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MEETING DATE:
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RECOMMENDED
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4646 Dakota Street S.E.
Prior Lake, MN 55372-1714
CITY COUNCIL AGENDA REPORT
APRIL 20,2009
50
Jerilyn Erickson, Finance Director
CONSIDER APPROVAL OF 2009 1ST QUARTER INVESTMENT REPORT
Introduction
Staff has prepared a list of investments as of March 31,2009. An Investment
Report Summary Narrative provides some supplementary information with
respect to the investments currently held, the allowable forms of investments
permitted by Minnesota Statute, and descriptions of funds established for the
City. In most instances, the balances in each of these funds are either
reserved and restricted for specific expenditures as indicated or sufficient fund
balances are necessary to provide adequate operational cash flows as in the
case with the General Fund and Sewer and Water Fund.
If council members have questions please feel free to contact me at 952-447-
9841 for more information.
A motion as part of the consent agenda to approve the 2009 1 sl Quarter
Investment Report as submitted.
ReViC:J A L
Frank SOYler' ity v'lc-nager
ATTACHMEN~: J 11. 20091S1 Quarter Investment Report Summary
J 2. Investment Report Summary Narrative
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City of Prior Lake
Investment Summary
As of 3/31/2009
Interest Purchase Maturity
Broker Investment Cost Rate Date Date
League 4M Fund:
Liquid Asset Fund 1,333,620.29 0.560% Various -/-/09
Northland Securities:
Waite Park G.O. bonds 183,051.00 5.600% 12/21/01 12/01/10
FNMA govt. agency 199,700.00 3.000% 02/26/09 02/26/11
FHLMC govt. agency 299,550.00 3.000% 03/12/09 03/12/11
Waite Park G.O. bonds 170,721.00 5.750% 12/21/01 12/01/11
Waite Park G.O. bonds 159,606.00 5.850% 12/21/01 12/01/12
FNMA govt. agency 1,000,000.00 4.000% 02/01/08 07/28/15
FNMA govt. agency 500.000.00 3.750% 03/28/08 09/25/15
Aurora MN ISO OPEB 500,000.00 4.650% 02/12/09 02/01/18
FHLB govt. agency 500,000.00 4.500% 02/13/08 02/13/18
Stillwater MN ISD OPEB 500.000.00 4.750% 02/17/09 03/01/18
FHLMC govt. agency 500,000.00 4.000% 03/27/08 03/15/18
FHLMC govt agency 500.000.00 4.000% 4/10/08 04/15/18
FHLB govt. agency 294,471.00 5.000% 12/01/08 04/30/18
Money Market 45,186.47 0.400% Various -/-/09
Subtotal 5,352,285.47
Smith Barney:
Morgan Stanley Bk-UT CD 150.000.00 1.250% 01/02/09 04/02/09
Wilmington Savings Fund CD 245,000.00 1.150% 01/07/09 04/08/09
Citibank NA NV CD 145.000.00 1.750% 01/07/09 10/07/09
RBS Citizens NA RI CD 245,000.00 1.200% 02/18/09 11/18/09
Bank of America NA NC CD 245,000.00 1.200% 02/19/09 11/19/09
FICO zero govt. agency 389,600.00 3.750% 03/21/03 12/06/09
Citibank NA NV CD 96.000.00 2.300% 01/07/09 01/07/10
FNMA govt. agency 250,000.00 2.800% 03/25/09 03/25/10
Bank Vizcaya CD 96.000.00 1.300% 03/25/09 03/26/10
New South Federal Savings AL CD 96,000.00 2.350% 01/07/09 07/07/10
First Federal Bk of CA CD 96,000.00 2.750% 01/07/09 07/07/10
Westernbank PR CD 96,000.00 2.500% 01/09/09 07/09/10
GMAC Bank UT CD 96,000.00 2.750% 01/02109 01/03/11
Bank Santander PR CD 96,000.00 2.550% 01/23/09 01/24/11
Silverton Bank GA CD 96,000.00 2.600% 01/23/09 01/24/11
Flagstar Bank FSB MI CD 96,000.00 2.650% 01/23/09 01/24/11
Shorebank IL CD 96,000.00 2.700% 01/28/09 01/28/11
First Regional Bank CA CD 96.000.00 2.350% 01/28/09 01/28/11
FICO zero govt. agency 673.760.00 4.790% 12/05/02 04/06/11
Keybank Natl Assn OH CD 96.000.00 2.600% 03/25/09 09/26/11
Doral Bank PR CD 96.000.00 2.750% 03/30/09 09/30/11
FHLB govt. agency 1,000,000.00 4.875% 12/20/02 11/15/11
Goldman Sachs Bank CD 96,000.00 2.850% 01/21/09 01/23/12
GE Capital Financial UT CD 96,000.00 3.000% 01/23/09 01/23/12
BMW Bk of North America UT CD 96,000.00 3.600% 12/31/08 12/31/12
CIT Bank UT CD 96.000.00 3.150% 01/22/09 01/22/13
FHLB govt. agency 500,000.00 5.800% 06/15/07 06/12/13
Capital One CD 96.000.00 4.400% 01/23/08 01/23/12
Capital One CD 96,000.00 4.400% 01/23/08 01/23/12
Washington Mutual CD 96,000.00 4.400% 01/23/08 01/23/12
Capmark Bank UT CD 96.000.00 3.000% 02/18/09 02/21/12
American Express Bank FSB CD 96,000.00 4.750% 12/24/08 12/24/13
American Express Centurion Bk CD 96,000.00 4.750% 12/24/08 12/24/13
Morgan Stanley Bk-UT CD 96,000.00 4.250% 12/24/08 12/26/13
GE Money Bank UT CD 96,000.00 4.100% 12/30/08 12/30/13
FHLB govt. agency 500,000.00 4.200% 02/25/09 02/25/16
FNMA govt. agency 500.000.00 4.750% 01/28/08 07/28/17
FNMA govt. agency 1,000.000.00 4.500% 02/06/08 02/06/17
FHLB govt. agency 1,000,000.00 4.875% 02/13/08 02/13/18
FHLB govt. agency 500,000.00 4.650% 02/27/09 02/27/19
Money Market 728,114.81 0.800% Various -/-/09
Subtotal 10,471,474.81
Wachovia Securities:
FNMA govt. agency step-up 1,000,000.00 1.750% 01/13/09 07/13/09
FHLMC govt. agency 500.000.00 5.250% 11/26/07 11/26/09
FHLMC govt. agency 1,000,000.00 2.250% 02/19/09 02/19/10
FNMA govt. agency step-up 500,000.00 4.000% 02/08/08 08/06/15
FHLMC govt. agency 498,750.00 4.000% 02/12/08 02/12/16
Subtotal 3,498,750.00
Investment Portfolio Total $ 20,656,130.117 3.530% (weighted average)
2009 Investment Reports 04/1512009
INVESTMENT REPORT SUMMARY NARRATIVE
The attached Investment Report Summary identifies the various types of investments and the brokerslbanks the
City of Prior Lake uses for investment purposes.
As of March 31, 2009, the balance of the investment portfolio is $20,656,130.57. The weighted average return
of the investment portfolio is currently 3.53%, down from 3.775% at the end of 2008. Bonds continue to be
called. During the first three months of 2009, $5 million in bonds was called. In the last four months,
approximately $8 million in bonds, or 38% of the portfolio, have been called. Funds have been reinvested at
the most competitive rates available with terms that meet our cash flow needs.
Interest rates have seen some fluctuation during the first quarter of 2009 but nothing significant. The following
table illustrates the changes that have occurred in the treasury rates during the past fifteen months.
4M
Fund
(4MP) 1 mo 3mo 6mo 1 yr 2 yr 3 yr 5yr 7 yr 10 yr
Change from
3 mas aQo (0.20) 0.06 0.10 0.16 0.20 0.05 0.15 0.12 0.41 0.46
Change from
6 mas ago (1.79) (0.85) (0.71) (1.17) (1.21 ) (1.19) (1.13) (1.31 ) (1.10) (1.14)
Change from
1 yr ago (2.52) (1.05) (1.17) (1.08) (0.98) (0.81 ) (0.64) (0.79) (0.60) (0.74)
Change from
12/31/07 (4.16) (2.59) (3.15) (3.06) (2.77) (2.24) (1.92) (1.78) (1.42) (1.33)
Investments for local governments are restricted to only those permitted by Minnesota Statutes. They are
identified as follows:
1. U.S. Treasury Bills and Notes which are direct obligations of the federal government.
2. U.S. Government Securities which are guaranteed or insured by the federal
government i.e., FHLB, FNMA, FHLMC agencies or authorities such as TV A.
3. State and Local Government bonds that are rated "A" or better.
4. Bankers' Acceptances of a United States Bank.
5. Commercial Paper that is rated "A1+P1" and matures in 270 days or less.
6. Repurchase Agreements/Certificate of Deposits with banks having capitalization
exceeding $10,000,000.
Also allowable, but of higher risks, are guaranteed investment contracts (GIC's) and mortgage-backed securities
(CMO's) which because of their sophisticated nature and inherent risk, Prior Lake does not participate in.
The City's investment portfolio amount is a pool of funds identified on the monthly Treasurer's Report which is
comprised of 24 funds that have been established by the City as allowable under state statute. A short
F\\Councll\2009 A.genda
20 0F1\2009 1 sl Ouarter Investment
description of these funds is outlined below. For the most part, each of these funds was established for a
specific purpose.
General Fund - The General Fund represents the necessary resources to support general operating budget
expenditures of the City. The year-end fund balance represents dollars that have accumulated over a period
of time as a result of cumulative budgetary revenue surpluses and expenditure under runs. The City
Council has designated a portion of this amount, equal to a minimum of 30% of the current operating
budget, for working capital to finance city operations.
Sewer & Water Fund - The Sewer and Water Fund accounts for the collection of sewer and water billing
utility revenue. This enterprise fund balance is allocated for the operational costs of the Water/Sewer
departments and normally reserved for large capital municipal system expenses.
Water Oualitv Fund - The Storm Water Fund is an enterprise account funded by the $7.25 storm water
charge on the water bills and is dedicated to finance water quality improvements including departmental
administration, storm water maintenance operations and improvement projects such as water quality
ponds.
Transit Fund - The Transit Fund is an enterprise account funded predominantly (90%) by state aid that is
derived from the vehicle excise tax paid through annual license tab renewals on vehicles and is dedicated
to pay for community transit services such as the downtown commuter service, van pool and dial-a-ride
services.
Cable Franchise Fund - This fund was created to act as a clearing house for funds that were received from
the cable franchise company as specified by ordinance which are then paid to ISD #719 as payment
support for 50% of the public access coordinator position and for cable studio equipment replacement.
Caoital Park Fund - Capital Park funds are dedicated funds generated by the cash park dedication fees paid
at time of development contract execution as a result of new development. Funds are collected for the
purpose of developing the City's neighborhood park and trail system. These dollars are programmed
throughout the course of the City's capital improvement plan.
Severance Comoensation Fund - This fund was established to partially fund the City's compensated
absence liability which is associated with the accrued vacation and sick leave for employees upon
employment termination. The State Auditor's Office has recommended that local governments set aside a
certain percentage on the basis of foreseeable turnover.
ED FedIMN Loan Funds - These funds were created to account for the proceeds of economic development
grants received either from the federal government or the State of Minnesota to provide seed money for a
revolving loan account. The purpose is to provide economic incentive for new business expansion within
the community.
Downtown Redevelooment Fund - This fund was created to provide development assistance in the context
of building facade improvements for downtown businesses in an effort to revitalize and renew the general
appearance of the downtown business district.
DAG Soecial Revenue Fund - The DAG Fund is a special revenue fund to account for project engineering
and inspection fees that are collected as a result of a developer's agreement contract. The fees are paid to
the City by the developer when the contract is executed at the time of final plat approval. These revenues
are used to pay for legal expenses and inspection services on developer-installed utilities including sewer,
water and street installation for newly approved subdivisions within the City of Prior Lake.
F< \Council\2009
20 osr:,z(]CH-; : st Q\ l;-Hier In\restrn:3nt
Water Revenue Bond Fund - PW Bldg - This fund is a debt service fund to pay the bonds that were issued
to construct the public works maintenance building. The capital facility (CFAC) charge of $10.00 that is
generated on the bi-monthly water and sewer bill provides the funding for the bond payments which occur
semi-annually in June and December of each year. Upon demand the funds are transferred from the Sewer
and Water Fund.
Water Revenue Bond Fund - WT Plant - This fund is a debt service fund to pay the bonds that were issued
to construct the water treatment plant. Revenue from the water and sewer bills provides the funding for the
bond payments which occur semi-annually in June and December of each year. Upon demand the funds
are transferred from the Sewer and Water Fund.
Tax Increment Funds - The Tax Increment Fund represents an accumulation of funds such as bond
proceeds and project administration fees charged to companies requesting project writedowns in the form
of tax increment fmancing for new development and/or redevelopment. The TIP district property taxes are
then deposited in a number of tax increment funds established to track their respective revenue.
RevolviDl! Eauioment Fund - A regular replacement schedule for equipment needs of the City in excess of
$5,000 has been adopted. Periodic fund transfers are appropriated to provide a funding source for the
acquisition and purchase of new and replacement vehicles and equipment. The long term effect of
appropriating fund transfers is to mitigate property tax increases and eliminate debt financing.
BuildiDl! Fund - The funds within the Building Fund are reserved for future building needs.
Construction Fund - Construction Fund dollars represent unexpended bond proceeds that are reserved to
pay for improvement projects that have been approved by the City Council on an annual basis. For the
most part, these moneys are necessary to complete outstanding construction contracts and related
engineering and professional services.
Street Oversize Fund - The Collector Street Fund consists of dedicated revenue generated by fees
associated with new development and new construction building permits for the purpose of funding
pedestrian related improvements i.e., bikeways, sidewalks, trail systems plus right of way acquisition
along collector streets and occasional collector street links.
Trunk Reserve Fund - The Trunk Reserve Fund consists of dedicated revenue generated from utility
connection permits and acreage fees assessed at time of sewer and water installation for the purpose of
recovering trunk oversizing costs and central municipal system improvements i.e., wells lift stations, force
mains, etc. These dollars are programmed throughout the course ofthe City's capital improvement plan.
Water StoralZe Fund - The Water Storage Fund accounts for the water tower fee that is charged and
collected on building permits. This fund balance is 100% reserved for the construction of elevated and
ground water storage facilities.
Debt Service Fund - The Debt Service Fund represents prepayments of special assessments, property tax
collections and special levies needed to amortize the outstanding bonded indebtedness of the City. This
fund balance is 100% reserved for the payment of bond principal and interest.
AlZencv Fund - The Agency Fund accounts for the $1500 residential building permit deposit that is
refunded to the building contractor upon final inspection. This provides the City the required financial
assurance that the property site will be adequately cleaned up and debris free before an occupancy permit
is granted.
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r~eport~;\04 20 0912009 1 st Oumtel Investrnent F~eDOit doc
Because city funds are pooled for investment purposes, interest is allocated to each fund on a monthly basis,
and is based upon each individual fund's proportionate share of the total amount. Overall, the total investment
pool does not represent excess reserves but rather available financial resources. In most instances these funds
were established and restricted for specific and designated purposes by either Minnesota Statutes or City Code
to accomplish the goals and objectives of the City of Prior Lake.
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20 Om2009 1 st OU31'ter Investrnent F\epolt cioc