HomeMy WebLinkAbout6-30-15 Qtr End Report
Quarterly Investment Report
As of
June 30, 2015
July 31, 2015
This report presents the City’s investment portfolio for the quarter ending June 30, 2015. It has been prepared
to comply with regulations contained in California Government Code Section 53646. The report includes all
investments managed by the City on its own behalf as well as for other third party agencies on a fiduciary
basis such as the Whale Rock Commission. It also includes all City-related investments held by trustees for
bond debt service obligations. As required, the report provides information on the investment type, issuer,
maturity date, cost, and current market value for each security.
The investment objectives of the City of San Luis Obispo are first, to provide safety of principal to ensure the
preservation of capital in the overall portfolio; second, to provide sufficient liquidity to meet all operating
requirements; and third, to earn a commensurate rate of return consistent with the constraints imposed by the
safety and liquidity objectives.
The City follows the practice of pooling cash and investments for all funds under its direct control. Funds
held by outside fiscal agents under provisions of bond indentures are maintained separately. Interest earned
on pooled cash and investments is allocated quarterly to the various funds based on the respective fund’s
average quarterly cash balance. Interest earned from cash and investments with fiscal agents is credited
directly to the related accounts. It is common for governments to pool the cash and investments of various
funds to improve investment performance. By pooling funds, the city is able to benefit from economies of
scale, diversification, liquidity, and ease of administration.
The City uses the services of an investment advisor, PFM Asset Management, to manage a portion of the
City’s portfolio. The City’s strategy is to retain approximately 25% of the portfolio to manage its day-to-day
cash flow needs, while PFM’s focus is on longer-term investment management. In addition, the City has
retained direct control of several investments that had been acquired before the City began to use investment
advisors. All investments are held by the City in a safe keeping account with Bank of New York Mellon,
except for investments held by trustees related to bond financings, which are held by either US Bank or Bank
of New York Mellon.
Investment Portfolio Benefits all Funds
The City’s cash and investment portfolio represents money from all City funds, including the General Fund,
enterprise funds, capital projects funds, and other funds which are restricted to specific purposes.
In general, monies held by the city are either allocated by the City Council for spending or are purposefully
retained in reserve. For example, the money in the Capital Outlay Fund has been identified to provide
particular capital projects for the community and there is a plan for spending down the cash balance as the
projects progress. In the General Fund, about $10 million is purposely held in reserve to meet the City’s
reserve policy of 20% of operating expenditures.
Quarterly Investment Report
Current Cash and Investment Summary
The following is a summary of the City’s cash and investments based on market value as of June 30, 2015
compared with the prior quarter:
March 31, 2015 June 30, 2015 Percent of Total
Cash and investments held by the City 54,434,580 55,575,151 52.54%
Cash and investments managed by PFM 45,940,792 45,622,718 43.13%
Cash and investments held by trustees 4,665,595 4,581,321 4.33%
TOTAL 105,040,967 105,779,190 100%
There are a number of factors which result in changes in cash and investment balances from month to month
and quarter to quarter. Often they are the result of the receipt of revenues or a large disbursement. Some
major City revenues are received on a periodic rather than a monthly basis. Property Tax, for example, is
received in December, January, April and May of each year. Other revenues, such as Transient Occupancy
Tax, are received monthly but vary considerably because they are seasonal. On the disbursement side,
payments for bonded indebtedness or large capital projects can reduce the portfolio substantially in the
quarter that they occur. Significant fluctuations of this type will be discussed in the following section of this
report.
Securities in the City’s portfolio are priced by IDC, an independent pricing service at the end of every month.
In some cases, the City may have investments with a current market value that is greater or less than the
recorded value. These changes in market value are due to fluctuations in the marketplace having no effect on
yield, as the City does not intend to sell securities prior to maturity. Nevertheless, these market changes will
impact the total value of the portfolio as reported. At June 30, 2015 the market value of the portfolio was
$101,601 less than the cost basis.
The portfolio’s yield on a market basis as of June 30, 2015 was .84%, and the yield on a cost basis was
1.12%. (These amounts do not reflect the returns on the assets held by the bond trustee.)
As of June 30, 2015, the investment portfolio was in compliance with all State laws, the City's Statement of
Investment Policy and the City’s Investment Management Plan.
Summary of Activity for the Quarter and Future Liquidity
Cash receipts and disbursements are generally consistent with past trends for the quarter. The cash
management program contains enough liquidity to meet the next six months of expected expenditures by the
City as well as by related parties, such as the Whale Rock Commission.
Report Contents and Distribution. This report includes the following four schedules on the City’s portfolio
as of June 30, 2015: summary of investments held or managed by the City, trustees or PFM; summary of
investment portfolio liquidity; investment details; and detail of holdings for each investment. These
schedules have not yet been reviewed by the City’s independent auditor.
If you have any questions concerning this report, or require additional information, contact Wayne Padilla,
Director of Finance at (805) 781-7125.
DISTRIBUTION LIST
City Council
Jan Howell Marx, Mayor
John Ashbaugh, Vice Mayor
Dan Carpenter, Council Member
Carlyn Christianson, Council Member
Dan Rivoire, Council Member
Investment Oversight Committee
Jan Howell Marx, Mayor
Wayne Padilla, Director of Finance & Information Technology
Michael Codron, Assistant City Manager
Katie Lichtig, City Manager
Vilma Warner, Finance Operations Manager
Steven Barasch, Public Member
Independent Auditor
Allen E. Eschenbach, Glenn Burdette Attest Corporation
PFM Asset Management
Nancy Jones, Managing Director
Carlos Oblites, VP/Portfolio Manager
CITY OF SAN LUIS OBISPO
SUMMARY OF INVESTMENTS
As of June 30, 2015
Percent of Current Market
Portfolio Yield Value
Local Agency Investment Funds 49%0.26%27,256,994.00
Certificate of Deposit 2%0.27%1,000,000.00
Money Market Account 2%0.21%1,008,468.00
Checking Account 45%0.25%25,253,909.00
Treasury Issues 2%9.24%1,055,780.00
Total Investments Held by the City 100%0.42%$55,575,151.00
Percent of Current Market
Portfolio Yield Value
Federal Agency Issues 54%1.32%24,656,595.00
Money Market Fund 0%0.00%74,684.00
US Corporate Notes 15%0.95%6,691,199.00
Treasury Issues 31%1.05%14,200,240.00
Total Investments Managed by Public Financial Management 100%1.18%$45,622,718.00
Percent of Current Market
Trustee Portfolio Yield Value
First American Treasury Funds 2.10%0.00%96,160.00
Other Money Market Accounts 0.05%0.02%2,251.00
Certificate of Deposit 0.00%0.00%
Guaranteed Investment Contracts 44.44%see below 2,036,161.00
Federal Agency Issues 18.39%2.55%842,317.00
Treasury Issues 35.02%Varies 1,604,432.00
Total Investments Held by Trustees 100%$4,581,321.00
Total of all Investments--Market Value $105,779,190.00
INVESTMENTS HELD AND MANAGED BY THE CITY
INVESTMENTS OF THE CITY MANAGED BY PUBLIC FINANCIAL MANAGEMENT
INVESTMENTS OF THE CITY HELD BY TRUSTEES FOR BOND DEBT SERVICE OBLIGATIONS
TOTAL CASH AND INVESTMENTS
CITY OF SAN LUIS OBISPO
SUMMARY OF INVESTMENT PORTFOLIO LIQUIDITY
As of June 30, 2015
Managed Managed Percent of Market
by City by PFM Portfolio Value
On Demand 53,519,371.00 74,684.00 53%53,594,055.00
Within Three Months 0.00 1,501,183.00 1%1,501,183.00
Within Six Months 1,000,000.00 3,452,053.00 4%4,452,053.00
Six Months to One Year 8,142,079.00 8%8,142,079.00
Within One to Five Years 1,055,780.00 32,452,719.00 33%33,508,499.00
Over Five Years 0%0.00
TOTAL 55,575,151.00 45,622,718.00 100%$101,197,869.00
Percent of Market
Portfolio Value
On Demand 2%98,411.00
Within Six Months 0%
Six Months to One Year 0%0.00
Within One to Five Years 25%1,133,029.00
Over Five Years 73%3,349,881.00
TOTAL 100%$4,581,321.00
Total of all Investments--Market Value $105,779,190.00
INVESTMENTS HELD BY THE CITY AND THOSE MANAGED BY PUBLIC FINANCIAL MANAGEMENT (PFM)
INVESTMENTS HELD BY TRUSTEES FOR BOND DEBT SERVICE OBLIGATIONS
TOTAL CASH AND INVESTMENTS
CITY OF SAN LUIS OBISPO
INVESTMENT DETAIL
As of June 30, 2015
Agency Investment Coupon Current Purchase Maturity Market
(Broker)Description Rate Yield Date Date Value
Local Agency Money Market Fund On
Investment Fund City NA 0.26%Varies Demand 27,189,590.00
Local Agency Money Market Fund On
Investment Fund CIB NA 0.26%Varies Demand 67,404.00
On
Bank of America Checking Account NA 0.25%Varies Demand 25,253,909.00
Collateralized
Heritage Oaks Certificate of Deposit NA 0.27%12/20/2013 12/20/2015 1,000,000.00
On
Heritage Oaks Money Market Account NA 0.21%1/24/2012 Demand 1,008,468.00
B of NY Safekeeping U.S. Treasury Bond
9.25%9.24% 4/18/86 2/15/2016 1,055,780.00
TOTAL $55,575,151.00
INVESTMENTS HELD AND MANAGED BY THE CITY
CITY OF SAN LUIS OBISPO
INVESTMENT DETAIL
As of June 30, 2015
Agency Investment Coupon Current Purchase Maturity Market
(Broker)Description Rate Yield Date Date Value
2005 Refunding Lease Revenue Bonds
U. S. Bank First American
Corporate Trust Services Treasury Fund N/A 0.00%Varies on demand $0.00
U. S. Bank United States
Corporate Trust Services Treasury Bonds 6.00%4.47%6/26/96 2/15/26 $789,802.00
2006 Lease Revenue Bonds
U. S. Bank First American
Corporate Trust Services Treasury Fund N/A 0.00%Varies on demand $28,056.00
Guaranteed
FSA Capital Investment Contract
Management Services LLC Treasury Fund 5.545%5.545%5/11/06 5/26/36 $1,000,814.00
2006 Water Revenue Bonds
U. S. Bank First American
Corporate Trust Services Treasury Fund N/A 0.00%Varies on demand $28,029.00
Guaranteed
FSA Capital Investment Contract
Management Services LLC Treasury Fund 5.355%5.355%8/17/06 5/28/36 $1,035,347.00
2009 Lease Revenue Bonds
U. S. Bank First American
Corporate Trust Services Treasury Fund N/A 0.00%Varies on demand $40,075.00
U. S. Bank
Corporate Trust Services Federal Home Loan Bank 1.00%0.99%11/25/2014 6/21/2017 $35,183.00
U. S. Bank Fed Home Loan Mort. Corp
Corporate Trust Services Medium term Note 0.75%0.75%11/25/2014 1/12/2018 $79,602.00
U. S. Bank
Corporate Trust Services U.S. Treasury Note 1.50%1.49%11/25/2014 2/28/2019 $70,591.00
U. S. Bank
Corporate Trust Services U.S. Treasury Note 1.13%1.13%11/25/2014 5/31/2019 $79,350.00
U. S. Bank Fed Home Loan Mort. Corp
Corporate Trust Services Debenture 1.25%1.26%11/25/2014 8/1/2019 $79,150.00
U. S. Bank
Corporate Trust Services Federal Nat'l Mtge. Assoc.1.75%1.74%11/25/2014 9/12/2019 $50,401.00
U. S. Bank
Corporate Trust Services U.S. Treasury Note 0.88%0.88%11/25/2014 1/31/2018 $70,011.00
U. S. Bank
Corporate Trust Services U.S. Treasury Note 1.38%1.36%11/25/2014 6/30/2018 $70,760.00
U. S. Bank Federal Nat'l Mtge. Assoc.
Corporate Trust Services Debenture 1.88%1.83%11/25/2014 9/18/2018 $35,756.00
U. S. Bank Federal Nat'l Mtge. Assoc.
Corporate Trust Services Debenture 0.88%0.88%11/25/2014 2/8/2018 $79,803.00
U. S. Bank
Corporate Trust Services Federal Home Loan Bank 1.38%1.36%11/25/2014 3/9/18 $70,609.00
INVESTMENTS HELD BY TRUSTEES FOR BOND DEBT SERVICE OBLIGATIONS
2012 Water Revenue Refunding Bonds (Refunded 2002 Water Revenue Bonds)
U. S. Bank U.S Bank Money
Corporate Trust Services Market Account N/A 0.02%Varies on demand $2,251.00
U. S. Bank United States
Corporate Trust Services Treasury Bond 2.00%2.00%Varies 11/25/21 $225,405.00
U. S. Bank United States
Corporate Trust Services Treasury Note 7.125%5.150%Varies 2/15/23 $298,513.00
2012 Revenue Refunding Bonds (Refunded 2001 Revenue Refunding Bonds)
U. S. Bank U.S Bank Money
Corporate Trust Services Market Account NA 0.00%Varies on demand $0.00
U. S. Bank
Corporate Trust Services Federal Home Loan Bank 5.50%5.21%Varies 8/15/16 $411,813.00
TOTAL $4,581,321.00
CITY OF SAN LUIS OBISPO
INVESTMENT DETAIL
As of June 30, 2015
The City of San Luis Obispo maintains certain performance objectives for the investments that are managed by Public
Financial Management. The overall performance objective for the portfolio is to earn a total rate of return over the market cycle
that equals or exceeds the market index. In order to achieve this objective the portfolio invests in high-quality money market
instruments, US Treasury securities, Agency securities, and high-grade corporate securities, with a maximum maturity of
five years. To monitor the achievement of this objective, the City uses a “Benchmark” to compare to. The benchmark
which is used is based on the BofA Merrill Lynch Index of 0-5 year Treasury securities. Below is a summary of the monthly
results as compared to the benchmark. While the City strives to achieve this performance objective every month, the goal
is assumed to be met on an annual basis. The City of San Luis Obispo is currently just under the benchmark goals in
most categories. We feel that through market trends and current investing adjustments, our performance will meet or
exceed the benchmarks by the end of the fiscal year.
Benchmark Comparison for the Quarter Ended 6/30/2015
Benchmark 06/31/2015 Portfolio 03/31/2015 Portfoli
Average Maturity (yrs)2.25 2.21 2.16
Modified Duration 2.18 2.15 2.12
Average Purchase Yield n/a 1.12%1.11%
Average Market Yield 0.75%0.84%0.70%
Average Quality AA+AA+/Aaa AA+/Aaa
Total Market Value $45,622,718 $45,633,343
The following pages provide a summary of the portfolio under management by Public Financial Management (PFM) as well as
a detailed holding report for the month.
MANAGED BY PUBLIC FINANCIAL MANAGEMENT