HomeMy WebLinkAbout1996-10-24 City Council (6)City of Palo Alto
City Manager’s Report
TO:HONORABLE CITY COUNCIL
FROM:CITY MANAGER DEPARTMENT: ADMINISTRATIVE
SERVICES
DATE:OCTOBER 24, 1996 CMR:444:96
SUBJECT:CITY OF PALO ALTO’S INVESTMENT ACTIVITY REPORT
FOR THE FIRST QUARTER, FISCAL YEAR 1996-97
REQUEST:
The purpose of this report is to inform Council on the status of the City’s investment
portfolio as of the first quarter of the 1996-97 fiscal year.
RECOMMENDATIONS:
This is an informational report and no Council action is required.
POLICY IMPLICATIONS:
This report does not propose any changes to existing City policies.
EXECUTIVE SUMMARY
Current Investment Portfolio as of September 30, 1996
The City’s investment portfolio is detailed in Attachment B. It is grouped by investment type
and includes the category of investment, date of maturity, current market value, as well as
the book and face (par) value, and the weighted average maturity of each type of investment
and of the entire portfolio, as of September 30, 1996.
The face value of the City’s portfolio is $208.1 million, which consists of $113.1 million, or
54 percent, maturing in less than two years. Most of the investments, $198 million, or 95
percent, are in United States governmental securities. The current market value of the
CMR:444:96 Page 1 of 3
portfolio is 99.6 percent of the book value and the average life is 1.98 years. The market
valuation is provided by Union Bank of Califomia, which is the City’s safekeeping agent.
Investments Made During the First Quarter
During the first quarter of the fiscal year, the portfolio grew by $4.7 million. Staff replaced
$8 million in maturing U. S. Government agency notes, having an average yield of 6.17
percent, with $3 million in U. S. Treasury notes, having a yield of 6.67 percent and $7
million in U. S. Government agency notes having yields of around 6.26 percent. In addition,
$5 million was invested in U. S. Government agency notes with a five-year maturity, with
a yield of 6.86 percent. A net reduction of $2.3 million in holdings in short-term money
market funds occurred over the quarter.
Availability_ of Funds for the Next Six Months
The normal flow of revenues from the City’s utility billings, sales and property taxes,
transient occupancy taxes and general user fees is sufficient to provide funds for ongoing
expenditures. Projections indicate receipts will be $104.7 million and expenditures will be
$95.8 million over the next six months, indicating an overall growth of the portfolio of about
$9 million. In addition, securities totaling $33 million will mature between October, 1996
and March, 1997. $10 million is also available in funds which can be withdrawn on a daily
basis from the City’s investments in the Local Agency Investment Funds (LAIF) and Fidelity
money market fund. On the basis of the above projection, there are more than sufficient
funds to meet Palo Alto’s expenditure requirements for the next six months.
Compliance with City_ Investment Policy
During the first quarter of fiscal year 1996-97, staff complied with all aspects of the
investment policy. Attachment C lists the different restrictions in the City’s Investment
Policy compared with the portfolio’s actual compliance.
Investment Yields
Interest income on an accrual basis for the first quarter of 1996-97 was $3.5 million. This
is 29.9 percent of the 1996-97 budget of$11.7 million. The effective rate of return for the
fi~cal year, as of September 30, was 5.98 percent. This compares to LAIF’s yield for the
quarter of 5.53 percent, and the yield on the two-year Treasury note of 6.04 percent.
Yield Trends
During this quarter, the Federal Reserve Open Market Committee (FOMC) made no change
in either the discount rate or the federal funds rate. Following the latest meeting in
September, release of jobs, inventory and wage data indicate that while the economy is
strong, inflationary indicators are not overheating. Bond yields dropped in late September
atter the FOMC meetings (an increase had been anticipated by the bond market) and future
prospects are that rates will remain lower for the foreseeable future.
CMR:444:96 Page 2 of 3
Funds Held by the City or Managed Under Contract
Attachment A is a consolidated report of all City investment funds, including those not held
directly in the investment portfolio. Those include cash in our regular bank account with
Bank of America; bond proceeds, which the City itself manages in a separate investment
account; bond reserves and debt service payments being held by the City’s fiscal agents; and
employee deferred compensation accounts, whose investment is directed by the individual
employee but are technically considered City funds, reserved for the employees. The most
recent data on the funds held by the fiscal agent is as of September 30, 1996, while the
balances in the deferred compensation accounts are as of June 30, 1996.
FISCAL IMPACT:
This is an informational report with no fiscal impact resulting.
ENVIRONMENTAL ASSESSMENT:
There is no environmental assessment required for this report.
ATTACHMENTS:
A)Consolidated Report of Cash and Investments
B)Investment Portfolio, as of September 30, 1996
C)Investment Policy Compliance
PREPARED BY: Linda Craig, Senior Financial Analyst
DEPARTMENT HEAD APPROVAL:
CITY MANAGER APPROVAL:
M’eli~sa Cavallo
Acting Director,
Administrative S~
Manager
CC:N/A
CMR:444:96 Page 3 of 3
Attachment A
Consolidated Report
City of Palo Alto Cash and Investments
First Quarter, Fiscal Year 1996-97
Book Value Market Value
City. Investment Portfolio (see Attachment B)$209,248.727 $ 208.298.131
Other Funds Held by the City.
Cash with Bank of America
1995 Utility Revenue Bond Proceeds
Fidelity Fund - Treasury Class I
Total
$4,326,593
$ 7.079.769
$11.406,362
4,326,593
7,079.769
11.406,362
Funds Under Management of Contracted Parties
Fiscal Agent Debt Service Payments and Reserves
First Trust California
Golf Course Corporation Lease/Reserve Fund $162,832
Palo Alto Public Improvement Corporation
Lease/Reserve Fund $ 770,263
Total $ 933,095
Employee Deferred Compensation Acccounts
(June 30, 1996)
Great Western Bank
ICMA Retirement Corporation
ITT Hartford
Total
$ 814,391
$13,571,195
$25,719,800
$40,105.386
$ 162,832
770,263
$ 933,095
$ 814,391
13,571,195
25,719,800
$ 40,105,,3,8,6
TOTAL $261,693,570 $ 260.742,974
City of Paio Alto FI -1
INVESTMENTS BY TYPE -CPA
ACCRUAL
SEPTEMBER 30,1996
![.ArjSTMENT PUR~rLASE STATED ...._VT~: ....MATURITY DAYS
[CuTM~ER ISSUER DATE BOOK VALUE, FACE VALUE MARKET VALUE- RATE 360 365 DATE TO MAT
[-L~:AGED POOL ACCOUNTS
15~Fidelity Investments
159 Local Agency Invest. Fund
SUBTOTALS and AVERAGES
994,607.08 994,607.08 994,607.08 5.170 5.099 5.170
9,100,000.00 9,100,000.00 9,100,000.00 5.582 5.506 5.582
I0,094,607.08 10,094,607.08 10,094,607.08 5.465 5.541
1
FEDERAL AGENCY- ISSUES - COUPON
193 Federal Fa-~ Credit Bank 05/03/96 1,997,160.89 2,000,000.00
136 Federa! Home Loan Bank 05/24/94 2,501,539.18 2,500,000.00
127 Federal Home Loan Bank 10/25/94 3,000,000.00 3,000,000.00
138 Federal Home Loan Bank 03/07/94 4,998,194.44 5,000,000.00
!39 Federal Home Loan Bank 06/16/95 2,000,000.00 2,000,000.00
140 Federal Home Loan Bank 06/19/95 3,000,000.00 3,000,000.00
i4~Federal Home Loan Bank 08/02/94 3,002,106.94 3,000,000.00
142 Federa! Home Loan Bank 09/26/94 3,986,678.50 4,000,000.00
146-Cali Federa! Home Loan Bank 02/18/94 2,000,000.00 2,000,000.00
i47-Cali Federa! Home Loan Bank 02/14/94 2,000,000.00 2,000,000.00
i48-Cali Federal Home Loan Bank 02/09/94 2,000,000.00 2,000,000.00
!49-Cali Federal Home Loan Bank 02/10/94 2,000,000.00 2,000,000.00
!50-Cal!Federal Home Loan Bank 02/11/94 2,000,000.00 2,000,000.00
!5!-Step Up Federal Home Loan Bank 04/13/94 4,150,000.00 4,150,000.00
!52-Step Up Federa! Home Loan Bank 04/15/94 2,925,000.00 2,925,000.00
!53-Step Up Federa! Home Loan Bank 04/14/94 2,925,000.00 2,925,000.00
166 Federal Home Loan Bank 11/16/95 4,995,584.81 5,000,000.00
i67-Cai!Federa! Home Loan Bank 12/27/95 3,000,000.00 3,000,000.00
172 Federa! Home Loan Bank 02/15/96 2,002,159.78 2,000,000.00
173 Federal Home Loan Bank 02/15/96 4,009,496.02 4,000,000.00
i77-Cali Federa! Home Loan Bank 02/21/96 1,550,000.00 1,550,000.00
!79-Cai!Federal Home Loan Bank 02/28/96 2,000,000.00 2,000,000.00
187 Federal Home Loan Bank 04/23/96 2,000,000.00 2,000,000.00
18E Federal Home Loan Bank 04/23/96 2,000,000.00 2,000,000.00
189 Federal Home Loan Bank 05/06/96 2,000,000.00 2,000,000.00
202 Federa! Home Loan Bank 08/09/96 4,002,246.37 4,000,000.00
203 Federal Home Loan Bank 09/27/96 3,003,269.05 3,000,000.00
127 Fed Home Ln Mort Corp 03/21/94 2,000,049.19 2,000,000.00
178-Cai!Fed Home Ln Mort Corp 02/23/96 2,000,000.00 2,000,000.00
i64 Federal Land Bank 01/20/77 500,000.00 500,000.00
212 Fed Nat Mortgage Assn 08/25/94 8,023,736.84 8,000,000.00
213 Fed Nat Mortgage Assn 01/12/87 2,000,077.39 2,000,000.00
114 Fed Nat Mortgage Assn 01/25/94 1,999,297.17 2,000,000.00
1i5 Fed Nat Mortgage Assn 04/27/95 4,002,559.23 4,000,000.00
!16 Fed Nat Mortgage Assn 08/25/95 4,000,000.00 4,000,000.00
!17 Fed Nat Mortgage Assn 08/16/95 4,119,037.30 4,000,000.00
ii8 Fed Nat Mortgage Assn 06/08/95 3,014,674.57 3,000,000.00
219 Fed Nat Mortgage Assn 08/15/95 4,147,709.58 4,000,000.00
i20 Fed Nat Mortgage Assn 01/11/93 999,880.01 1,000,000.00
!,999,380.00
2,502,350.00
3,003,480.00
4,990,650.00
2,001,880.00
3,002,820.00
3,015,000.00
4,022,520.00
1,965,000.00
1,965,000.00
1,965,000.00
1,965,000.00
1,965,000.00
4,181,872.00
2,947,464.00
2,947,464.00
4,946,900.00
2,936,250.00
1,973,760.00
3,891,812.00
1,502,043.00
1,922,500.00
1,997 500.00
1,997 500.00
2,000 000.00
4,000 000.00
2,993 430.00
1,998 760.00
1,919 380.00
502 815.00
8,045,040.00
2,011,260.00
1,994,200.00
4,025,640.00
4,007,680.00
4,137,520.00
3,016,290.00
4,160,000.00
999,060.00
5.500 5.674 5.753 05/01/97 212
7.100 6.007 6.090 10/25/96 24
6.700 6.608 6.700 10/25/96 24
5.180 5.271 5.344 03/07/97 157
5.890 5.809 5.890 06/16/97 258
5.890 5.890 5.971 06/16/97 258
6.525 6.334 6.422 07/11/97 283
6.530 6.839 6.934 09/02/97 336
5.380 5.496 5.572 12/14/98 804
5.380 5.496 5.572 12/14/98 804
5.380 5.496 5.572 12/14/98 804
5.380 5.496 5.572 12/14/98 804
5.380 5.496 5.572 12/14/98 804
6.000 5.833 5.914 04/13/01 1,655
6.000 5.833 5.914 04/13/01 1,655
6.000 5.854 5.936 04/13/01 1,655
5.660 5.706 5.785 i1/09/98 769
6.250 6.193 6.279 12/27/00 1,548
4.920 4.835 4.902 02/09/98 496
5.055 4.945 5.014 02/09/99 861
5.965 5.965 6.048 02/21/01 1,604
5.860 5.860 5.941 02/28/01 1,611
6.100 6.100 6.185 04/23/99 934
6.100 6.100 6.185 04/23/99 934
6.210 6.210 6.296 05/06/99 947
6.260 6.153 6.238 08/09/99 1,042
6.335 6.208 6.294 09/23/99 1,087
5.470 5.389 5.464 03/21/97 171
5.600 5.600 5.678 02/~3/01 1,606
7.350 7.249 7.350 01/20/97 Iii
7.600 6.414 6.504 01/10/97 I01
7.600 7.580 7.685 01/10/97 I01
4.380 4.487 4.550 01/21/97 112
6.770 6.547 6.638 04/14/97 195
6.110 6.026 6.11b 08/25/97 328
9.550 6.049 6.133 09/10/97 344
6.450 5.918 6.000 12/08/97 433
9.550 6.085 6.170 12/10/97 435
6.050 5.978 6.061 01/12/98 468
ATTACHMENT B
22/1996 City of Paio Alto
INVESTMENTS BY TYPE
SEPTEMBER 30, 1996
FI -2
CPA
ACCRUAL
- ZT,~ESTMENT PURCHASE
.r TJMB E RISSUER DATE BOOK VALUE
STATED ....YTM ....MA_~JRITY DAYS
FACE VALUE MARKET VALUE- P~.TE 360 365 DATE TO
FSDE~AGENCY ISSUES -COUPON
12l Fed Nat Mortgage Assn 01/11/93 1,999,760.03
122 Fed Nat Mortgage Assn 01/12/93 1,999,759.90
123 Fed Nat Mortgage Assn 10/05/95 4,001,042.42
124 Fed Nat Mortgage Assn 10/06/95 4,001,016.64
16~Fed Nat Mortgage Assn 11/15/95 5,204,906.03
!68 Fed Nat Mortgage Assn 01/26/96 4,002,158.01
170 Fed Nat Mortgage Assn 01/26/96 4,442,547.10
171 Fed Nat Mortgage Assn 02/09/96 3,008,214.82
!~C Fed Nat Mortgage Assn 03/07/96 2,988,078.52
16!Fed Nat Mortgage Assn 03/13/96 2,960,961.25
!86 Fed Nat Mortgage Assn 04/18/96 1,986,193.99
194 Fed Nat Mortgage Assn 05/06/96 1,991,674.91
!95 Fed Nat Mortgage Assn 05/06/96 1,751,746.28
196 Fed Nat Mortgage Assn 05/31/96 2,321,188.65
197 Fed Nat Mortgage Assn 05/31/96 2,105,386.54
200 Fed Nat Mortgage Assn 07/11/96 2,587,793.82
201 Fed Nat Mortgage Assn 07/11/96 2,275,578.94
155 Student Loan Mktg. Assn 05/02/95 4,015,225.83
169 Student Loan Mktg. Assn 01/26/96 4,238,406.29
2,000,000.00 1,998,120.00 6.050 5.978 6.061 01/12/98 468
2,000,000.00 1,998,120.00 6.050 5.978 6.061 01/12/98 468
4,000,000.00 3,980,000.00 5.950 5.854 5.935 09/28/98 727
4,000,000.00 3,980,000.00 5.950 5.854 5.935 09/28/98 727
5,000,000.00 5,196,900.00 9.550 5.513 5~590 11/10/97 405
4,000,000.00 3,841,720.00 5~550 5.459 5.535 01/17/01 1,569
4,000,000.00 4,316,240.00 8.900 5.415 5.490 06/12/00 1,350
3,000,000.00 2,930,160.00 5.200 5.087 5.158 01/25/99 846
3,000,000.00 2,931,480.00 5.280 5.385 5.460 03/01/99 881
3,000,000.00 2,938,140.00 5.400 5.907 5.989 03/12/99 892
2,000,000.00 1,977,680.00 5.840 6.061 6.145 03/29/99 909
2,000,000.00 1,998,740.00 6.625 6.641 6.733 04/18/01 1,660
1,790,000.00 1,756,974.50 6.160 6.631 6.723 04/03/01 1,645
2,205,000.00 2,333,860.20 8.700 6.421 6.510 06/10/99 982
2,000,000.00 2,116,880.00 8.700 6.421 6.510 06/10/99 982
2,705,000.00 2,611,542.25 5.720 6.779 6.873 03/08/01 1,619
2,300,000.00 2,294,296.00 6.590 6.766 6.860 05/24/01 1,696
4,000,000.00 4,030,000.00 7.875 6.566 6.657 02/03/97 125
4,000,000.00 4,120,000.00 7.500 5.458 5.534 03/08/00 1,254
SUBTOTALS and AVERAGES 169,737,097.23168,550,000.00168,770,072.95 5.930 6.012 761
TR~URY SECURITIES - COUPON
107
108
i62
183
184
i~5
190
!91
192
!98
199
U.S Treasury
U.S Treasury,
U.S Treasury
U.S Treasury
U.S Treasury
U.S Treasury
U.S Treasury
U.S Treasury
U.S Treasury
U.S Treasury
U.S Treasury
12/01/93
11/17/93
03/21/96
03/21/96
03/27/96
03/27/96
05/01/96
05/03/96
05/03/96
06/17/96
07/10/96
1,999,596.35 2,000,000.00
1,999,865.03 2,000,000.00
2,971,983.77 3,000,000.00
2,967,239.58 3,000,000.00
2,945,698.46 3,000,000.00
2,975,417.45 3,000,000.00
2,002,201.54 2,000,000.00
2,002,240.14 2,000,000.00
3,036,109.19 3,000,000.00
3,012,717.17 3,000,000.00
3,015,186.07 3,000,000.00
1,997,500.00
1,997,500.00
2,957,820.00
2,955,000.00
2,927,820.00~
2 964,390.00
2 003,120.00
2 003,120.00
3 036,570.00
3 037,500.00
3 045,000.00
4.375 4.489 4.551 11/15/96 45
4.375 4.373 4.434 11/15/96 45
5.250 5.792 5.873 07/31/98 668
5.125 5.797 5.877 06/30/98 637
4.750 5.697 5.776 08/31/98 699
5.125 5.634 5.712 03/31/98 546
6.125 5.967 6.050 05/15/98 591
6.125 5.966 6.049 05/15/98 591
6.750 6.158 6.244 05/31/99 972
6.750 6.486 6.576 06/30/99 1,002
6.875 6.581 6.672 07/31/99 1,033
SUBTOTALS and AVE.~-AGES 28,928,254.75 29,000,000.00 28 925,340.00 5.796 5.876 663
GI}~IE MAE’ S
161
162
160
Fed Home Ln Mort Corp 07/05/83
Fed Home Ln Mort Corp.02/16/79
Govt. Nat!. Mortgage Assn 01/26/87
44,312.44 43,231.65 43,123.57 12.450 11.875 12.039 09/15/09 4,732
111,604.22 113,568.00 122,727.26 I0.000 10.120 10.261 02/01/09 4,506
332,850.86 322,862.31 342,259.94 9.000 8.449 8.566 11/15/16 7,350
SUBTOTALS and AVERAGES 488,767.52 479,661.96 508,110.77 9.141 9.268 6,463
TOT~L INVESTMENTS and AVERAGES
208,124,269.04
S 209,248,726.58 208,298,130.80 5.897%5.978%724
====================================================================================
Attachment C
Investment Policy Compliance
as of September 30, 1996
No more than 10 percent of the portfolio in collateralized Certificates of 0.00%
Deposit (CDs) of any institution.
No more than 30 percent of the portfolio in Banker’s Acceptance Notes.0.00%
- No more than $5 million with any one institution,n/a
No more than 15 percent of the portfolio in Commercial Paper.0.00%
- No more than $3 million with any one institution,n/a
Limit investments exclusively to those stipulated under types of investments No exceptions
No more than 10 percent of the portfolio in Farm Credit Securities..96%
No more than 2 percent of the portfolio in the Guaranteed Portion of Small 0.00%
Business Administration Notes.
No more than 15 percent of portfolio in Mutual Funds..48%
No more than 20 percent of portfolio in callable or Multi-Step-up 13.72%
government agency securities.
Liquidity enough to meet one month’s cash needs.$15.6 million
At least $50 million maturing in less than 2 years.$113.1 million
No more than 20 percent of the portfolio shall be in investments maturing in .23%
more than five years.
Market value of the portfolio will exceed 95 percent of the amortized cost 99.55 %
basis of the portfolio.
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