HomeMy WebLinkAboutFin Investment Report 2010-01CITY OF
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Agenda Item No: 5
Meeting Date: February 16, 2010
SAN RAFAEL CITY COUNCIL AGENDA REPORT
Department: FINANCE
C&N�
Prepared by: Cindy Mosser,
Finance Director
City Manager Approval:
SUBJECT: INVESTMENT REPORT FOR JANUARY 2010
RECOMMENDATION: ACCEPT INVESTMENT REPORT FOR THE MONTH ENDING
JANUARY 2010, 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 January report contains information regarding the MBIA managed operating funds, excluding our
West America checking account, which had a balance of $2,778,764 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 Open Market Committee
(FOMC) met in January and, as expected, kept the fed funds target rate between 0.00 and 0.25
percent. The FOMC reaffirmed that the rate will remain at this level for an "extended period"
and noted that it will allow some of the liquidity policies set up in the past two years to expire as
scheduled. This includes the Fed's policy of buying of massive amounts of mortgage-backed
FOR CITY CLERK ONLY
File No.:
Council Meeting:
Disposition:
SAN RAPAEL CITY COUNCIL AGENDA REPORT / Paee: 2
securities. U.S. Government Agencies remained largely under the radar as Congress has been
focusing on the private banking industry and Wall Street.
❖ 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-five percent of our operating cash funds are held to mature in less than
one year (January 2011). Eighty percent of the total invested cash matures within 90 days
(again, the LAIF pool accounting for most of these dollars).
❖ Individual security information is presented on the "Securities Held" (pages 8 through 9 ).
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 January ended with a balance of $14,722,914. Portfolio returns on LAIF dollars
should be about 0.56 percent for January 2010. The percentage of investments held one year or less
is 85.2 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- WorkFile\Finance- WorkFile\Council Material\Staff Reports\2010\City\cityinvrpt12010.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. THE CITY HAS
SUFFICIENT LIQUIDITY TO MEET ALL OF THE OBLIGATIONS REQUIRED DURING THE NEXT
SIX-MONTH PERIOD.
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CINDY MOSSER
TREASURER
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