CITY COUNCIL STAFF REPORT
November 19, 2024 5g
FILING OF THE TREASURER’S REPORTS ON INVESTMENTS FOR THE CITY AND THE
SUCCESSOR AGENCY TO THE COMMUNITY DEVELOPMENT AGENCY FOR THE CITY OF CORONADO FOR THE QUARTER ENDING SEPTEMBER 30, 2024
RECOMMENDATION:
Examine the quarterly Reports on Investments and direct them to be them filed.
BACKGROUND:
In accordance with the City’s Investment Policy, an investment report is prepared and presented to the City Council for review at the close of each quarter. The report details the investment activities for both the City and the Successor Agency portfolios. As of September 30, 2024, the combined book value of these portfolios is approximately $249.9 million in cash.
ANALYSIS:
This report covers the period July 1, 2024, through September 30, 2024. Attached is a summary detailing all investments, along with an overview of the year-to-date investment earnings in comparison to the annual budget.
City cash, investments and the percentage of total are as follows:
Book Value
% of Total
Investments
Investments:
Local Agency Investment Fund $ 38,716,869 17.62%
San Diego County Treasurer's Pooled Investment Fund 12,456,487 5.67% CAMP 90,767,308 41.31%
US Bank Loan Repayment Fund* 16,933,748 7.71%
CalPrivate Business Money Market 17,130 0.01%
Certificates of Deposit with San Diego Private Bank 250,000 0.11% Certificates of Deposit with San Diego Private Bank 30,237,161 13.76% US Money Market - 0.00%
US Treasury Bills 10,146,628 4.62%
OPEB and Pension Trust Investment Portfolio with PARS** 15,883,000 7.23% Sub-Total Investments 215,408,331 98.04%
From July 1, 2024, through September 30, 2024, City investment earnings totaled $2,554,019, representing 39.49% of the fiscal year budget projection of $6,467,808, with an average annual return of 4.74%. The following schedule provides a comparison between the book value, market value, and year-to-date earnings of investments for the current period (July through September 2024) against the same period from the previous Fiscal Year.
Successor Agency cash, investments and the percentages of the total are as follows:
Earnings for the Community Development/Successor Agency for the period July 1, 2024, through September 30, 2024, were $246,583. Investment summaries for both the City and Successor Agency, along with monthly reports for September 30, 2024, including market values for all investments, are attached.
Market Update and Investment Allocation Changes
As anticipated, the Federal Open Market Committee (FOMC) lowered the target range for the federal funds rate by 50 basis points to 4.75% - 5.00% at its September meeting. This marks the first rate cut since 2020 and signals the start of an easing cycle. The Fed's updated “dot plot” projections indicate an additional rate cut by the end of 2024, continuing into 2025. The Consumer Price Index (CPI) slowed for the fifth consecutive month in August, reaching a year-over-year rate of 2.5%, the lowest in over three years. This trend highlights progress toward the Federal Reserve’s inflation target of 2%.
U.S. Treasury yields declined in September following the Fed's rate cut. With potential rate reductions anticipated in the latter half of the year, the City’s investment strategy remains focused on higher-yielding short- to mid-term products with maturities of 12 months or less, securing favorable rates.
Demand Deposit Accounts:
US Bank Operating Account 3,820,456 1.74%
US Bank HRA Account 92,829 0.04%
US Bank FSA Account 32,955 0.01%
CalPrivate Bank Money Market Account 350,000 0.16%
Sub-Total Demand Deposit Accounts 4,296,240 1.96%
Total All Investments $ 219,704,571
* Resctricted for public use capital improvements
** Restricted for Other Post Employment Benefits (OPEB) and Pension stablization PARS Market Value as of September 30, 2024 totaled $21,982,963 Book value of Market value of FYTD Investment
As of : Investments Investments Earnings
Jul - Sept FY 2023-24 $ 206,055,214 $ 204,910,933 $ 1,677,661 3.26% Jul - Sept FY 2024-25 215,408,331 224,277,110 2,554,019 4.74% Average Investment
Annual Return
Book Value
% of Total
Investments
Local Agency Investment Fund $ 8,536,204 28.25%
Cash in Bank at Union Bank 21,675,902 71.75%
Total Cash and Investments $ 30,212,106 100.00%
Quarter-Ending Changes for September 30, 2024:
Continued to rebalance the Local Agency Investment Fund and San Diego County Treasurers’ Pooled Investment Fund to $38.7M and $12.5M, respectively. As of September 2024, the funds are yielding 4.71% and 3.61%, respectively.
US Treasury Bills: Approximately $10.0M and $20.0M of 26-week US Treasury Bills matured in August and September, respectively. The matured funds were transferred out of the account based on evaluations of the available reinvestment rates. $20.0M of matured US Treasury Bills were transferred to the California Asset Management Program (CAMP) account, yielding 5.29% as of September 2024. $10.0M of matured US Treasury Bills were transferred and a 12-month Certificate of Deposit Account Registry Services (CDARS) was purchased, yielding 4.3%. All investment allocation changes comply with the City’s investment policy and sufficient liquidity is maintained for operating needs.
FISCAL IMPACT:
The City invests funds from various sources in accordance with the City of Coronado Investment Policy, prioritizing safety, liquidity, and yield, in that order. The Successor Agency to the Community Development Agency’s funds are also managed under this policy.
ALTERNATIVE:
None.
CALIFORNIA ENVIRONMENTAL QUALITY ACT:
Not Applicable.
PUBLIC NOTICE:
No notice required.
ATTACHMENTS:
1. Treasurer’s Report on Investments as of September 30, 2024 Submitted By: Administrative Services Department / John Kim