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Home My WebLink About2009/08/11 Item 8 CITY COUNCIL AGENDA STATEMENT < -<j,~-~, ~\'f:.. CITY OF ~CHULA VISTA AUGUST 11, 2009, 1tem~ SUBMITTED BY: REVIEWED BY: INVESTMENT REPORT FOR THE QUARTER ENDED JUNE 30, 2009 DIRECTOR OF FIN/f'E/TREASURER ~ CITY MANAGER ASSISTANT CITY ANAGER <7Y ITEM TITLE: 4/STHS VOTE: YES D NO ~ SUMMARY Transmitted herewith is the City's investment report for the quarter ended June 30, 2009. To meet the reporting requirements set forth in the California Government Code Sections 53600 et 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 15060Cc)(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 June 30, 2009 was $186,109,137. This is an increase of approximately $107,834 from March 31, 2009 to June 30, 2009. For the quarter ended June 30, 2009, the earned interest yield was 2.286%, a decrease from the 2.747% reported for the quarter ended March 31, 2009, 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 June 30, 2009 was 2.22 years which was a slight increase from 8-1 .J.~."",,"'''_''''''!::''''''-''ii':~ AUGUST 11, 2009, Item~ Page 2 of2 2.11 years for the prior quarter. The weighted average maturity remains sufficiently liquid to enable the City to meet all operating requirements which might be reasonably anticipated. DECISION MAKER 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 g 87100, et seq.). CURRENT FISCAL IMPACT Considering the projected tirning of cash receipts and disbursements 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. ONGOING FISCAL IMPACT There is no ongoing fiscal impact by this action. ATTACHMENTS A Investment Report for the Quarter Ended June 30, 2009 Prepared by: N Mandery, Treasury Manager, Finance Dept. 8-2 ~v?- -..- "-- ---- ...o::::~--~ ~-:o...- - CITY OF CHULA VISTA Finance Department Investment Report for the Quarter Ended June 30, 2009 August 11, 2009 Honorable Mayor and City Council, I am pleased to present this report of investment activity for the quarter ended June 30, 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 March 31,2009 and June 30,2008. Market Overview The Federal Open Market Committee (FOMC) continued to maintain the key Fed Funds rate at a target range of 0.00% to 0.25% in an effort to stimulate the economy. Two-year Treasuries yielding 0.80% at the beginning of the quarter climbed slightly to 1.11 % at the end of the quarter as the markets move toward a slow recovery. Although consumer spending, housing and manufacturing indicators are stabilizing, and positive growth is forecast for next quarter, many indicators remain at very low levels. It remains likely that the economic recovery will be weak and the unemployment rate is likely to continue to rise. The Federal Reserve and the U.S. Treasury are continuing to find ways to help stabilize the financial industry. In addition to increasing the FDIC insurance on bank deposits and implementing the Treasury Liquidity Guarantee Program (TLGP), a new program called Build America Bonds has been introduced. The program is designed to help local agencies raise funds for new construction projects by issuing taxable bonds. This program was initially designed to expire at the end of 2010, but due to strong demand, it may be extended. Portfolio Composition The table below provides a summary of the City's total investment portfolio as of June 30, 2009. The Investment Portfolio ($175,193,617) Cashmme Deposits ($10,915,520) and Bank Trustee/Fiduciary Funds ($157,157,243) continue to be invested in accordance with the Government Code, bond covenants and the Council Investment Policy as adopted on February 17,2009. 8-3 Honorable Mayor and City Council Investment Report Quarter ended 6/30/2009 Page 2 of4 Summary of Cash and Investments as of June 30, 2009 %of Investment Type Par Value Market Value Book Value Portfolio Investment Portfolio Federal Securities 112,000,000 112,206,893 111,998,125 31.62% Pooled Investments 59,193,617 59,300,071 59,193,617 16.71% Corporate Bonds 4,000,000 4,073,540 3,992,960 1.13% Subtotal 175,193,617 175,580,503 175,184,702 48.34% CashfTime Deposits $10,915,520 $10,915,520 $10,915,520 3.08% Total Cash & Investments Held by the City $186,109,137 $186,496,023 $186,100,222 52.55% Held by Bank Trustee/Fiduciary Funds (1) U. S. Government 56,418,464 66,834,948 56,418,464 15.93% Investment Agreements 25,923,019 25,923,019 25,923,019 7.32% Mutual Funds 61,003,967 61,003,967 61,003,967 17.22% Cash with Fiscal Agents 0 0 0 0.00% Restricted Cash 13,811,792 13,811,792 13,811,792 3.90% Total Held by Bank Trustee/Fiduciary Funds $157,157,243 $167,573,726 $157,157,243 44.37% Total Portfolio $354,181,900 $364,985,269 $354,172,985 100.00% (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 June 30, 2009 US Government Agency 63.93% Corporate Coupon Bonds 2.28% 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. 8~4 Honorable Mayor and City Council Investment Report Quarter ended 6/30/2009 Page 3 of 4 Total Portfolio Income Recognized Accrual Basis Total Portfolio Quarter-End Net Interest Earnings Net Gains (Losses) from Sales Net Total Income Recognized Fiscal Year-to-Date Net Interest Earnings Net Gains (Losses) from Sales Net Total Income Recognized June 30, 2009 -- March 31, 2009 June 30, 2008 $1,201,806 $1,361,958 $2,042,816 $ 24,800 $ 24,938 $ (56,630) $1,226,606 $1,386,896 $1,986,186 $6,044,232 $ 4,839,146 $8,657,954 $ 49,738 $ 24,938 $ 190,093 $6,093,970 $ 4,864,084 $8,848,047 Source: 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 Lo'cal Agency Investment Fund (LAIF) and the two-year and three-year treasury from June 2007 through June 2009. Monthly Benchmark Comparison 6.0% 10% 5.0% 4.0% 3.0% 2.0% . 0.0% Jun-07 Sap-O? Dee-O? Mar-DB Jun-08 Sep-OB Dee-08 I~City ---liJ-LA1F -A-2yrTreasury --i!3-3yrTreasury I Mar-09 Jun-09 8-5 Honorable Mayor and City Council Investment Report Quarter ended 6/30/2009 Page 4 of 4 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 f~~i~t~ll}%~;~~t,~~~4B~;;Yi8la~;:1~~1tf\t-ADM'~ benchmarks to be used when determining whether City 809 market yields are being achieved. The three-year U.S. LAIF 235 Treasury is added as an additional point of reference in 2 Year Treasury 730 order to provide an upper range that is above the 3 Year Treasu weighted average maturity of the City's portfolio, which is ADM = Avera at 809 days. Investment Activitv During the quarter, fifteen investments totaling $51,000,000 matured/expired or were redeemed. These monies represent pooled cash received from various funding sources such. as sewer, RDA, TOIF, PAD, General Fund, etc. The majority of these funds were reinvested through the purchase of thirteen Federal Agency Securities totaling $43,000,000 using the City's Investment Policy guideline to ensure safety, liquidity and yield. 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 June 30, 2009 was $186,109,137. This is an increase of approximately $107,834 from March 31, 2009 to June 30, 2009. For the quarter ended June 30, 2009, the earned interest yield was 2.286%, a decrease from the 2.747% reported for the quarter ended March 31, 2009, 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 June 30, 2009 was 2.22 years as compared to 2.11 years for 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 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. I certify that this report reflects the City of Chula Vista and related agencies pooled investments and is in conformity with the State of Califomia Government Code on authorized investments and with the Investment Policy of the City of Chula Vista as stated in Resolution No. 2009-33 dated February 17, 2009. Respectfully submitted, 4r1~ ~'-'- Maria Kachadoorian Director of FinancelTreasurer 8-6