12.1 SR 04-15-2024City of
Elk -
River
To
City Council
Meeting Date
April 15, 2024
Item Description
Investment report - I st quarter 2024
Action Requested
Information Only
Request for Action
Item Number
12.1
Prepared By
Lori Stich, Finance Manager
Reviewed by:
Lori Stich
Joe Stremcha
Cal Portner
Tina Allard
Background/Discussion
Introduction
The purpose of this report is to update the City Council on the status of the various investments the city
maintains as of March 31, 2024.
Background
The investment policy complies with state statutes and generally follows the Government Finance Officers
Association (GFOA) model.
The investment goals for the City of Elk River are passive in nature due to the allowable investments
permitted under state statutes. The city has four objectives for investing. In order of importance, they are: 1)
safety of principal, 2) liquidity, 3) return on investment, and 4) maintaining public trust. This means we are
focused on not losing on the original investment, having sufficient funds to meet ongoing operating cash needs,
getting a market rate of return, and not purchasing speculative investments.
State statutes limit the city's ability to invest in many risky types of investments. The city is generally limited to
federal and state government obligations or agencies backed by them, rated debt of local governments, short-
term highly rated commercial paper, certificates of deposit, and money market accounts (with collateralization
if in excess of FDIC insurance amounts).
The city intends to hold investments until maturity, which means we will get the rate of return on which we
invest our funds. The finance staff ensures the city is sufficiently liquid by continually updating our forecast on
the anticipated cash flow needs over the next five-year time horizon. We anticipate two large tax settlements
each year along with the regularly scheduled debt service payments. We also build in a reserve balance
maintained in money market accounts in case of unexpected expenditures.
The Elk River Vision
A avelcoming community with revolutionary and spirited resourcefulness, exceptional service, and community p p W E H E 0 B
engagement that encourages and inspires prospert1NMURd201i
6.00%
5.00%
4.00%
3.00%
2.00%
1.00%
0.00%
Treasury Yield Curve
1 mo 3 mo 6 mo 1 yr 2 yr 3 yr 5 yr 7 yr 10 yr 20 yr 30 yr
1/2f 24
3/28/24
Cities generally use a short -horizon benchmark such as the two-year Treasury Bill or some similar measure.
As of 3/28/24, the two-year T-bill was at 4.59%, up from 4.33% on 1/2/24. Our current portfolio yield is
roughly 4.89%.
Our primary reserve account is our 4M Fund, which is a money market account where many cities pool their
funds. It currently yields 5.275% with daily withdrawal privileges. It is important the city maintains a strong
diversified portfolio, prioritizing safety, liquidity, and flexibility in this market environment.
Financial Impact
N/A
Mission/Policy/Goal
Grow responsibly and be good stewards for every dollar to develop a sustainable and prosperous community
Attachments
1. 03-2024 investment summary
Page 191 of 201
4*UBS
Bond Summary
as of March 31, 2024
Bond Overview
Total quantity
48,428,000
Total market value
$44,870,179.85
Total accrued interest
$262,516.13
Total market value plus accrued interest
$45,132,695.98
Total estimated annual bond interest
$1,300,109.35
Average coupon
2.80
Average current yield
2.90
Average yield to maturity
4.89
Average yield to worst
4.89
Average modified duration
3.30
Average effective maturity
3.97
Credit Quality of Bond Holdings
Value on % of
Effective credit rating Issues 03/31/2024 ($) porn
A
Aaa1AAA1AAA
13
4,481,400.16
9.93
B
Aa1AA1AA
64
26,722,530.99
59.18
C
AIAIA
1
257,826.00
0.57
D
Baa1BBB1BBB
1
267,020.83
0.59
E
Non -investment grade
0
0.00
0.00
F
Certificate of deposit
20
4,634,678.76
10.25
G
Not rated
9
8,769,2 39 23
1947.
Total
108
$45,132,695.98
100%
RX XX694 • City of Elk River • Business Service Account
Prepared for City of Elk River
Risk profile. Conservative
Return Objective. Current Income
Investment Type Allocation
Investment type
Taxable ($)
Tax exempt /
deferred ($)
Total ($)
of
bond
port.
Asset/Mortgage
8,764,378.51
0.00
8,764,378.51
1942.
Certificates of deposit
4,634,678.76
0.00
4,634,678.76
10.27
Municipals
31,2 39,588 70
0.00
31,239,588.70
69.22
U.S. federal agencies
494,050.00
0.00
494,050.00
1.09
Total
$45,132,695.97
$0.00
$45,132,695.97
100%
Bond Maturity Schedule
$ Millions
7.5
16.2% 16.8%
G q 13.1%12.6%
11.7%
5.0 9.2% 8.6% 8.6%
F
0 2 5 2.8%
C OB 0.0 ' 0.0% 0.0% 0.0% 0.0% 0.0%
2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2035, Other
Effective maturity schedule
Cash, mutual funds and some preferred securities are not. included.
Includes all fixed income securities in the selected portfolio. Average yields and durations exclude Structured Product, Pass Through, Perpetual Preferred, and Foreign securities.
Accrued interest, if any, has been included in the total market value.
Report created on. April 01 , 2024 Page 3 of 33
Page 192 of 201