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HomeMy WebLinkAboutFin Investment Report 2009-10CITY OF wr+� Agenda Item No: 6 Meeting Date: November 16, 2009 SAN RAFAEL CITY COUNCIL AGENDA REPORT Department: FINANCE Prepared by: Cindy Mosseros , City Manager Approval: Finance Director SUBJECT: INVESTMENT REPORT FOR OCTOBER 2009 RECOMMENDATION: ACCEPT INVESTMENT REPORT FOR THE MONTH ENDING OCTOBER 2009, AS PRESENTED BACKGROUND: Pursuant to the State of California Government Code Section 53601, staff is required to provide the governing body a report regarding the City's investment activities. Each month the Finance Department prepares a report outlining the major investments for the preceding month. Included on the report are the cost of each instrument, the interest rates (yield), maturity dates, and market value. Separate schedules are prepared for both the City and Redevelopment Agency. Beginning in January 2005, the City established a contract with MBIA to administer cash management services to a portion of our portfolio. Services provided by MBIA include updating our investment policy annually, cash flow administration, and procurement of various instruments using MBIA's market expertise (aligned with our needs). In addition, MBIA prepares a comprehensive monthly investment report that meets not only required reporting information required by State law, but can be used as an asset management tool. The October report contains information regarding the MBIA managed operating funds, excluding our West America checking account, which had a balance of $3,080,697 at month end. The MBIA reports provide a fair amount of detail. I am highlighting those pages that the community and Council might find most useful and informative. ANALYSIS: I will summarize elements of the key pages contained as an attachment with this report. ❖ Page 2 — Review of fixed income securities market — The Federal Reserve continues to maintain its fed fund target range between 0.00 and 0.25 percent. While there are still some signs of reduced pressure on the economy, slow growth remains evident in the remaining quarter of 2009 as the recessionary environment appears to be ebbing and an economic recovery is potentially starting to take hold. FOR CITY CLERK ONLY Fite No.: Council Meeting: Disposition: SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2 ❖ Page 6 — Recap of Securities Held — This page summarizes all of our operating funds. The chart shows a majority of our investments are in U.S. instrumentalities. Most of the City's liquid funds are held in the State of California LAIF pool, which is used as a daily account for withdrawals and deposits. Unrealized gains or losses are recorded only at fiscal year end for accounting purposes. ❖ Page 7 - Reflects Maturity Distribution - Historically, San Rafael has invested conservatively. Approximately, eighty percent of our operating cash funds are held to mature in less than one year (October 2010). Sixty-nine percent of the total invested cash matures within 90 days (again, the LAIF pool accounting for most of these dollars). Approximately three percent of our portfolio has maturities extending beyond two years. ❖ Individual security information is presented on the "Securities Held" (pages 8 through 9l. Specific information is presented to show interest coupon rates, cost and fair values, earned income and projected net yields. Acquiring diversified instruments with varying maturity dates allows the market values to stay close to historical cost. ❖ Purchases (page 11), sales (page 12) and transactions (page 13) are presented on separate pages. This includes LAIF deposits and withdrawals for operating funds. LAIF activity reflects the need to move cash around as large receipts are deposited (monthly sales tax payments) and expenses are incurred (weekly vendor payments and semi-monthly payroll). ❖ The last page provides a Schedule of Upcoming Maturities and Cash Activities. This provides management an opportunity to fill holes in the cash flow cycles and replace maturing instruments as appropriate. Our LAIF balance for September ended with a balance of $9,197,788. Portfolio returns on LAIF dollars should be about 0.75 percent for October 2009. The percentage of investments held one year or less is 79.6 percent at month end. By our own policy, this level of liquidity is adequate to cover our cash flow projections in the coming months. The City is well placed and diversified in the market for the coming months. By continuing our practice of diversifying into various agencies with different maturity dates, the City's portfolio is strengthened against both credit and market risk. FISCAL IMPACT: No financial impact occurs by adopting the report. The City continues to meet the priority principles of investing - safety, liquidity and yield in this respective order. The portfolio remains conservatively invested. Sufficient liquidity exists to meet daily operating and capital project requirements for the next six months. Operating funds, as defined for this report, exclude cash held with fiscal agents for the payment of bond principal and interest. OPTIONS/ACTION REQUIRED: The City Council should adopt the report as presented in order to satisfy current State Investment Code requirements and City policy. ATTACHMENTS WAManagement Services- WorkRe\Finance- WorkFile\Council Material\Staff Reports\2009\City\cityinvrpt92009.doc SAN RAFAEL CITY COUNCIL AGENDA REPORT / Paee: 3 TREASURER'S CERTIFICATION I CERTIFY THAT ALL INVESTMENTS MADE ARE IN CONFORMANCE WITH THE CITY'S APPROVED INVESTMENT POLICY AND STATE INVESTMENT REGULATIONS. 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