City Council
259 N. Wilma Avenue
Ripon, CA 95366
MEMO
To: Honorable City Council
From: Lisa Roos, City Clerk & Finance Director
Date: 08/08/2023
Subject: Annual Investment Report Review
RECOMMENDED ACTION:
Accept the City’s annual investment report for the period ending June 30, 2023.
BACKGROUND:
The following report is the City’s annual investment report for the period ending June 30, 2023.
This report summarizes:
City’s investment policy that was adopted by the Council in 1996 and amended in 2003 and in 2023
Average interest rate for the last 12 months
Lists individual investments with their balances and interest rates as of the end of the period. The interest rates that are shown in the report are for the most recent 12-month period.
The City maintains money in both shorter-term daily liquidity investments, such as LAIF, and longer-term investments held at the Bank of New York. The shorter-term investments allows the City to earn interest, which is normally lower than the interest from longer-term investments, while the funds remain liquid and can quickly be transferred from time to time to cover operational costs of the City throughout the year.
In May 2023, the City added California Asset Management Program (CAMP) as a short-term investment option. Within CAMP, the City can invest in liquid funds or in term funds. Term funds have a set maturity date and interest rate, which allows the City to take advantage of higher rates on funds that are not needed as liquid funds.
The investments held at the Bank of New York have longer durations, as such, our goal is to normally not access the funds for liquidity purposes. It is not uncommon during federal tightening cycles for money market funds and pools similar to LAIF to have yields that surpass longer duration portfolios such as the investments held at the Bank of New York. CAMP has a shorter duration than LAIF, so in a rising interest rate market, CAMP’s returns will be higher than LAIF’s returns. However, when interest rates decrease, then LAIF and CAMP typically have lower returns than Bank of New York.
Each year, the City analyzes the amount of funds needed in the short-term to cover operating costs and projected capital costs. The remaining funds are invested in investments that provide the best chance of earning the highest return, based on actual market conditions. In August 2022, $5,000,000 was transferred from the short-term LAIF account to the longer-term Bank of New York account. In May 2023, $15,000,000 was transferred from the short-term LAIF account to CAMP for a longer TERM investment with a set rate of return of 5.43% and another $15,000,000 was transferred in June 2023 at a TERM rate of 5.63%.
Section 115 Trust
In October 2022, $1,135,396.65 was deposited into the City’s Section 115 Trust with PARS.
Below is a table showing the return on investment of these funds:
Initial Deposit –
10/2022
Current Balance –
06/2023
Earnings Rate of
Return
$1,135,396.65 $1,204,095.65 $68,699.00 3.05%
At the end of FY 22/23, the savings of $161,861.23 from the financing of Redevelopment bonds was transferred into the PERS Contingency fund. These dollars will be transferred into the PARS Section 115 Trust so that all PERS Contingency funds are in the 115 Trust.
Attachments:
1. Investment report for Council 06.2023