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Home My WebLink AboutInvestment Advisory Board - Annual Report on Investments to 7-e p d f hol, Joint Study Session IAB/City C ounc i l Investment Advisory Board Members: Rick Ganulin,Chair; Paul Arms,Joe Foye,Bob Glass, Warren Hall,Bob Turicchi,Bob Winchell November 18, 2002 Study Session Topics •Overview of year - LAB report •Accomplishments •Investment opportunities in a low interest rate environment 2 CITY OF HUNTINGTON BEACH INVESTMENT ADVISORY BOARD (IAB) ANNUAL REPORT TO THE CITY COUNCIL FOR THE PERIOD OCTOBER 1, 2000 TO SEPTEMBER 30, 2001 October 1, 2001 Establishment of Board The LAB was created to act in an advisory capacity'to the City Council and City Treasurer in matters pertaining to all of the City's investments by the City Council in May 1995 by Resolution #3284. The seven Board members are appointed by a member of the City Council and are as follows: Name Council Member Richard Ganulin, Chair Dave Garofalo Paul Arms Connie Boardman Joe Foye Debbie Cook Bob Glass Pam Julien Warren Hall Peter Green Bob Turicchi Shirley Dettloff Robert Winchell Ralph Bauer Board Activities The meetings of the Board for the fiscal year ended September 30, 2001 were open to the public as required by Government Code 54950 and held on the following dates in City Hall: November 13, 2000 January 24, 2001 April 18, 2001 July 25, 2001 In addition, a joint study session with the City Council is scheduled to be held on November 19, 2001. The two major activities of the Board consisted of reviewing each monthly investment report and reviewing the City of Huntington Beach Investment Policy annually, prior to their presentation at a City Council meeting. As required under HB Municipal Code 2.110.040(b), the Board has reviewed matters pertaining to the City's investments in the following areas: • Reviewed the annual Investment Policy • Reviewed the Management Letter from the City's independent financial auditor in conjunction with the annual financial audit which includes the investments and the cash audit update from the City's independent financial auditor • Discussed Cash Management and ensured that there was sufficient liquidity to meet the next six month's estimated expenditures for all funds including the General Fund. • Reviewed Risk-Return Analysis as it relates to Safety, Liquidity, and Yield • Reviewed Long Term Investments and how cash flow forecasting will enable the City to match investments to budgeted expenditures • Reviewed New Investment Sources, as appropriate • Reviewed Proposed State Legislation impacting the City's Investments • Reviewed any Anticipated Exposure to Loss by looking at liquidity, credit & market value • Reviewed Quarterly Reports prior to them being presented to the City Council • Reviewed Quarterly Compliance with Investment Policy • Monitored Broker-Dealer Selection and performance Based on the information reviewed by the Board for the period October 1, 2000 to September 30, 2001 it appears that the City Treasurer has maintained compliance with all requirements in the City's Investment Policy. Respectfully submitted, r Ri and Ganulin Chair—Investment Advisory Board xc: Shari L. Freidenrich, City Treasurer G:\treas\iab\iab annual report fy0001.doc Joint Study Session s o � z IAB/City Council ^JT por-n�, n cn J Investment Advisory Board Members: Rick Ganulin,Chair; Paul Arms,Joe Foye,Bob Glass, Warren Hall,Bob Turicchi,Bob Winchell November 19,2001 Study Session Topics • Overview of year - IAB report •Accomplishments •Investment strategies in a declining rate environment S� 1 Overview of IAB Annual Report • Investment policy compliance • Broker/dealer review • Legislation impacting investments • Cash management • Monthly/quarterly investment report • Annual audit management letter 3 Accomplishments • Cash management program • Awards • Certified investment policy • Certified municipal treasurers • Investment quality— no utility investments • Interest income versus budget 4 2 FY 00/01 Budgeted Income versus Actual $700,000 $600,000 a >R &:gd In $500,000 $4009000 $300,000 $200,000 $100,000 Y Dec-00 Mar-01 30-Jun Sep-01 5 Investment Strategies in a Declining Rate Environment •Market overview • Interest Rate Yield •Investment strategies 6 3 Interest Rate Yield Curve 6.50 —Jan-Ol 5.50 4.50 3.50 —Oct-01 2.50 1.50 Fed 3mo 6mo 2yr 5yr 10yr 30yr Funds Investment Strategies • Purchase short term investments, but monitor interest income budget and extend maturities if estimated income is less than budget • Maximize investments in funds that have weighted average maturities over 1 day • LAIF/money market funds • Favor top-rated gov't agencies and consider short-term top-rated commercial paper versus US treasuries 8 4 Overview of 1AB Annual Report • Investment policy compliance • Broker/dealer review • Legislation impacting investments • Cash management • Monthly/quarterly investment report • Annual audit management letter 3 Accomplishments • Cash management program • Awards •Certified investment policy • Certified California Municipal Treasurer • Certified Municipal Finance Administrator • Investment quality • Interest income versus budget 4 2 Budget Vs. Actual Quarterly Interest Income $1,400,000 $1,200,000 $1,000,000 ry $800,000 �y ❑Budget i $600,000 ®Actual u $400,000r �s2 $200,000 ,��qq, $0 12/31/2001 3/31/2002 6/30/2002 9/302002 5 Investment Opportunities in a Low Interest Rate Environment •Interest rate yield curve: 0 to M yrs •Overview since last year •Investment strategies 6 3 Interest Rate Yield Curve 7.00 6.00 —Dec-98 5.00 —Dec-99 4.00 —May-00 3.00 —May-01 2.00 —Nov 02 1.00 Fed 3mo 6mo 2yr 5yr 10yr 30yr Funds 7 Overview since Last Year •Last year, expected higher rates today •Rates are actually lower (FF -1.25%) •Going forward — no significant change expected to mid-year 8 4 Investment Strategies • Continue to stay short • Seek instruments with limited risk that provide better returns • Callable government agencies(AAA rated) • Favor gov't agencies over corporate bonds • Continue to purchase"cushion agency bonds —callable agencies at a premium" • Ensure portfolio liquidity to meet cash needs 9 Conclusion •Overview of year - LAB report •Accomplishments •Investment opportunities in a low interest rate environment 10 5 CITY OF HUNTINGTON BEACH INVESTMENT ADVISORY BOARD (IAB) ANNUAL REPORT TO THE CITY COUNCIL o , FOR THE PERIOD OCTOBER 1, 2001 TO SEPTEMBER 30, 2002 October 1, 2002 3- r Establishment of Board The IAB was created to act in an advisory capacity to the City Council and City--? , Treasurer in matters pertaining to all of the City's investments by the City.Council in( May 1995 by Resolution #3284. The seven Board members are appointed by a member of the City Council and are as follows: Name Council Member Rick Ganuhn, Chair Grace Winchell Paul Arms Connie Boardman Joe Foye Debbie Cook Bob Glass Pam Houchen Warren Hall Peter Green Bob Turicchi Shirley Dettloff Robert Winchell Ralph Bauer Board Activities The meetings of the Board for the fiscal year ended September 30, 2002 were open to the public as required by Government Code 54950 and held on the following dates in City Hall: October 17, 2001 November 19, 2001 January 23, 2002 May 1, 2002 July 24, 2002 In addition, a joint study session with the City Council is scheduled to be held on November 18, 2002. The two major activities of the Board consisted of reviewing each monthly investment report and reviewing the City of Huntington Beach Investment Policy annually, prior to their presentation at a City Council meeting. As required under HB Municipal Code 2.110.040(b), the Board has reviewed matters pertaining to the City's investments in the following areas: • Reviewed the annual Investment Policy • Reviewed the Management Letter from the City's independent financial auditor in conjunction with the annual financial audit which includes the investments and the cash audit update from the City's independent financial auditor • Discussed Cash Management and ensured that there was sufficient liquidity to meet the next six month's estimated expenditures for all funds including the General Fund. • Reviewed Risk-Return Analysis as it relates to Safety, Liquidity, and Yield • Reviewed Long Term Investments and how cash flow forecasting will enable the City to match investments to budgeted expenditures • Reviewed New Investment Sources, as appropriate • Reviewed Proposed State Legislation impacting the City's Investments • Reviewed any Anticipated Exposure to Loss by looking at liquidity, credit & market value • Reviewed Quarterly Reports prior to them being presented to the City Council • Reviewed Quarterly Compliance with Investment Policy • Monitored Broker-Dealer Selection and performance Based on the information reviewed by the Board for the period October 1, 2001 to September 30, 2002 it appears that the City Treasurer has maintained compliance with all requirements in the City's Investment Policy. Respectfully submitted, Ri k Ganulin Chair—Investment Advisory Board xc: Shari L. Freidenrich, City Treasurer G:\treas\iab\iab annual report fy000l.doc *310,16 M T't' :I_FJK CITY OF HUHT'iHG1T0, 114 BEACH, CA CITY OF HUNTINGTON BEACH 2001 INVESTMENTNOV -9 P 12. 58 ADVISORY BOARD(IAB) ANNUAL,RRPORT TQ THE_CTTY_COUNCIL FOR THE PERIOD OCTOBER 1,2000 TO SE,PTFNMER 30,2001 Octobfm 1, 2001 Establiy ttent of Board The 1AB was created to act in as advisory capacity to the City Cmmcil and City Treasurer in matters pertaining to all of the CitYs investments by lhr City Council in May 1095 by Resclutioa#3284. The seven Board members are appoipted by a member of the City Council and are as follows: Name Quncil NfembQr Richard G mulin,,Qaittr Dave Garowo Paul Arras Connie Boardman Joe Foye Debbie Cook Bob glass Para Julien Warm Hall Peter Green Bob Turicchi Shirley Dettloff Robert Winchell Ralph Bauer BBt nrd tivitip The meetings of the Board for the fi"year ended SepU=bar 30, 2001 were open to the public as required by Government Code M99 0 and held on the ibllowing dawn iu City Sall. November 13,2000 January 24,2001 April 18, 2001 July 25,2001 In addition, a juint study session with the City Council is scheduled to be held on November 19,2001. The two mwdor activities of the Board consisted of reviewing each monthly investment report and reviewing the City of Huntington Beach Investment Policy annually, prior to their prescmadva at a City ComiciI meeting. As required under HB Municipal Code 2.110.040(b), the Board has reviewed m utms gertainin,g to the City's invmtments in the following areas: • Reviewed the annual Invesunenl Poliuy Reviewed the Management Letter from the City's independent financial auditor in conjunction with the annual fi=cial audit which includes the investments and the cash audit updato from the City's independent fn.srnecial auditor • Diwumed Cash Maanagcmcut and easured that there was sufficiomt liquidity to meet the next six month's estimated expenditures for all ftmda including the General Fund, a Reviewed Risk-Return Analysis as it relates to Saftty,Liquidity,and Yiold • Reviewed Long Term Tnvestmmts and hbw cash flow forecaasdng will enable the City to match investments to budgeted expendiftmw 6 Reviewed New Investment Sutuces,as aFPloprIs a Reviewed Proposed State Legislation impacting the City's Investm=ts • Reviewed auy Anticipated Exposure to Loss by looking at liquidity, credit &market valuc • Reviewed Quarterly Reports prior to them being presented to the City Council Reviewed Quarterly Compliance with%yeament Policy a Monitored Broker-Dealer Selechrm and�erformanpe Based on the information revicwod by th6 Doard for tho period October 1, 2000 to September 30, 2001 it appears did the City Treasurer has maintained compliance with all requirements in the City's Investment Policy, Respectfay submitted, Richard C=uhn Chair—Investment Advisory Dowil xe; Shari L. Freidewich, City T)nmaamr a.-No iddabHab annual report IyWol.dac I Investment Strategies • Seek instruments with limited risk that provide better returns • Callable government agencies (AAA rated) • Top-rated corporate securities (AAA/AA) The Federal Reserve meets on December 11 and is expected to further decrease rates by 25 basis points 9 Discussion • Adjourn to January, 28, 2002 - 6:00 pm 10 5