CITY TREASURER'S REPORT Carmel-by-the-Sea August 6, 2013

1

ROLE OF THE CITY TREASURER

• Invest City's "Investable" funds • Assess effectiveness of the City's disbursement controls

2

GOALS OF INVESTMENT DECISIONS
• Safety: low risk of default • Liquidity: easy access to cash value of an asset • Yield: level of interest payments

3

INVESTMENT POLICIES
• Types of allowed investments: Federal instruments, bank debt, etc. • Limits on amount invested in a given instrument

4

CASH FLOW MANAGEMENT
• Estimated cash inflows and outflows (obtained from Interim Finance Manager, Paul Wood) • End cash balance

= Beginning cash balance

+ receipts -payments

• Manage bank account balances to cover expected disbursements • "Surplus" funds are invested within limits of investment policies

5

AVAILABLE INVESTMENTS
• LAIF (Local Agency Investment Fund)
-A state-managed investment fund - Provides excellent safety and liquidity -Carmel policies allow unlimited amount of investment in LAIF -Low yield (currently 0.27%)

• Certificates of Deposit (CDs)
- Insured by Federal FDIA up to $250,000 -Amount of investment limited by City policies -Yield determined by market and maturity
6

CURRENT INVESTMENT ENVIRONMENT
• Extraordinarily low yields • Not much incentive to reach for higher yields • Not much incentive to draw down on "excessive" cash buffer

7

COMPOSITION OF CITY'S FINANCIAL ASSETS

"Working Capital"

LAIF

CDs (original cost)

Type of Asset

8

CHARACTERISTICS OF CITY'S INVESTMENTS IN COs
Yield vs. Maturity
2.0%

1.5%
~~

Yield

_% 10


~
LAIF yiel ~

ll
~~

0.5%

0.0%
0
1

2

3

4

5

Years to Maturity

9

GAIN/YR FROM CD INVESTMENTS
$25,000 . , . - - - - - - - - - - - - - - -- - - $20,000
+----~

$15,000 + - - -

$10,000

4- -

$5,000 + - - -

.
I

"

,~ '

.

....

.

"""

.

$0

+----

'

CDS

LAIF

GAIN

10

FINANCIAL OUTLOOK
• Amount of investable funds likely to grow
- Increase in sales tax over 10-year period - Improved economic conditions likely to increase revenue available for investment (TOT, sales taxes, property tax)

• Interest rates likely to remain low, at least through 2014 • Modest increases in interest income are likely to be possible

11

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