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AGENDA BILL Agenda Item No. 5(D) Date: November 20, 2012 To: El Cerrito City Council From: Mary Dodge, Administrative Services Director/City Treasurer Subject: September 30, 2012 Quarterly Investment Report ACTION REQUESTED Receive and file the City’s September 30, 2012 Quarterly Investment Report. QUARTERLY INVESTMENT REPORT REVIEW The Quarterly Investment Report shows that the city’s investments had a par value of $1,570,329.52 as of September 30, 2012. This is a decrease of $4,103,621.12 from last quarter due to operational uses at a low point in the year relative to cash flow. Without any bond proceeds to invest, the City continues to have minimal investments that are not required for debt service reserves, and to have limited, if any, interest earnings on those restricted funds. Due to those restrictions, and the low value of Treasury Investments in the Blackrock Liquidity funds, Federal National Mortgage Association (FNMA) Agency Bonds were purchased for the bulk of the reserve amounts during the quarter. This purchase increased the return on investment for the debt reserve funds for the City Debt Fund and the Street Improvement Fund to .62%. The Local Area Investment Fund (LAIF) continues to provide the most liquid investment asset available, and will continue to be used to invest the operational portion of the city’s cash in order to maintain cash flow. As of September these funds have been used for operational purposes. Overall, interest rates continue to be extremely low and currently LAIF is at .35%, which is one basis point down from the last quarter. While the LAIF account had a very low balance as of this date, cash was available in the city’s Mechanics Bank checking account for continuing operations until the issuance of the Tax Anticipation Notes (TAN). The TAN’s were approved by the City Council on October 2, 2012 in the amount of $4,000,000 to provide operational cash for the City until the receipt of 55% of the property tax from Contra Costa County in mid- December. FINANCIAL CONSIDERATIONS The purpose of the City’s Investment Policy is to provide guidelines for the prudent investment of the City’s idle funds, and to outline the policies for maximizing the efficiency of the City’s cash management system. The ultimate goal is to enhance the economic status of the City while protecting the funds at all times. The City’s investments are in compliance with the “Authorized Investments” section of the Investment Policy. ---PAGE BREAK--- ---PAGE BREAK--- Agenda Item No. 5(D) Attachment 1