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INVESTMENT REPORT FOR THE QUARTER ENDED JUNE 30, 2016
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RECOMMENDED ACTION
Recommended Action
Council accept the report.
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SUMMARY
Transmitted herewith is the City’s investment report for the quarter ended June 30, 2016. To meet the reporting requirements set forth in the California Government Code Sections 53600 et seq. and the City of Chula Vista Investment Policy and Guidelines, a separate report was distributed to the City Council in July.
ENVIRONMENTAL REVIEW
Environmental Notice
Environmental Notice
The activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act State Guidelines; therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is required.
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Environmental Determination
The Director of Development Services has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a “Project” in accordance with Section 15378 of the State CEQA Guidelines because it involves only acceptance of the Quarterly Investment Report; therefore it is an organizational or administrative activity of government that will not result in a direct or indirect physical change in the environment; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no environmental review is required.
BOARD/COMMISSION RECOMMENDATION
Not Applicable.
DISCUSSION
The total cash and investment portfolio held by the City as of June 30, 2016 was $247,784,563 and total cash and investments held by the trustees was $39,228,087.
The cash and investments held by the City are composed of the following components: Cash/Time Deposits ($55,830,832), Managed Investment Portfolio ($155,304,664), State of CA Local Agency Investment Fund ($1,642,189), and County of San Diego Pooled Investment Fund ($34,701,005). Cash and investments held by the City and the trustees continue to be invested in accordance with the Government Code and the Council Investment Policy as adopted by Resolution 2016-046 on March 15, 2016.
During the quarter, two investments matured totaling $6,900,000 and seven investments totaling $16,525,000 were sold prior to their maturity dates. Nine purchases were made to replace those investments and invest idle cash. Purchased investments include: four corporate notes issued by Morgan Stanley ($450,000), General Electric ($1,500,000), General Electric ($1,500,000), and Pepsico ($2,000,000); four treasury notes totaling ($17,530,000); and one asset-backed security issued by Ally ($530,000). Public Financial Management (PFM), the City's investment advisor, continues to monitor the portfolio and will make recommendations as financial and economic conditions warrant. There is no further activity to report on other than routine investments by the City's fiscal agents.
The Federal Open Market Committee (FOMC) maintained the Fed Funds target rate at a range of 0.25% to 0.50% through June. Two-year Treasuries yielding 0.72% at the beginning of the quarter ended lower at the end of the quarter at 0.59%.
As of June 30, 2015, the Yield to Maturity at Cost on the Managed Investment Portfolio was 1.30%, which was an increase of seven basis points from the previous quarter.
At the end of this quarter, the weighted average maturity of the Managed Investment Portfolio was 2.47 years which is an increase from 2.39 the previous quarter and is within the Council Policy.
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 Title 2, section 18704(d)(1). Consequently, this item does not present a conflict of interest under the Political Reform Act (Cal. Gov't Code § 87100, et seq.).
Staff is not independently aware, and has not been informed by any City Council member, of any other fact that may constitute a basis for a decision maker conflict of interest in this matter.
LINK TO STRATEGIC GOALS
The City’s Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy Community, Strong and Secure Neighborhoods and a Connected Community. The investment portfolio supports the Operational Excellence goal as it seeks to maintain the safety and liquidity of the City’s cash while contributing investment earnings to the bottom line.
CURRENT YEAR FISCAL IMPACT
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.
ONGOING FISCAL IMPACT
There is no ongoing fiscal impact by this action.
ATTACHMENTS
Summary of Cash and Investments as of June 30, 2016
PFM Investment Report for the Quarter Ended June 30, 2016
Staff Contact: David Bilby, Director of Finance/Treasurer, Finance Department