HomeMy WebLinkAboutFin Investment Report 2009-12CITY OF
Item No:
Meeting Date: February 1, 2010
SAN RAFAEL CITY COUNCIL AGENDA REPORT
Department: FINANCE 1
CSB*^
Prepared by: Cindy Mosser, City Manager Approval:
Finance Director
SUBJECT: INVESTMENT REPORT FOR DECEMBER 2009
RECOMMENDATION: ACCEPT INVESTMENT REPORT FOR THE MONTH ENDING
DECEMBER 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 December report contains information
our West America checking account, which
reports provide a fair amount of detail. I am
might find most useful and informative.
ANALYSIS:
regarding the MBIA managed operating funds, excluding
had a balance of $2,997,861 at month end. The MBIA
highlighting those pages that the community and Council
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 met in December
and continued to maintain its fed fund target range between 0.00 and 0.25 percent. The
direction of monetary policy in 2010 is a hotly debated topic and non-traditional monetary
policies are likely to be part of the picture along with typical fed funds rate adjustments. It
remains a uniquely challenging environment.
FOR CITY CLERK ONLY
File 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, seventy-nine percent of our operating cash funds are held to mature in less than
one year (December 2010). Seventy 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.
d• 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
December's property tax levy) and expenses are incurred (weekly vendor payments and semi-
monthly payroll). In December, the City received $7.3 million in property tax revenues.
❖ 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 December ended with a balance of $11,007,788. Portfolio returns on LAIF
dollars should be about 0.55 percent for December 2009. The percentage of investments held one
year or less is 78.8 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
W:\Management Services- WorkFile\Finance- WorkFile\Council Material\Staff Reports\2010\City\cityinvrpt122009.doc
SAN RAFAEL CITY COUNCIL AGENDA REPORT / PaEe: 3
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.
QS
CINDY MOSSER
TREASURER
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