAlF (State Pool) 30.28% Portfolio Performance Portfolio performance is provided in more detail in the attachments to the report. The summary information provided below includes the total portfolio income recognized for the last quarter as compared to the prior quarter and the same quarter one year ago. 5-4 Honorable Mayor and City Council Investment Report Quarter ended 3/31/2009 Page 3 of 5 Total Portfolio Income Recognized Accrual Basis Total Portfolio March 31, 2009 December 31, 2008 March 31, 2008 Quarter-End Net Interest Earnings Net Gains (Losses) from Sales Net Total Income Recognized $ 1,361,958 $ 1,637,055 $ 2,137,009 $ 24,938 $ $ (77,130) $ 1,386,896 $ 1,637,055 $ 2,059,879 $ 4,839,146 $ 3,477,188 $ 6,676,247 . $ 24,938 $ $ 246,723 $ 4,864,084 $ 3,477,188 $ 6,922,970 Fiscal Year-ta-Date Net Interest Earnings Net Gains (Losses) from Sales Net Total Income Recognized This info comes from the monthly Sympro "Interest Earnings Summary" reports. Benchmark Comoarison The following graph compares the monthly earned interest yield of the City's Portfolio Fund with the monthly average yields for the same period of the State of California Local Agency Investment Fund (LAIF) and the two-year and three-year treasury from March 2007 through March 2009. Monthly Benchmark Comparison 5.0% 4.0% 3.0% 2.0% 1.0% Mar-07 Jun-07 Sep-07 Dee-07 Mar-OB Jun-08 Sep-08 I-+-City ---m--LAIF --'-ZyrTreasury -....a-3yrTreasury I b-b Dee-08 Mar-09 Honorable Mayor and City Council Investment Report Quarter ended 3/31/2009 Page 4 of 5 Per Section 16.1 of the City's Investment Policy, the two-year U.S. Treasury and the Local Agency Investment Fund yields are the performance benchmarks to be used when determining whether market yields are being achieved. The three-year U.S. Treasury is added as an additional point of reference in order to provide an upper range that is above the weighted average maturity of the City's portfolio, which is at 770 days. ;~lL4il%~~~:~f/lf~%'~~;~~,P,i~;1~~Yrera'i~~~i?;3~;f!AD M;;~ City 2.75% 770 LAIF 1 .82% 197 2 Year Treasury 0.80% 730 3 Year Treasury 1 .1 5% 1 ,095 ADM - Averaqe Davs to Maturitv Investment Activitv During the quarter, sixteen investments totaling $57,000,000 maturedlexpired or were redeemed. These monies represent pooled cash received from various funding sources such as sewer, RDA, TDIF, PAD, General Fund, etc. The majority of these funds were reinvested through the purchase of seventeen Federal Agency Securities and one Temporary Liquidity Guarantee Program (TLGP) Corporate bond totaling $62,000,000 using the City's Investment Policy guideline to ensure safety, liquidity and yield. Although staff has been reluctant to purchase corporate bonds due to the uncertainties of the market, the purchase of this corporate bond is through the TLGP, which is a federally guaranteed program that offers the safety of a treasury note but with a higher yield. This type of investment also allows for more diversification within the portfolio. There is no further activity to report on other than routine investments in money market mutual funds by the City's fiscal-agents. Conclusion The total cash and investment portfolio as of March 31, 2009 was $186,001,303. This is a decrease of approximately $2,804,205 from December 31,2008 to March 31,2009. For the quarter ended March 31, 2009, the earned interest yield was 2.747%, a decrease from the 3.404% reported for the quarter ended December 31, 2008, reflecting reinvestment in a lower interest rate environment and of maturing securities purchased in periods of higher interest rates. The weighted average maturity as of March 31, 2009 was 2.11 years which was the same as the prior quarter. The weighted average maturity remains sufficiently liquid to enable the City to meet all operating requirements that might be reasonably anticipated. . . Considering the projected timing of cash receipts and disbursements, including the proceeds from the Tax and Revenue Anticipation Note borrowing and the structure of the Pooled Investment Portfolio, the City should be able to comfortably meet overall cash flow needs over the next six months. There is no direct fiscal impact by this action. 5-6 Honorable Mayor and City Council Investment Report Quarter ended 3/31/2009 Page 5 of 5 I certify that this report reflects the City of Chula Vista and related agencies pooled investments and is in conformity with the State of California Government Code on authorized investments and with the Investment Policy of the City of Chula Vista as stated in Resolution No. 2008-54 dated February 17, 2009. Respectfully submitted, JnCLc- ~~ Maria Kachadoorian Director of FinancefTreasurer 5-7