HomeMy WebLinkAbout1994-12-06; City Council; 12939; REPORT ON CITY INVESTMENTS AS OF OCTOBER 31, 1994TY OF CARLSBAD — AC NDA BILL
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DEPT. TRS
REPORT ON CITY INVESTMENTS
AS OF OCTOBER 31, 1994
RECOMMENDED ACTION:
Accept and file report
ITEM EXPLANATION:
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State law requires the City Treasurer to report to the City Council on'a monthly basis the
status of the City's investment portfolio. This report is presented to Council each month
on investments held.
In summary, the City's investment portfolio as of October 31,1994 is as follows:
Cost of Investments
Market Value
Cash Income Fiscal Year-to-Date
Average Yield
Average Life
All investments have been made in accordance with the City's investment policy adopted
January 2,1985, last revised January 26,1993, and last reviewed January 25,1994.
When held to maturity the above investments will yield $21,453,265 in interest income.
Current Month
118,415,260
117,798,613
2,328,726
5.94%
1 .52 years
Last Month
115,858,225
115,618,036
2,032,113
5.93%
1 .50 years
EXHIBIT:
1. Investment Reports (4)
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Reconciliation of Fund Source to Investment Portfolio
October 31,1994
Cash Balance by Fund:
General
Special Revenue
Debt Service
Capital Projects
Enterprise:
Carlsbad Municipal Water District
Sewer Fund
Solid Waste
Golf Course
Total
Internal Senrice
Redevelopment Funds
Trust Funds
Misc. Special Funds
17,356,000
18,239,000
11 6,000
1,958,000
10,825,000
6,594,000
1,361,000
39,517,000
37,669,000
9,687,000
5,642,000
5,811,000
0
Total General Ledger Balance 1 17,106,000
Deposits in transit
Outstanding checks
Wire in/(out) not recorded
Other
Payroll adjustment
(217,621)
1,972,134 .
(6,370)
(43991 4.3)
0
Total Treasurer's Investment Portfolio 118,415,000
r"f-
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-
Reconciliation of Fund Source to Investment Portfolio
October 31,1994
Cash Balance by Fund:
General
Special Revenue
Debt Senice
Capital Projects
Enterprise:
Carlsbad Municipal Water District
Sewer Fund
Solid Waste
Golf Course
Total
Internal Service
Redevelopment Funds
Trust Funds
Misc. Special Funds
17,356,000
18,239,000
1 16,000
1,958,000
10,825,000
6,594,000
1,361,000
39,517,000
*
37,669,000
9,687,000
5,642,000
581 1,000
9
Total General Ledger Balance 117,106,000
Deposits in transit (217,621)
Outstanding checks
Wire in/(out) not recorded
Other
Payroll adjustment
-I
Total Treasurer's investment Portfolio
1,972,134
(6,370)
0
(439,143)
118,415,000
15
0 0 EXHIBIT 3
December 8, 1994
TO: MAYOR, COUNCIL MEMBERS
FROM: CITY TREASURER
ORANGE COUNTY ANNOUNCEMENT OF DECEMBER 1,1944
The Orange County Treasurer-Tax Collector recently announced an unrealized loss, i.e., ”paper
loss“, of $1.5 billion in the county investment pool. This unrealized loss represented 20% of the
total pool assets. An unrealized loss is the difference between the cost of an asset and its
current market value. Unrealized losses are not unusual with fixed income instruments, e.g.
bonds, when interest rates are rising. Nonetheless, the magnitude of. the unrealized. loss, its
sudden revelation, and the ensuing filing of bankruptcy by Orange County shocked not only the
local communities and the state, but also made national headlines. Concern has been expressed
as to its implication regarding San Diego County and the City of Carlsbad.
The San Diego County Treasurer-Tax Collector also manages an investment pool. Local
agencies in San Diego County generally have found the pool to be an attractive alternative for
short-term investments. It offers good liquidity at yields that are usually attractive. Of the City’s
San Diego County investment pool. This is scheduled to be reduced to $12 million tomorrow
because of a withdrawal that was planned some three weeks ago. The City has no investment
in the Orange County pool.
From this vantage point, there appears to be several significant differences between the two
county pools. The Orange County pool was highly leveraged, i.e., many of the pool investments
came from money that had been. borrowed for that purpose. The unrealized loss in Orange
County was magnified because of this leverage. Assurances have been received from the San
Diego County Treasurer-Tax Collector that the San Diego pool is not leveraged and that the pool
does not have a cash flow problem. Reporting requirements also appear to be tighter in San
Diego County. From available information, the Orange County Treasurer-Tax Collector reported
on the investment pool only once a year. In contrast, the San Diego County Treasurer-Tax
Collector reports to the Board of Supervisors each month.
At this writing, there appears to be no shortage of speculation regarding the San Diego County
in variation with information received from the County Treasurer-Tax Collector. The situation will
be closely monitored in the forthcoming weeks.
A report will be made to the Council at the December 20 meeting summarizing the City’s
investment policy and applicable internal controls, the City Treasurer’s investment strategy, and
total investment porffolio of $1 18 million, approximately $18 million is currently invested in the
investment pool. It Seems that each day the media reports a new story that is in some degree
/, .“?&,status of the City’s invwent pottfolio. idx-. x” PES M. STANTON
F:\USERS\EROPRWPDATA\MEMOS\LOSS
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