v . 0 03 P a g e | 1
November 28, 2023
ITEM TITLE
Investment Report: Quarter Ending September 30, 2023
Report Number: 23-0301
Location: No specific geographic location
Department: Finance
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.
Recommended Action
Receive the investment report for the quarter ending on September 30, 2023.
SUMMARY
Transmitted herewith is the City’s investment report for the quarter ending September 30, 2023. 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 October.
ENVIRONMENTAL REVIEW
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” as defined under Section 15378 of the State CEQA Guidelines because the proposed activity consists of a governmenta l fiscal/administrative activity which does not result in a physical change in the environment . T herefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines, the activity is not subject to CEQA.
BOARD/COMMISSION/COMMITTEE RECOMMENDATION
Not applicable.
P a g e | 2
DISCUSSION
As shown in the table below, the total cash and investment portfolio held by the City as of September 30, 2023, was $614,483,374 and total cash and investments held by the trustees was $154,098,447.
Summary of Cash and Investments as of September 30, 2023 Investments Book Value
Managed Investment Portfolio $ 560,653,033 State of California Local Agency Investment Fund 7,606,042 County of San Diego Pooled Investment Fund 23,880,319 Total Investments Held by the City 592,139,394 Cash/Time Deposits 22,343,980
Total Cash and Investments Held by the City 614,483,374
Cash and Investments Held by Bank Trustee 154,098,447 Total Investment Portfolio $ 768,581,821
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 2023-024 on March 7, 2023.
During this quarter, $64,999,000 was transferred from the State of CA Local Agency Investment Fund, pooled investment account, to the City. $40,000,000 of the transferred funds were used for investment purchases, with the remainder of funds used to maintain adequate cashflows during the quarter. Additionally, twenty - eight investments matured, totaling $56,916,000. Fourteen purchases were made to replace those investments. Purchas ed investments include: seven treasury notes ($70,540,000), three federal agency bonds ($16,500,000), two corporate notes ($5,000,000), one negotiable certificate of deposit ($5,000,000), and one commercial paper ($5,000,000). The Finance Department contin ues to manage the portfolio and execute transactions as financial and economic conditions warrant. There is no further activity to report other than routine investments.
Two-year Treasuries were yielding 4.87% at the beginning of the quarter and ended the quarter at a yield of
5.03%. As of September 30, 2023, the Weighted Yield to Maturity on the Managed Investment Portfolio was
2.73%, which was an increase of 41 basis points from the previous quarter. The average yield of the two - year U.S. treasury note ov er the last twelve months is 4.54%. Purchases are made at current market yields with fixed interest rates.
At the end of this quarter, the Weighted Average Maturity of the Managed Investment Portfolio was 1.46 years, which is a decrease from 1.66 years from the prior quarter.
The Federal Open Market Committee (FOMC) meets approximately every six weeks and determines the level of the Federal Funds Rate. During this quarter, the FOMC met on July 25 and September 19. At their July 25 meeting, the FOMC voted to raise the Federal Funds Rate target range by 0.25%. At their September 19 meeting, the FOMC voted to maintain the Federal Funds Rate target range. The Federal Funds Rate target range is 5.25%-5.50%.
P a g e | 3
The following excerpts are from the statement issued by the FOMC following their June 13 meeting. “Recent indicators suggest that economic activity has been expanding at a solid pace. Job gains have slowed in recent months but remain strong, and the unemployment rate has remained low. Inflation remains elevated . The U.S. banking system is sound and resilient. Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. The Committee remains highly attentive to inflation risks. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 5 -1/4 to 5 -1/2 percent. The Committee will continue to assess additional information and its implications for monetary policy. In determining the extent of additional policy firming that may be appropriate to return inflation to 2 percent over time… In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.” This is the first complete quarter that Chandler Asset Management, Inc. has provided non -discretionary investment management services to manage the City’s investment portfolio. The Finance Department, with the assistance of Chandler Asset Manage ment, Inc, continues to manage the City’s investment portfolio in accordance with the Government Code and the Council Investment Policy. Considering the projected timing of cash receipts and disbursements and the structure of the Pooled Investment Portfolio, the City will be able to comfortably meet overall cash flow needs over the next six months.
DECISION-MAKER CONFLICT
Staff has reviewed the decision contemplated by this action and has determined that it is not site-specific and consequently, the real property holdings of the City Council members do not create a disqualifying real property-related financial 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.
CURRENT-YEAR FISCAL IMPACT
Considering the projected timing of ca sh 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 as a result of this action.
ONGOING FISCAL IMPACT
There is no ongoing fiscal impact as a result of this action.
ATTACHMENTS
1. Summary of Cash and Investments as of September 30, 2023
2. Investment Report for the Quarter Ended September 30, 2023 Staff Contact: Adrian Del Rio, Assistant Director, Finance Department Sarah Schoen, Director of Finance/Treasurer