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Investment Advisory Staff Reports 11/07/18MEETING OF THE INVESTMENT ADVISORY/OVERSIGHT JOINT COMMITTEE MEETING Wednesday, November 7, 2018 3:00 p.m. - 4:00 p.m. Finance Conference Room Meeting called by: Robert Foley, Chair - Facilitator: Robert Foley Type of meeting: Quarterly Meeting Minutes taken by: Diane Hornsby Attendees: Robert Foley, Larry Sallinger (IAC) Richard Rohm, Rick Otto, Will Kolbow (IOC) Josephine Chan, Diane Hornsby (Staff) Please read: The attached Please bring: The attached Agenda Topics 1. Call to Order Robert Foley 2. Approval of Minutes, Meeting of August 8, 2018 Robert Foley 3. Rate Summary October 2017 - September 2018 Josephine Chan 4. Investment Portfolio Update Josephine Chan 5. Treasurer's Investment Reports for July, August, & September 2018 Josephine Chan 6. Sales Tax Update Will Kolbow 7. California Forecast: Sales Tax Trends and Economic Drivers Will Kolbow 8. City Update Rick Otto 9. Next Meeting Date - Wed., February 6, 2019 Robert Foley 10. Public Comment 11. Adjournment Robert Foley MINUTES INVESTMENT ADVISORY (IAC) COMMITTEE INVESTMENT OVERSIGHT (IOC) COMMITTEE Wednesday, August 8,2018,3:00 p.m. - Finance Conference Room PRESENT: IAC COMMITTEE Robert Foley, Chair Ken Romero (absent) Larry Sallinger IOC COMMITTEE (non-voting) Richard Rohm, City Treasurer Will Kolbow, Finance Director (absent) Rick Otto, City Manager (absent) STAFF Katrin Bandhauer, Assistant Finance Director Josephine Chan, Investment/Revenue Officer Diane Hornsby, Executive Assistant 1. Call to Order Chairman Robert Foley called the meeting to order at 3:03 p.m. 2. Approval of Meeting Minutes of May 2, 2018. Mr. Foley moved to approve; Mr. Sallinger seconded; motion carried. 3. Rate Summary Highs and lows for various investments during period of July 2017 through June 2018. Action: Received and filed. 4. Investment Portfolio Update A report showing City's portfolio's investment percentages in various areas, as of July 30, 2018. Action: Received and filed. 5. Treasurer's Investment Reports for April, May, and June, 2018 Explanation of disbursements, investment activity, and sales tax revenue by month. Action: Received and filed. 6. Comparison of Investment Policy with Other Cities Although the cities of Garden Grove, Tustin, and Anaheim have fewer restrictions in their investment policies, Orange, which is more conservative, has seen a competitive rate of return in investments compared to these cities. 7. Sales Tax Update Sales tax receipts and the fifteen top business types comparing latest quarter to corresponding quarter of previous year. Action: Received and filed. DATE OF ITEM NO. 2 PAGE / MEETING //7i? Minutes of the Joint Meeting of the Investment Advisory and Investment Oversight Committees, August 8, 2018 8. i. Chapman Economic & Business Review ii. California Forecast: Sales Trends & Economic Drivers Findings by the forecast show a positive outlook for Orange County in 2018. Action: Received and filed. 9. City Update A verbal report was given regarding PERS unfunded liability and the upcoming Council election. 10. Next meeting date Wednesday, November 7, 2018, at 3:00 p.m. in the Finance Conference Room. 11. Public Comment - None 12. Adjournment - The meeting adjourned at 3:42 p.m. Robert Foley, Chair Richard Rohm, City Treasurer Investment Advisory Committee Investment Oversight Committee Distribution: Mayor and City Council City Manager, IOC Investment/Revenue Officer Administrative Services Director, IOC City Treasurer, IOC City Clerk Investment Advisory Committee 2 DATE OF ITEM NO. PAGE -MEETING RATE SUMMARY October 2017 to September 2018 Month Ending U.S. Treasury Yield LAIF Yield 3 month 6 month 2 year 3 year 5 year Oct-17 1.15% 1.28% 1.60% 1.73% 2.01% 1.14% Nov-17 1.27% 1.44% 1.78% 1.90% 2.14% 1.17% Dec-17 1.39% 1.53% 1.89% 1.98% 2.20% 1.24% Jan-18 1.46% 1.66% 2.14% 2.29% 2.52% 1.35% Feb-18 1.65% 1.86% 2.25% 2.42% 2.65% 1.41% Mar-18 1.73% 1.93% 2.27% 2.39% 2.56% 1.52% Apr-18 1.87% 2.04% 2.49% 2.62% 2.79% 1.66% May-18 1.93% 2.08% 2.40% 2.54% 2.68% 1.76% Jun-18 1.93% 2.11% 2.52% 2.63% 2.73% 1.85% Jul-18 2.03% 2.21% 2.67% 2.77% 2.85% 1.94% Aug-18 2.11% 2.28% 2.62% 2.70% 2.74% 2.00% Sep-18 2.19% 2.36% 2.81% 2.88% 2.94% 2.06% 3.50% 3.00% 2.50% 2,00% 1.50% 1.00% 0.50% 1 I I I Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 3month -4--6 month -0-2 year 3year --5year -8-LAIF DATE OF ITEM NO. 3 PAGE / MEETING 1' 7/i' Investment Portfolio Update As of 10-30-18 Instruments Book % of (Days to Maturity) Value Portfolio LAI F $ 13,700,000 12.6% Money Market Mutual Fund - Treasury Sweep 1,228,095 1.1% Medium Term Note 1 year 9,998,914 9.2% 2 year 10,000,000 9.2% 3 year 2,000,000 1.8% 21,998,914 20.2% Federal Agency 1 year 1,000,000 0.9% 2 year 27,000,930 24.8% 3 year 36,993,689 34.0% 4 year 7,000,000 6.4% Total 71,994,619 66.1% Total $ 108,921,628 100.0% DATE OF ITEM NO. PAGE / MEETING 1/' 71 8888888 8 co CY 41 CC C C (0 N-i C) .- 9,542,710.00 co 0 0 00008 0 0( C 0 C 8(00 8 IT co C -C)0 C co cm 0 108,928,094.59 8888 0 0 0 8 0 8 cm 8 Iq C 0000 0000 0.0.0.0. 0000 E E E E 0000 E E E E d 2 w 0ccc jO 000 E -0000 ;ZZZZ 0 -J 0_CUOC CC)0CJ0C(0(DC- C Total Portfolio B C '0 • 0 CUD LL w co ge Corporation D 2 -i<0 0000 '000'0 U. U. U.U. 00000000oo o •u. 00000 o o C C 0 0 (0 0 0CCr-r-r.o I. 0OCJ(0CCCCCC C. •C%0( Ca (DC.10Cl) Cl) Lt)CU) Q0CC00000dQ0ocjo.jo Q000000000000000QQO W888888o88888o88008 4 -j8 C 0 8 0 8 8 00 0 0 0 0 0 LL <CgCSJ cu cu IL IM Ø a0 E o CD CO C 0 - C(J 8 0 0 u.Z —p-- z 2 oc M c I_ z lu CO CO 0(D • LL U. Z Z ol Z U. Z Z I 0.1 O(02 3i 0.U. LL W U.U.u.<U. w (1) <Ui 0000000000000000 0 I I- 0J (\J C%J (SI CU (SI (Si (SJ (Si 0. (Si (Si (Si CU (SI (SJ (SJ C 2 E 0 0 0 CL C 0 CM it 0 0. (1 (I) 0 • a 3 E1 0 LU co ca 0 • 2 2 2 2 5 5 2 0 c CD 00(1 (1(10 () a (0 U) C/) (0(00) (0 0 C a 000 000 a '; (w LL LL w U.LL.0(1(0WCJ)(j)CJ)0000W(0(0W(1) a 0 -a 0 V- U- * aoj • Cl U) (S- CO (DC (S. (DID CCC 10(0 C- C- C. C a ac a CU CU N N N C9 cm cm cq cm CU N CY N CY CU a a Ci CII ('I CU CII (Si CU (Si CS) CS) CII Cl C') C') (II (SI (SI CU .0 U E E 00.00 E- CE 0) 00000 U. 00000 E E E E E E E E E E ft AGENDA ITEM Date: November 13, 2018 Reviewed/Verified By: City Manager Administrative Services Director 1041 To Be Presented By: X Cons Calendar City Mgr Rpts Council Reports Legal Affairs Boards/Cmtes Public Hrgs Admin Reports Plan/Environ William M. Kolbow Administrative Services Director 1. SUBJECT Monthly Treasurer's Reports for July, August, and September 2018. 2. SUMMARY Presentation of three monthly Treasurer's Reports to the City Council after the end of the quarter covered by the reports. 3. RECOMMENDED ACTION Receive and file. 4. FISCAL IMPACT No fiscal impact as a result of this action. 5. STRATEGIC PLAN GOAL(S) 2d. Be a Fiscally Healthy Community - Effectively manage and develop City assets. 6. GENERAL PLAN IMPLEMENTATION N/A 7. DISCUSSION and BACKGROUND The City's current Statement of Investment Policy has been adopted by the City Council of the City of Orange as Resolution 11080 and is in accordance with the California Government Code DATE OF ITEM NO. PAGE, / MEETING //7'' TO: Honorable Mayor and Members of the City Council THRU: Rick Otto City Manager FROM: Richard A. RAM — City Treasurer 9-P Sections 53600 ET Seq. Per the Investment Policy, three monthly investment reports are to be submitted to the City Council within 45 days following the end of the quarter. As required by the City's present Investment Policy, the City Treasurer's report delineates all investments made by the City Treasurer for the City, its special funds, and the Successor Agency funds, by investment type and by broker. The monthly Compliance Report certifying compliance of all investments with both the Government Code and the City's Investment Policy is included. The Investment Portfolio Statement accurately reflects all investments held by the City and its agents as of the end of the month. This investment data is also presented in other summary and graphic form. A reconciliation between total cash and investments and total cash per the General Ledger is also included. All of the three monthly Treasurer's Reports have been reviewed by the Investment Advisory Committee (IAC). SUMMARY OF CHANGES IN TREASURER'S CASH AND INVESTMENTS Treasurer's Operating Cash & Investments(') Balance @ 6/30/2018 $149,722,612 Monthly Activity: Cash Received 34,522,565 Cash Disbursed (71,106,825) Balance @ 9/30/2018 $113,138,352 "Includes operating cash and investments (valued at cost). Does not include deposits with administrators, imprest cash, fiscal agent cash and investments, and deferred compensation. For the month of July 2018 The July cash disbursements exceeded cash receipts by $30,848,141. During the month, large disbursements included payments totaling $14,890,062 to PERS for annual lump sum prepayment of unfunded liability, $5,182,495 to U.S. Bank for debt service, $4,453,649 to Orange County Water District for pumping assessments, $2,345,089 to Morillo Construction for Shaffer Park renovation, $1,634,104 to PERS for employee benefits, $1,550,848 to CIPA (California Insurance Pool Authority) for insurance, $753,578 to Municipal Water District of Orange County for annual water connection charge and purchased water, and $402,219 to R.J. Noble for annual pavement maintenance. In July, the City received $3,604,029 in sales tax revenue and $269,557 in property tax revenue. In the month of July, no investments were purchased, matured or were called. The City's balance in L.A.I.F. on July 31 was $21,000,000 or a decrease of $30,700,000 due to cash disbursements exceeding cash receipts during the month. DATE OF ITEM NO. PAGE 2 MEETING For the month of August 2018 The August cash receipts exceeded cash disbursements by $22,022. During the month, large disbursements included payments totaling $1,643,347 to PERS for employee benefits, $1,181,180 to Orange County Transportation Authority for the Metrolink Parking Structure, and $367,455 to Municipal Water District of Orange County for purchased water. In August, the City received $3,155,301 in sales tax revenue. In the month of August, no investments were purchased, matured or were called. The City's balance in L.A.I.F. on August 31 was $21,300,000 or an increase of $300,000 related to cash receipts exceeding cash disbursements during the month. For the month of September 2018 The September cash disbursements exceeded cash receipts by $5,758,141. Large disbursements included payments totaling $2,534,974 to U.S. Bank for debt service, $1,644,343 to PERS for employee benefits, $976,325 to R.J. Noble for Street maintenance and rehabilitation, $666,281 to Morillo Construction for Shaffer Park renovation, $631,927 to Municipal Water District of Orange County for purchased water, $405,630 to Ticor Title Company for purchase of right-of-way, and $375,512 Big Ben Engineering for annual pipeline renewal. The City received $3,798,901 in sales tax revenue and $487,639 in property tax revenue. In the month of September, no investments were purchased, matured or were called. The City's balance in L.A.I.F. on September 30 was $16,100,000 or a decrease of $5,200,000 due to cash disbursements exceeding cash receipts during the month. CREDIT RATING ON INVESTMENTS During this period, there was no change to the credit rating on the investments in the investment portfolio. INVESTMENT ADVISORY COMMITTEE (IAC) The most recent IAC meeting was November 7, 2018 while the next quarterly Committee meeting is to be scheduled for February 2019. 8. ATTACHMENTS Attachment A - Investment Report for July 2018 Attachment B - Investment Report for August 2018 Attachment C - Investment Report for September 2018 ov DATE OF ITEM NO. 5 PAGE 3 MEE7ING2/'J. Attachment A Investment Report for July 2018 DATE OF ITEM NO. PAGE 41 MEETING // 7 i? MONTHLY SUMMARY COMPLIANCE CERTIFICATE July 2018 Note: All concentration restrictions were obtained from Sections 53601 and 53635 of the Government Code or the City's Investment Policy as of June 12, 2018, whichever was the more stringent. 1. U.S. Agencies (A) Total amount (book value) of U.S. Agency securities owned by the City = $71,994,291. (B) Total amount allowed (75% of portfolio book value) of all City investments = $88,398,995. Is (A) less than (B) at time of purchase? Yes X No 2. Money Market Mutual Funds (A) Total amount (book value) invested in money market mutual funds by the City = $2,871,759. (B) Total amount allowed ($15 million or 20% of portfolio book value, whichever is less) of all City investments = $15,000,000. Is (A) less than (B)? Yes X No 3. LAW (A) Total amount (book value) invested in LAIF by the City = $21,000,000. (B) Total amount allowed (35% of portfolio book value) of all City investments = $41,252,864. Is (A) less than (B)? Yes X No 4. Commercial Paper (A) Total amount (book value) invested in commercial paper by the City = $0. (B) Total amount allowed (20% of portfolio book value) of all City investments = $23,573,065. Is (A) less than (B)? Yes X No 5. Medium-Term Notes (A) Total amount (book value) invested in medium-term notes by the City = $21,999,277. (C) Total amount allowed (20% of portfolio book value) of all City investments $23,573,065. Is (A) less than (B)? Yes X No 6. Excluded Investment Vehicles (A) Are any securities excluded by the Statement of Investment Policy currently included in the City's portfolio? Yes No X 7. Investment Management Agreements (A) Does the City have any investment manager or advisor agreements? Yes No X (if no, skip to number 8) DATE OF MEETING /1.7./f ITEM NO. PAGE (B) If so, was the agreement approved in advance by the City Council? Yes No (C) Has the City examined the methods and past performance of the investment manager? Yes No (D) Pursuant to the agreement, does the City retain authority to make investment decisions? Yes No (E) Pursuant to the agreement, are the investments deposited with the City's custodian? Yes No 8. Maturity Limits (A) Does the City currently own any security with a maturity date in excess of five years? Yes No X (B) Does the City currently hold at least 25% and no more than 50% of its portfolio in securities at time of purchase with maturities equal to or less than 365 days? Yes No (C) Does the City currently hold no more than 50% of its portfolio in securities at time of purchase with maturities between 366 days and 730 days? Yes X No (D) Does the City currently hold no more than 35% of its portfolio in securities at time of purchase with maturities between 731 days and 1095 days? Yes No (E) Does the City currently hold no more than 30% of its portfolio in securities at time of purchase with maturities between 1096 days and 1460 days? Yes No (F) Does the City currently hold no more than 30% of its portfolio in securities at time of purchase with maturities between 1461 days and 1825 days? Yes No 9. Issuer Limits Does each issuer of Money Market Mutual Funds continue to meet the following requirements? (i) Is each issuer registered with the Securities and Exchange Commission under the Investment Company Act of 1940? Yes No N/A X (ii) Does the fund of each issuer carry the highest rating of at least two of the three largest national rating agencies? Yes No N/A X (iii) Has each issuer retained an investment adviser registered with the Securities and Exchange Commission with not less than five years' experience managing money market mutual funds with assets under management in excess of $500 million? Yes No N/A X DATE OF ITEM NO. PAGE t MEETING Prepared By: Audited By: c - to-ss~phit Chan osa6io Gizman Investment/Revenue Officer Accountant We hereby certify that for the month of July 2018, the investment actions of the City of Orange comply in all respects with the requirements of the California Government Code and the City's current Investment Policy and that there is sufficient cash flow to cover the next six months' expenditures barring any catastrophic natural disasters. Market values are obtained through ICE Data Pricing and Reference Data, the State Treasurer's Office, U.S. Trust and U.S. Bank. Certified By: Verified By: <I- 11 tl-~ Richard A. Rohm William M. Kolbow City Treasurer Administrative Services Director DATED: October 25, 2018 oop DATE OF ITEM NO. S PAGE 7 MEETING /f 7/ Stifel Nicolaus & Co Inc. UBS Financial Services UBS Financial Services UBS Financial Services Stifel Nicolaus & Co Inc. Stifel Nicolaus & Co Inc. o 00 ci L(( C) C) C') (0 NC') IZF 06 (6 '— qqTC') In 00 a) cc co C') 0 0 d 0 0 0 0 0 (0 0) LO 0 It (N (0 ((DC 0 LO 0 (N (N (0 (0(C 41,000,000.00 0 0 d 0 0 0 0 0 (0 40,998,966.11 4,997,444.20 ul~I,s 5,000,000.00 5,870,532.00 (N 0 (N N (N 0 (N 0 ('I Co 0 (N 0 ('4 (0 ('4 (0(0(0 000 U- LL U U- U- LL (ON (0 0 0 0 (N C'4C'J (N C'J(O UBS Financial Services UBS Financial Services UBS Financial Services —j 0< z z 0 —j LU 0 = -J LU LU LL BANK/BROKER (I) LOCAL AGENCY INVESTMENT FUND (LAIF) 000 000 tC)LU 0) 0 IRT Lfi OCT (d 0 qct(0 N NC) (D (C) N 0 (0 (00 (N 00) (00- 0)00 CD 0) 00 C) 00 (0 N 00 00 00 00 00 00 00 N (N 7,000,000.00 (0 IC) C) CNN - cici 0 100 0 (N 0 (N0 (N (N (N 0 00 (N (N (N N (DC) (N (N ('4 N 00 (D co cacti III U-U-U- (ON(0 0 00 (N (N (N N0 C) (N (f (N N 0) C') Stifel Nicolaus & Co Inc. Stifel Nicolaus & Co Inc. Stifel Nicolaus & Co Inc. 000 000 d 0 000 000 CT cc o 000 (:: co C'J C) i 04 000 000 d co 000 000 000 000 ooq C C) - 04 000 000 000 co 000 000 00o (N . ' C) (N It qt . . 00 DESCRIPTION co 0 csJ CO) 75 3 >' - MATURITY LU U.S. T-Note 0 (0 C,) C') CO N C') ('4 0 LU ci LO N 1-7 (0 (N LU (N N N ('4 C) C) C) (N 0 0 d 0 0 0 0 0 (N (N 0 LU 0) LO N P- 00 (0 (N 0 (0 LO N N (0 (N 0 Iq LO N N (0 (N 0 LU ci LI) N [,-co (0 (N 115,258,952.50 0 LU (0 LO N N (0 (N 117,865,326.99 152,518,235.46 150,046,378.29 117,871,758.50 152,524,649.29 Portfolio total 6-30-18 Portfolio total 7-31-18 0000 0000 Itt (D 00 It -LU qt LU 0)00) LO LU C') 0) 0 C') (N 0 0 (0 (0 0 dC) fl, d 0 11, (N 0 0 (0 (0 0 0 0- CO 0 000) 0 C'4(OC') 0 0 (0 C) 0 10000 1010 It 0 0000 101000 IC) N 0 (N 0 C) (N'-0 0 OC'4 (N -. (N LO co CQ (0(0 N N 0000 C'4 (N ('4 (N LU 0) CD 0) Stifel Nicolaus & Co Inc. UBS Financial Services UBS Financial Services UBS Financial Services 14,655,663.00 0 ('1 Rt C) C) RF o 000000 o 000000 .i C) (O0(3)NIU- o 6-ccic5 qzr N(0L0c0(0 It (0C)LU0)(0N C') 0000'-O C) 000O-O d 0000(00 (0 0000(00 (0 0(::000)0 N C) 00000)0 0) 00000)0 16 71, o 000000 o 000000 d dddddd 0 000000 o 000000 d 000000 o 000000 o ooc000 16 (0-IUC) Ni (0 0000 N 0 (0 0 (0 0010 NIflNL 000000 100100010 't ICT N10LCL o 0 (N(N ('4 (N 0 00 0 (NC\j (N(N - (N (N C\j (N (N (N LL 00 zzzzzz Li. LL Li. LL Li. LL (0(0(0(D(0(0 000000 Z (N (N (N o N (0(0(0 N N It 101010 r- 0 0 U) Cl) LU I- 0 -I z 0 z —j cc LU LU PURCHASES I DEPOSITS $170,936.10 CALLABLE C coco 0) C N. z '4. '4- '4- DESCRIPTION SETTLEMENT DATE DATE OF ITEMNO.__i_PAGE '1 MEETING. ,iii8 w 0 0 CALLABLE IItkIII1J SETTLEMENT DATE MATURITIES I WITHDRAWALS I CALLS $30870936.10 $30,870,936.10 z a Various dates DATE OF -7-le ITEM NO. ' PAGE /c) MEETING nce Measures Portfolio Pert 0 0- U) i—F-- 00 (0 cd T- CD 11- C#) 00 CD CD w The Modified Dietz Method assumes a constant rate of return on the portfolio during the period and is not based on daily valuations. adjusted on a time-weighted basis (per Modified Dietz Method) for cash flows into or out of the portfolio during the period. in the case of coupon investments, includes an adjustment to the face rate for any premium paid or discount received. Source of Market Value: ICE Data Pricing and Reference Data provides market value on all instruments. Portfolio Effective Rate of Return: interest earnings (not receipts) for period divided by average daily balance for period, annualized (multiplied by quotient of 365 divided by days in period). Portfolio Yield to Maturity: weighted-average yield to maturity (or call date, if applicable) for entire portfolio; Total Rate of Return: growth or decline in the value of the portfolio, including both changes in the market value and income, as a proportion of the starting value, 0 0 4 It 0 0 Rate of Return: .2 DATE OF ITEM NO. PAGE /3 MEETING /f Maturity Aging Schedule co N- CJOQ C) Q'tNQQ C)QDCt)OO > co coa)oo . 00 OOQ 0110- 0—(OC'JN- C Cl) Cl) Cl) Cl) Cl) - - . )) crio Weighted-average years to maturity for portfolio $90,000,000 + 64 $40,000,000 + 0 0 $50,000,000 -I- $60,000,000 + $70,000,000 + $80,000,000 + $30,000,000 + $10,000,000 1- $20,000,000 + 0 0 0 0 0 City of Orange Reconciliation of Total Cash and Investments to General Ledger As of July 31, 2018 Treasurer's Operating Cash and Investments Checking, Payroll & PMA - Wells Fargo Treasurer's Investments Cash in transit Cash Deposits with Administrators State Compensation Insurance Fund Imprest Cash Fiscal Agent Cash and Investments 296,345 117,865,327 712,800 118,874,472 90,423 118,964,895 12,200 7,366,841 Total Cash & Investments 126,343,936 Total Cash and Investments per General Ledger 1 Plus Outstanding Checks 126,030,730 313,206 Total Cash & Investments 126,343,936 DATE OF ITEM NO........ PAGE /4/ MEETNG_I' 7/( 1 Includes adjustment for month-end timing differences. GL Cash 1 Attachment V City of Orange Fiscal Agent Investments As of July 31, 2018 Carrying Value Market or Contract Value Fiscal Agent Cash and Investments Assessment District 95-1 1996 Limited Obligation Improvement Bonds - U.S. Bank 79,311 79,311 First American Government Obligation Fund (1.77%) Community Facilities District 91-2 2013 Special Tax Refunding Bonds - U.S. Bank 1,586,475 1,586,475 First American Government Obligation Fund (1.77%) Federal National Mortgage Association (1.25%) Successor Agency 2008A Merged & Amended Tax Allocation Bonds - U.S. Bank 1,364 1,364 First American Government Obligation Fund (1.77%) Federal National Mortgage Association (1.375%) Successor Agency 2008B Merged & Amended Tax Allocation Bonds - U.S. Bank 515,773 515,773 First American Government Obligation Fund (1.77%) Federal National Mortgage Association (1.875%) Community Facilities District 06-1 2015 Special Tax Refunding Bonds - U.S. Bank 1564,629 1,564,629 First American Government Obligation Fund (1.77%) US Treasury Bond (4.375%) Successor Agency 2014A Merged & Amended Tax Allocation Refunding Bonds - U.S. Bank 3,495,428 3,495,428 First American Government Obligation Fund (1.77%) Successor Agency Refunding Bonds 2018A - U.S. Bank 123,861 123,861 First American Government Obligation Fund (1.77%) Total Fiscal Agent Cash and Investments 7,366,841 7,366,841 DATE OF ITEM NO. PAGE / MEETINGL"Z1 Fiscal. 1 Master (2) Attachment B Investment Report for August 2018 DATE OF ITEM NO. PAGE fe MEETING MONTHLY SUMMARY COMPLIANCE CERTIFICATE August 2018 Note: All concentration restrictions were obtained from Sections 53601 and 53635 of the Government Code or the City's Investment Policy as of June 12, 2018, whichever was the more stringent. 1. U.S. Agencies (A) Total amount (book value) of U.S. Agency securities owned by the City = $71,994,455. (B) Total amount allowed (75% of portfolio book value) of all City investments = $89,868,777. Is (A) less than (B) at time of purchase? Yes X No 2. Money Market Mutual Funds (A) Total amount (book value) invested in money market mutual funds by the City = $4,531,485. (B) Total amount allowed ($15 million or 20% of portfolio book value, whichever is less) of all City investments = $15,000,000. Is (A) less than (B)? Yes X No 3. LAW (A) Total amount (book value) invested in LAW by the City = $21,300,000. (B) Total amount allowed (35% of portfolio book value) of all City investments = $41,938,762. Is (A) less than (B)? Yes X No 4. Commercial Paper (A) Total amount (book value) invested in commercial paper by the City = (B) Total amount allowed (20% of portfolio book value) of all City investments = $23,965,007. Is (A) less than (B)? Yes X No 5. Medium-Term Notes (A) Total amount (book value) invested in medium-term notes by the City = $21,999,096. (C) Total amount allowed (20% of portfolio book value) of all City investments = $23,965,007. Is (A) less than (B)? Yes X No 6. Excluded Investment Vehicles (A) Are any securities excluded by the Statement of Investment Policy currently included in the City's portfolio? Yes No X 7. Investment Management Agreements (A) Does the City have any investment manager or advisor agreements? Yes No X (if no, skip to number 8) DATE OF ITEM NO. PAGE t7 MEETING (B) If so, was the agreement approved in advance by the City Council? Yes No (C) Has the City examined the methods and past performance of the investment manager? Yes No (D) Pursuant to the agreement, does the City retain authority to make investment decisions? Yes No (E) Pursuant to the agreement, are the investments deposited with the City's custodian? Yes No 8. Maturity Limits (A) Does the City currently own any security with a maturity date in excess of five years? Yes No X (B) Does the City currently hold at least 25% and no more than 50% of its portfolio in securities at time of purchase with maturities equal to or less than 365 days? Yes No (C) Does the City currently hold no more than 50% of its portfolio in securities at time of purchase with maturities between 366 days and 730 days? Yes No (D) Does the City currently hold no more than 35% of its portfolio in securities at time of purchase with maturities between 731 days and 1095 days? Yes No (E) Does the City currently hold no more than 30% of its portfolio in securities at time of purchase with maturities between 1096 days and 1460 days? Yes No (F) Does the City currently hold no more than 30% of its portfolio in securities at time of purchase with maturities between 1461 days and 1825 days? Yes No 9. Issuer Limits Does each issuer of Money Market Mutual Funds continue to meet the following requirements? (i) Is each issuer registered with the Securities and Exchange Commission under the Investment Company Act of 1940? Yes No N/A X (ii) Does the fund of each issuer carry the highest rating of at least two of the three largest national rating agencies? Yes No N/A X (iii) Has each issuer retained an investment adviser registered with the Securities and Exchange Commission with not less than five years' experience managing money market mutual funds with assets under management in excess of $500 million? Yes No N/A X DATE OF ITEM NO. PAGE / MEETING Prepared By: Audited By: a~ sphie Chan R 7/ osanGuzman Investment/Revenue Officer Accountant We hereby certify that for the month of August 2018, the investment actions of the City of Orange comply in all respects with the requirements of the California Government Code and the City's current Investment Policy and that there is sufficient cash flow to cover the next six months' expenditures barring any catastrophic natural disasters. Market values are obtained through ICE Data Pricing and Reference Data, the State Treasurer's Office, U.S. Trust and U.S. Bank. Certified By: Verified By: Richard A. A. Rohm City Treasurer William M. Kolbow Administrative Services Director DATED: October 25, 2018 DATE OF ITEM NO. PAGE / MEETING 000 000 ood 000 000 00 000 coc 0- ('1 000 000 ood 000 coo 000 000 '-0 CN- 000 000 000 000 000 000 C)000) '-0 i- Co Co C) C) 6,731,123.00 N- 0 0 Co C) 0 IT 0 N-C) 0 C) (0 00 C) 00 C)_ 0_0_ (ON- C'J 15,997,923.98 000000 0.q°.q00 0 Li) Li) N- 00 CO CO (0 C) It C) - 0 ('4 C) ('4 Co N- C) CO Cl) Co C) LO 0) C) Co C) LO OD Co N- LI) CoCOCt) 0000 Co 0 000000 odddcid 000000 000000 0006a6 0000 C) 0 O 0 00 C) 0 (0'- LO C) Cl) (0 0000 N- 0 LO L000Ct) N-L(N-(0 000000 LO LI)OOLC) IcT It r- CC) Li It J - J UBS Financial Services UBS Financial Services UBS Financial Services Stifel Nicolaus & Co Inc. 40,999,003.08 41,000,000.00 000 000 (0 (0 C'J LO LO 0000 0000 CsiCoO Co 0 ('4 C) CoO 0 (0 C') Lt) C) LU ('4(0 Itt CO C) C) C) It) LU CO C) 0 q CO CY - Co 0 N CF - 4,997,527.90 0 F- ('4 It) F- 0) le C) 4,000,000.00 0 CO Co 0 0 Co C) 0 0 LO (Y) 0 0141(.00 00 Co 0 0- Co 0 00 C) 0 c\i(6C':;0 5,000,000.00 0000 0000 0000 0000 0000 CDCOC 0000 0000 0 0 0 4,000,000.00 LI ('4(0 C) LU 0 (CCC 0 (0 C) 0 (0000 LU LU '-c'J 0 LO ('1 IN(0 ((CO 0000 LU LU 0 0 LUN-0 ('4 0 ('4 0 ('4 Co 0 C) 0 0 0 0 0 (0 0 0 C 0 0 0 0 d 0 0 0 0 0 (0 U.S. T-Note Wells Fargo Bank 0 0 0 Co C') 0 RT ('4 (0 LU It lq- 17 (') LI) It U) 0) 0 C) (7) 0) ('4 (0 I.t) It C') LO 0 0 0 0 0 0 0 (0 LU Co co It LU 1147 00 00 001 0(00 C) C) 0C-%J0 C) C) LO LO C\J 0 000 c\J ('4 ('4 ('1 ('J C'4 N- 00 CD (I) LOCAL AGENCY INVESTMENT FUND (LAIF) 1- LUW BANK/BROKER DESCRIPTION 7,000,000.00 00 00 00 N- C'4 CD LO CO C'Jf,- LOCt) c\J c'J 0 ('4 0 ('4 N- ('I - 10/28/2019 '-0 C'JC'J 00 (\J C'4 LOLl) ('4 C'J Lt)C'J 11/30/2020 zzzzzz IL IL IL LL LL IL (0(0(0(0(0(0 Co U, Co Iz C,) 1$) ICF Co U) Ict RT C,) It) IT Co U) RT C,) U) 14, 117,465,158.56 119,825,035.33 119,831,484.56 115,258,952.50 117,865,326.99 117,871,758.50 co co 1- 1 C') C') CoN- C C - - 00 00 00 00 0-a- 00 C) C) 00 00 00 0 000000 o• 000000 0 000000 0 000000 0 000000 0 000000 0 000000 0 000000 Co u(O 000000 cJ ('4 ('4 ('4 ('4 ('4 ('4C'J ('4 ('1 ('4 'C'JC'JC'1 ('I'-'-- 0 U) Cl) LU 0 le CC ccwwcci Q000 1-0 a 2 CD (1) Cl) Wl)G)Ci) w <oioi (J)Wo (J) 0 OCCl(COCClC.) OOO Z C ,-c cc Cci - (ciCciCci <ccc z ZZMEZE LLtLtLi w 1- <.tUCo.-Co fl CoCoCo 2 0 0 0 LU Lii LU U- U- August 2018 w 0 0 $5,371,447.43 $2,500,000.00 5,371,447.43 2,500,000.00 CALLABLE z z Co C) 0) C 0-0 co Co 0) DESCRIPTION Sweep Account SETTLEMENT DATE Various dates Various dates ITEM NO. b PAGE 2-, DATE OF MEETING SETTLEMENT DATE DESCRIPTION $2,200,000.00 $2,200,000.00 2 z Sweep Account Various dates PAGE 7- ITEM NO. DATE OF MEETING. , Portfolio Effective Rate of Return: interest earnings (not receipts) for period divided by average daily balance for period, annualized (multiplied by quotient of 365 divided by days in period) ci) ca > 0) C cci U) ci) r 0 C 0 t 0 cc. 0 CL ca (/) ca ci) E 0 0 C 0 C cci ci) cci > C - Is; co cn og ci) (ci -70 > r -cc cm E () ci)3 > 26 cc.-5 cci 0 ci)ci) C) .0 C — 42ci) ci) CE cz So > Cci) ca .0 g o ci) C (ci ci) 0 Cci •c cci 00 Cl)I- The Modified Dietz Method assumes a constant rate of return on the portfolio during the period and is not based on daily valuations. in the case of coupon investments, includes an adjustment to the face rate for any premium paid or discount received. adjusted on a time-weighted basis (per Modified Dietz Method) for cash flows into or out of the portfolio during the period. Portfolio Yield to Maturity: weighted-average yield to maturity (or call date, if applicable) for entire portfolio; Portfolio Performance Portfolio Performance Measures 0 0 .4— t 0 0 Rate of Return: Portfolio Effective Rate of Return - for Fiscal Year-to-date Cl) C) I- 0 cc a) 0 cc a) C.) a) w 0 0 0 CL Portfolio Yield to Maturity at 8/31/2018 Total Rate of Return: (D N = C CC C— CO (C H — ON- O C; C6 C C) 0)0 J c'0, E 0 0 .0 .0 C -'--. U. - C) C 0 C) C) E U- C) .0) C)' 09 0) \ C)' CM 0 00 / 00 Lo C C) Z 1 ; C)0 00 0 • U,>- C) z:-0 ENLO L..0 C) C)(L() Q)Lr)c C) LI.. 0,-,- EO.0 LL .2 C) C) U- DATE OF OF ITEM NO. PAGE MEE11NGJ/"?'d' QC)'—(O0 010000 C) cc N-cc0 ici -o QQC")0 >C)QC)0 0C)0 10QDOD N- 0 0 10 C) 0 LI) cc 0) 0 o Cr)CJ1' 0 Im ft L. 0 C (1) Cl) Cl) Cl) Cl) - .- - - - 1.. cc Maturity Aging Schedule Weighted-average years to maturity for portfolio $90,000,000 + $80,000,000 + $70,000,000 -I- $60,000,000 + $50,000,000 + $40,000,000 + $30,000,000 ± $20,000,000 -1- $10,000,000 ± 64 0 0 0 0 0 0 City of Orange Reconciliation of Total Cash and Investments to General Ledger As of August 31, 2018 Treasurers Operating Cash and Investments Checking, Payroll & PMA - Wells Fargo Treasurers Investments Cash in transit Cash Deposits with Administrators State Compensation Insurance Fund Imprest Cash Fiscal Agent Cash and Investments 218,286 119,825,035 (1,146,828) 118,896,493 118,896,493 12,200 7,467,661 Total Cash & Investments 126,376,354 Total Cash and Investments per General Ledger 1 Plus Outstanding Checks 124,613,563 1,762,791 Total Cash & Investments 126,376,354 DATE OF ITEM NO. PAGE MEETING 1 Includes adjustment for month-end timing differences. GL Cash 2 Attachment V City of Orange Fiscal Agent Investments As of August 31, 2018 Carrying Value Market or Contract Value Fiscal Agent Cash and Investments Assessment District 95-1 1996 Limited Obligation Improvement Bonds - U.S. Bank 147,688 147,688 First American Government Obligation Fund (1.79%) Community Facilities District 91-2 2013 Special Tax Refunding Bonds - U.S. Bank 1,586,520 1,586,520 First American Government Obligation Fund (1.79%) Federal National Mortgage Association (1.25%) Successor Agency 2008A Merged & Amended Tax Allocation Bonds - U.S. Bank 2,559 2,559 First American Government Obligation Fund (1.79%) Federal National Mortgage Association (1.375%) Successor Agency 2008B Merged & Amended Tax Allocation Bonds - U.S. Bank 516,665 516,665 First American Government Obligation Fund (1.79%) Federal National Mortgage Association (1.875%) Community Facilities District 06-1 2015 Special Tax Refunding Bonds - U.S. Bank 1,590,206 1,590,206 First American Government Obligation Fund (1.79%) US Treasury Bond (4,375%) Successor Agency 2014A Merged & Amended Tax Allocation Refunding Bonds - U.S. Bank 3500,006 3,500,006 First American Government Obligation Fund (1.79%) Successor Agency Refunding Bonds 2018A - U.S. Bank 124,017 124,017 First American Government Obligation Fund (1.79%) Total Fiscal Agent Cash and Investments 7,467,661 7,467,661 Ole DATE OF ITEM NO. > PAGE A7 MEfl1NG ff'1Ld' Fiscal.2 Master (2) Attachment C Investment Report for September 2018 DATE OF ITEM NO. PAGE MEETING IIP MONTHLY SUMMARY COMPLIANCE CERTIFICATE September 2018 Note: All concentration restrictions were obtained from Sections 53601 and 53635 of the Government Code or the City's Investment Policy as of June 12, 2018, whichever was the more stringent. 1. U.S. Agencies (A) Total amount (book value) of U.S. Agency securities owned by the City = $71,994,619. (B) Total amount allowed (75% of portfolio book value) of all City investments = $84,566,468. Is (A) less than (B) at time of purchase? Yes X No 2. Money Market Mutual Funds (A) Total amount (book value) invested in money market mutual funds by the City = $2,661,758. (B) Total amount allowed ($15 million or 20% of portfolio book value, whichever is less) of all City investments = $15,000,000. Is (A) less than (B)? Yes X No 3. LAW (A) Total amount (book value) invested in LAIF by the City = $16,100,000. (B) Total amount allowed (35% of portfolio book value) of all City investments = $39,464,352. Is (A) less than (B)? Yes X No 4. Commercial Paper (A) Total amount (book value) invested in commercial paper by the City = (B) Total amount allowed (20% of portfolio book value) of all City investments = $22,551,058. Is (A) less than (B)? Yes X No 5. Medium-Term Notes (A) Total amount (book value) invested in medium-term notes by the City = $21,998,914. (C) Total amount allowed (20% of portfolio book value) of all City investments = $22,551,058. Is (A) less than (B)? Yes X No 6. Excluded Investment Vehicles (A) Are any securities excluded by the Statement of Investment Policy currently included in the City's portfolio? Yes No X 7. Investment Management Agreements (A) Does the City have any investment manager or advisor agreements? Yes No X (if no, skip to number 8) DATE OF ITEM NO. s PAGE . MEETING /f.7f (B) If so, was the agreement approved in advance by the City Council? Yes No (C) Has the City examined the methods and past performance of the investment manager? Yes No (D) Pursuant to the agreement, does the City retain authority to make investment decisions? Yes No (E) Pursuant to the agreement, are the investments deposited with the City's custodian? Yes No 8. Maturity Limits (A) Does the City currently own any security with a maturity date in excess of five years? Yes No X (B) Does the City currently hold at least 25% and no more than 50% of its portfolio in securities at time of purchase with maturities equal to or less than 365 days? Yes No (C) Does the City currently hold no more than 50% of its portfolio in securities at time of purchase with maturities between 366 days and 730 days? Yes No (D) Does the City currently hold no more than 35% of its portfolio in securities at time of purchase with maturities between 731 days and 1095 days? Yes No (E) Does the City currently hold no more than 30% of its portfolio in securities at time of purchase with maturities between 1096 days and 1460 days? Yes No (F) Does the City currently hold no more than 30% of its portfolio in securities at time of purchase with maturities between 1461 days and 1825 days? Yes No 9. Issuer Limits Does each issuer of Money Market Mutual Funds continue to meet the following requirements? (i) Is each issuer registered with the Securities and Exchange Commission under the Investment Company Act of 1940? Yes No N/A X (ii) Does the fund of each issuer carry the highest rating of at least two of the three largest national rating agencies? Yes No N/A X (iii) Has each issuer retained an investment adviser registered with the Securities and Exchange Commission with not less than five years' experience managing money market mutual funds with assets under management in excess of $500 million? Yes No N/A X DATE OF ITEM NO. PAGE 3° MEETING/J7(F Prepared By: Audited By: /t"t1A't1 -?1t&__-- Guzman Accountant JbSephine Chan Investment/Revenue Officer We hereby certify that for the month of September 2018, the investment actions of the City of Orange comply in all respects with the requirements of the California Government Code and the City's current Investment Policy and that there is sufficient cash flow to cover the next six months' expenditures barring any catastrophic natural disasters. Market values are obtained through ICE Data Pricing and Reference Data, the State Treasurer's Office, U.S. Trust and U.S. Bank. Certified By: Verified By: 7 ?, , -z I- a, v 6 A 72L - Richard A. Rohm City Treasurer William M. Kolbow Administrative Services Director DATED: October 25, 2018 DATE OF ITEM NO. PAGE 3/ MEETING 000 000 doo 000 000 doo 000 CD LU - (D co Tl- 000 ooq doo 000 00q 000 000 CD LU 0 CD CD 000 000 000 00q 600 000 CD Lo C CD CD Co Co CD CD 0Q Co Co CD CD C.J C'J 00 000 000 N- LOO It L0 00 CD '-Co N- LU Co Co Co co N-. N°' CD CD 0 N- OCo dd 0 Co 00) 00 00 00 N- CJ 00 00 0 00 00 00 00 00 N- CJ CD It) Co C'JN- c'J C\j 0 LU 0 0 C'J 0 LU V -LU C%J C'J D n co III LL LL LL ( CD N- CD 0 00 c..J C') C') N- 00) C%JCo C') N- 00 (Y) 0 06 C') Ca 0 C) z 0) Cl) (I) LOCAL AGENCY INVESTMENT FUND (LAIF) 6,997,036.67 7,000,000.00 Stifel Nicolaus & Co Inc. Stifel Nicolaus & Co Inc. -J 0< CD> MATURITY DESCRIPTION Ui 0 BANK/BROKER Cs.) CD C--U) C- (D CD C') C') CD C-U) N- CD CD C') C-..) N-U) N- CD co ('4 112,755,290.71 110,192,752.62 112,761,757.62 119,831,484.56 119,825,035.33 117,465,158.56 Portfolio total Portfolio total tTEMNO._cPAGE U.S. T-Note (DCDN- N - 0000 C') C') C'.) C') LU CD C) 0 0000000 0000 0000 0 0000000 0000 0000 ('1 04LU(DCD06- 0000 OCDCDO co LU q,4,- LU C') It) LU 0 C') CO '-0) - qct CDCoN-0) It U) 00 - LUCDN- N- CD O(dN- N- CDN- CD 0)N-N-CO CDC'JCDC') U) CD CD CD (o V-- CD co .- CD CD 0) Lo CD CD N- C) co C) CD CD 0) C) 0) LU U) LU CD Co LU C) qqi Co LU IZF LU Co C) 0000 LU 0 U) - 0 0 '— 0 lqt LU 0 0 0000000 CDOOCD 00Co0 N oddoddo 0 - o - oo CD 0000 It 0 Rr 0 0 - 0 CD Lo 0 C) 0000000 CD 0 (= CD 0 C') CD 0 N 00000)00) N- 0 0 N- 00) C) 0 C) 00000)00) 0) 0 00) 00 CD 0 C) 00000)00) 0) 0 0 C) 0 (::0) 0 U) CD-LO0)CoCD0 C'4CDCo0 1 0 0000000 0 0 00 0000 0 0000000 0 0 00 0000 d 000000 dodd dddd 0 0000000 0 0 00 0000 0 0000000 0 0 00 0000 d 6000000 0000 0066 0 0000000 0 0 00 0000 0 0000000 0 0 00 0000 CD CD .- LU C) Ni CD i— LU Ili CD LU C') CD Ni 0 'l• 0000 N- 0 C) Lo 0 0 CD C) 0 4) 0 LU 00 Lo v C') CD LU 000 It It N-LUN-LOCDCDCO LULU0 C') 000000 0 LU 0 0000 LU 0 LU 00 Lo C') C') CD LU Lo 00 NT N- LULULU CDCDCO LUN-0 I— C') 0 C'.) 0 C'.) CD C') CDCDCD 000 LL LL LL LLL1U CD CD CD CD CD co CD N- CD 000000 z C') C') C') C') ('4 ('4 C'.) ('4 C') CJC')C') C') 9t ItT Lo Lr) L0 r- - 0 U) U) 4 Ui 4 Z 4 CD C 0) (1) C O__00_0 - a 0)0) 0) Ui oS(I)C/)o(J) cc 0 Oa)c0 cc c05 -jww(I) CD CD - co 0 0 Ui Ui 3 1 <<<<<4 zzzzzz LL U LL LL LL U o C')C'J 0 C') 0 c\j 00 c\l 0 C') C')C'.) C') C'.) C') C') -. C'.) C') 0 C') UBS Financial Services 0 C'.) 0 C') Co UBS Financial Services UBS Financial Services 0 C') 0 CD C') Co Lo co N- ci - CD Co co C') C') C) C') CO CD N- LU C) N- co C) CD 0) CD C') C') 0 C'.) 0 CD N- 0 LU 0 N- 0 0 CD 0 CD C') CD CD CALLABLE DESCRIPTION SETTLEMENT DATE $7,656,561.98 7,656,561.98 $4,700,000.00 4,700,000.00 Sweep Account Various dates Ci co DATE OF ITEM NO. PAGE 33 ___ $9,531,915.46 $9,531,915.46 $9,900,000.00 $9,900,000.00 CALLABLE DESCRIPTION SETTLEMENT DATE z z U) w Sweep Account Various dates Various dates DATF OF ITEM NO. PAGE 0 CL Rate of Return: 00) to CC Ccci 0 0 00 CL (n CV 00 CC cc m L. 00) 00 4) 4) cocci 00 Portfolio Yield to Maturity at 9/30/2018 Total Rate of Return: >wO 00.. 0(0 cci.-:5— ..° t V 0) W— Cci in :::.2 o I. == o _ tt Q CL c - cn 0 C 0 D Cl) C C 0 —0 Cci °- . - E C - (0 0. 2E >) >.g o.j Co 0 06 C-i 00) (0 0 0) 0) C 0 0 .5 0 2 U' .5 C U) >2 0 •0 (0 '..-. .0 CD a)0 2_as >.0 co C7 CD The Modified Dietz Method assumes a constant rate of return on the portfolio during the period and is not based on daily valuations cz 0) 2 .2 6ci) .5 — •0-0 =0 ca .2. s c (0 CL ca 0 >( 0) 0 C 0(00 ci) 00 00 0 = 0 00.0= 0 C CO 00 V —Cd) cn Cci> co 0 .2.2 , 5.5 0)C.0 ca 0 A2 c a 00o a) a) U- 211 DATE OF ITEM NO. PAGE 3(' MEEflNG 1 0) CJ r'U) LO C' 649, 00) a) - 0 — Oo C) o-t Ca - co 0 I— Maturity Aging Schedule (0 LCD CO (C) C) ccjr 0 0 1 C1)OcOQQ W NCOcoQ (0O)(0Q C OOCOD >(000)O • 0cOcOcON- o 'jC'"It co C . WØWQ)O c O—C\JCO Weighted-average years to maturity for portfolio $100,000,000 $90,000,000 + $80,000,000 + $70,000,000 + $60,000,000 + $50,000,000 + $40,000,000 + $30,000,000 + $20,000,000 + $10,000,000 + 64 City of Orange Reconciliation of Total Cash and Investments to General Ledger As of September 30, 2018 Treasurer's Operating Cash and Investments Checking, Payroll & PMA - Wells Fargo 201,692 Treasurer's Investments 112,755,291 Cash in transit 181,370 113,138,353 Imprest Cash 12,200 Fiscal Agent Cash and Investments 5,805,502 Total Cash & Investments 118,956,055 Total Cash and Investments per General Ledger 1 118,018,763 Plus Outstanding Checks 937,292 Total Cash & Investments 118,956,055 DATE OF ITEM NO. < PAGE .i! 1 Includes adjustment for month-end timing differences. GL Cash 3 Attachment V City of Orange Fiscal Agent Investments As of September 30, 2018 Carrying Value Market or Contract Value Fiscal Agent Cash and Investments Assessment District 95-1 1996 Limited Obligation Improvement Bonds - U.S. Bank 78,877 78,877 First American Government Obligation Fund (1.84%) Community Facilities District 91-2 2013 Special Tax Refunding Bonds - U.S. Bank 3,269,061 3,269,061 First American Government Obligation Fund (1.84%) Federal National Mortgage Association (1.25%) Successor Agency 2008A Merged & Amended Tax Allocation Bonds - U.S. Bank 2,563 2,563 First American Government Obligation Fund (1.84%) Federal National Mortgage Association (1.375%) Successor Agency 2008B Merged & Amended Tax Allocation Bonds - U.S. Bank 1,895 1,895 First American Government Obligation Fund (1.84%) Federal National Mortgage Association (1.875%) Community Facilities District 06-1 2015 Special Tax Refunding Bonds - U.S. Bank 2,442,821 2,442,821 First American Government Obligation Fund (1.84%) US Treasury Bond (4.375%) Successor Agency 2014A Merged & Amended Tax Allocation Refunding Bonds - U.S. Bank 9,941 9,941 First American Government Obligation Fund (1.84%) Successor Agency Refunding Bonds 2018A - U.S. Bank 344 344 First American Government Obligation Fund (1.84%) Total Fiscal Agent Cash and Investments 5,805,502 5,805,502 DATE OF ITEM NO. PACE FiscaI.3 Master (2) City of Orange Sales Tax Update Third Quarter Receitsfor Second Quarter Saks (April -Juiie 2018) Top 25 PRODUCERS IN ALPHABETICAL ORDER Best Buy Cab West/Volvo Leasing Caiply Circle K David Wilsons Ford David Wilsons Villa Ford DMG Corporation Enterprise Rent A Car Foundation Building Materials Home Depot Kia of Orange Mazda of Orange MS International NIKE Factory Store Nordstrom Rack Ralphs SC Fuels Selman Chevrolet Stadium Nissan Target Thompson Building Materials Toyota Lease Trust Toyota Scion of Orange Verco Decking Walmart 2nd Quarter 2017 2nd Quarter 2018 I SALES TAX BY MAJOR BUSINESS GROUP $2,400,000 $2,000,000 $1,600,000 $1,200,000 $800,000 $400,000 $0 Autos Fuel and General County Restaurants Business and Service Consumer and State and and Transportation Stations Goods Pools Hotels Industry REVENUE COMPARISON Four Quarters - Fiscal Year To Date (Q3 to 02) 2016-17 2017-18 Point-of-Sale $36,721,239 $36,485,055 County Pool 4,819,477 4,923,957 State Pool 20,274 20,711 Gross Receipts $41,560,990 $41,429,722 Published by by HdL Companies in Fall 2018 www.hdlcompanies.com I 888.861.0220 Orange In Brief Receipts from Orange's April through June sales were 6.6% low- er than the same quarter one year ago. However, for the second time this year, the States software con- version resulted in unusual process- ing delays. Consequently, sizeable payments remain outstanding. Actu- alsales after adjusting for all anom- alies. would have decreased 0.3%. Missing/delayed payments had a large negative impact on most gen- eral consumer goods categories and restaurant sectors, and along with some business closures, also impacted several business-industry segments. Most new vehicle dealerships ex- perienced declining sales and only partial payment receipts depressed building-construction results. Despite some missing/delayed payments, higher fuel prices and increased volume sales boosted fuel-service station group returns. Net of aberrations, taxable sales for all of Orange County grew 0.7% over the comparable time period: the Southern California region was up 1.0%. Building and Construction LU (9 CL 0 2 W Food and LjLC Drugs 2 W <LIJ REVENUE By BusiNEss GROUP Orange This Quarter Fuel 17% Cons.Goods 16% Pools 12% Restaurant 11% Food/Drug 4% Building 10% Busflnd. 11% Autos/T 18% $8,000 $6,000 $4,000 $2,000 $0 02 15 Orange Q2 16 County Q2 17 California 02 18 02 <U WC 114 LL CL C 2 LL I- ORANGE Top 15 BUSINESS TYPES In thousands of dollars Business Type Orange Q2'18* Change County HdL State Change Change 206.2 8.5% 567.3 -11.5% 465.7 -16.7% 338.6 6.4% 181.6 -8.8% - CONFIDENTIAL - 231.6 -1.0% 244.5 -20.7% 214.6 19.0% 1261.7 -14.0% 186.2 16.3% -CONFIDENTIAL - 405.4 CONFIDENTIAL- 405.4 -4.4% 312.5 41.5% 195.0 22.7% 62.1% 60.9% -22.6% -23.2% -14.0% -12.7% -10.4% -10.7% 20.2% 12.7% -10.9% -13.5% -1.3% -5.1% -23.3% -27.2% -7.1% -7.0% 46% -2.0% -44.9% -21.9% 16.8% 0.4% -1.7% -6.0% -31.3% -26.5% -0.8% -3.3% -8.3% 7.8% -6.6% -11.5% 3.9% -9.8% 8,563.4 1,218.8 9,782.2 Q2 2018 City of Orange Sales Tax Update California Overall Local Government cash receipts from April through June sales dropped 10.1% from the same quarter one year ago due to implementation issues with CDFTA's new tax reporting softwarç system. The results were further, skewed by the State's attempt to offset the resulting shortages by advancing tax revenues that it estimates will be generated next quarter. After reviewing unprocessed returns and approximating the full amounts of partial payments, HdL estimates that once all returns are properly processed and the data adjusted to reflect actual quarter receipts, statewide local sales and use tax revenues will be 1.6% higher than second quarter 2017. Sales of building and construction materials, jet fuel and online shop- ping appear to have been the primary drivers of statewide growth during the second quarter. Auto sales leveled off as previously anticipated, although receipts from auto leases continued to show substantial gains. Online fulfillment centers and value themed apparel stores were the primary gainers within the general consumer goods group. Business-industrial purchases were slightly lower than previous quarters with declines in new energy projects being a major factor. Regionally, the San Francisco Bay area and the Sacramento and San Joaquin Valley areas outperformed the rest of the state. Tariff Policies and Sales Tax Tariffs are becoming a key element of the federal government's international trade strategy with additional duties of 10% announced for the end of the third quarter, rising to 25% by the end of 2018. Despite the current debates, analysts be- lieve that the impact on prices and sales will be minimal through the remainder of 2018-19 as most major retailers have already imported their inventory for the holiday season and are attempting to rush spring inventories through customs ahead of the new 5% rates. Many man- ufacturers have managed to avoid rais- ing prices by absorbing the costs of the initial first round of tariffs on metals, machinery and components. On the down side, small retailers without the power to lock in prices may be placed at a competitive disadvantage and contrac- tors are beginning to require escalation clauses in contracts to cover potential cost increases on long range projects. The key concern for analysts project- ing 2019-20 tax revenues will be how the federal government refines its trade policies and the impact on sales and use tax revenues. Although higher prices generate more sales tax from individual purchases, they also potentially reduce the number of purchases, particularly in an environment where rising housing, education and health care costs compete for a significant portion of discretionary income. Proponents of rising tariffs argue that the rising strength of the U.S. dollar will offset the impact of tariff related price increases on consumers. Opponents worry that the stronger dollar and the announced $5.6 billion in retaliatory tariffs on California exports will neg- atively impact both the affected com- panies' job base and capital investment in supplies, equipment and expansion opportunities. Auto Lease Budding Materials Casual Dining Contractors Department Stores Discount Dept Stores Electronics/Appliance Stores Family Apparel Grocery Stores New Motor Vehicle Dealers Office Equipment Petroleum Prod/Equipment Quick-Service Restaurants Service Stations Shoe Stores Total Total All Accounts County & State Pool Allocation Gross Receipts SALES PER CAPITA I P, A TRENDS'-" It ECONOMIC DRIVERS SEPTEMBER 2018 HdL provides relevant information and analyses on the economic forces affecting California's local government agencies. In addition, HdL's Revenue Enhancement and Economic Development Services help clients to maximize revenues. HdL serves over 500 cities, counties and special districts in California and across the nation. ok Delivering Revenue, Insight and Efficiency to Local Government Since 1983 CALIFORNIA FORECAST HdL Corn anics 2018/191 2019 /2 0 Autos/Transportation 0.5% 10.0% This sector is in a sweet-spot marked by growing wages combined with moderate financing rates; this has yielded strong truck and sports utility vehicle sales. However, lending rates have risen from historic lows and it is becoming more difficult to find zero-rate vehicle loans. Continued increases in benchmark interest rates, higher gasoline prices and a glut of off-lease vehicles hitting the market are expected to crimp tax revenue in the coming months. Simmering trade tensions further unsettle industry observers. Building/Construction 4.5% 1 3.9% Construction product costs are rising steadily and will boost taxes. Home affordability continues to take a hit with both labor and materials on a sharp upward trajectory. Planned multi-family starts may be affected as projects fail to pencil out. At best, upcoming bids for infrastructure projects will cause the scope of work to decrease, some projects could be delayed or shelved due to a lack of funding. The volume of work on highways and local streets under existing contracts is not affected by recent increases levies on imported steelwork and lumber. Business/Industry 2.2% I 2.0% Not limited to this group, but the State's computer conversion problems delayed a substantial number of second quarter tax returns thereby skewing what can be determined from sales tax data. Outside statistics suggest capital investment remains at previous year's levels with the tech sector being the primary driver of growth. Costs of raw materials and transportation rising due to labor shortages. A rush in purchases to beat new rounds of tariff announcements may generate a spike in third quarter sales tax 04FAU revenues followed by declines in subsequent quarters. MW Food/Drugs 1.9% I 1.5% Grocery stores are in the midst of a rapidly changing landscape. Established chains still dominate the market. However, new entrants are luring shoppers with low margin products, expansive on-line inventories and quick home delivery. Cashierless outlets and voice activated buying are emerging trends anchored to consumer convenience preferences. Drug store offerings reflect liquor, food and trendy products while enhancing pharmaceutical and medical service offerings. Licensed cannabis businesses are cultivating new revenues for this sector. l i; I A HDL CONSENSUS FORECAST - SEPTEMBER 2018 STATEWIDE SALES TAX TRENDS LJ TOTAL 2.2% I 2.1% HdL Companies Proposition 172 projections vary from statewide Bradley-Burns calculations due to the state's utilization of differing collection periods in its allocation to counties. Retroactive accounting adjustments are anticipated in 2018 /1 9 and beyond as the California Department of Tax and Fee Administration migrated to a new information management platform in May 2018. HdL forecasts positive growth in Fiscal Year 2018/19 just at a slower pace than prior years due to potential economic constraints impacting consumer spending. HdL forecasts a statewide increase of 1.51% for Fiscal Year 2018/19 and a gain of 2.10% in 2019/20. Fuel/Service Stations 0.2% I 1.0% Global crude oil prices have remained steady for several months as OPEC members and affiliates complied with production caps, only slowly increasing output to keep up with demand. This consistent pricing also tempered U.S. extraction in West Texas as driller's struggle with tight labor markets. In California, while elevated summer pricing will soon give way to lower winter blend cost, all eyes will be on the Prop 6 November election results - repeal of SB-i legislation that increased statewide excise tax on gas and diesel fuel. -/ General Consumer Goods 1.0% I 1.0% Traditionally based retail is transforming itself driven by emphasis on experience and community. This means the integration of bedrock brands infused with ever changing, limited quality, unique finds combined with the addition of restaurants, pop-up shops, and amenities such as speaker series, art installations and podcasts. The launching of storefronts amplifying online sellers and the emergence of social media are becoming a force in the retail marketplace. As a result, there will be local and regional fluctuations in performance based on retail mix and demographics. There are predictions of an ongoing favorable sales trend, buoyed by rising wages and low unemployment. However emerging headwinds like rising freight, fuel prices and merchandise tariffs could rein in spending. t I Restaurants/Hotels 3.0% I 3.0% Restaurant owners again report a net increase in activity and are generally optimistic about sales growth in the months ahead. Quick service and fast casual eateries have remained unperturbed by the recent softness and should continue to perform well. Casual dining establishments are struggling with weak same-store sales and traffic. Menu prices are increasing at a much quicker rate than the prices of food at the grocery stores. California's hotel market remains strong; new openings offer bars, meals and other conveniences that contribute to the positive trend for this group. 1111 State and County Pools 5.5% 1 5.1% Favorable prognostications are on the horizon for the 2018 holiday season. This is particularly so for e-commerce and mobile device purchases; experts anticipate sizeable growth from tech-savvy consumers. Amazon will dominate gains; traditional retailers are poised to reap benefits from digital age investments that cater to consumer shopping patterns. Congress introduced the Online Sales Simplicity and Small Business Relief Act in response to the Supreme Court's Wayf air decision. Notable is a $10 million exemption provision for small business sellers; it remains until simplified taxpayer collection is agreed to by all states. California has yet to implement Wayfair guidelines; new out of state taxes for the pools are not expected soon. HdL Companies I hdlcompanies.com NATIONAL AND STATEWIDE ECONOMIC DRIVERS 4 BEACON ECONOMICS 2018/19 2019/20 \/ U.S. Real GDP Growth 3.0% I 2.4% II. The United States is currently in the midst of the second longest expansion in the nation's history at 1111 months and counting. If it continues to July of next year, the current expansion will officially become the longest on record. Will we make it? Odds are almost certain we will. Far from losing steam, the U.S. economy has been on an upswing lately. The rest of this year looks solid, but expect slower growth next year. Additionally, the long-term stressors of heavy Federal borrowing, rising interest rates and ongoing political chaos make it clear that while there is no reason to expect a recession anytime soon. We should remain more vigilant than ever in watching for the unanticipated shock. The nation's capacity to absorb a blow to its economy is substantially diminished and it won't take much to end the current expansion. U.S. Unemployment Rate 3.9% I 3.9% Employment growth over the last 3 months has totaled over 200,000 jobs added per month even with unemployment below 4%. More importantly, the job openings rate is at 4.2%, suggesting that employers would hire even more workers if they could find them. As positive as all this news is, don't be fooled into believing the U.S. economy has truly achieved a new pace of sustained growth. The current growth surge is, at best, temporary, with the economy's long-run trajectory limited by increases in the labor force. CA Total Nonfarm 1.8% I 1.7% Employment Growth With two quarters down and sights turning toward the last part of the year, it is apparent that the California economic engine continues to hum along, much like the nation as a whole. Job gains have been steady and the state's leading industries have expanded despite ongoing concerns on the international trade front. In looking at the future growth trajectory of the California economy, the elephant in the room is the high cost of housing and its impact on labor force growth. As growth in the state's labor force slows further, it will tighten like a noose on the economy and limit future expansion and business development. ,\ II. CA Unemployment Rate 4.1% I 4.0% California continues to land in record territory, with its unemployment rate at 4.2% for the fourth month in a row as of July 2018. Recent labor market reports reveal the ongoing challenge that U.S. employers currently face in filling job vacancies. The number of job openings nationally has been routinely pushing into record territory, with nearly every industry suffering from a lack of workers, from the tech sector to health care to restaurants. These problems are compounded in California, which has consistently outpaced the nation in terms of job growth and economic activity. 0 CA Median $502,100 I $533,865 Existing Home Price California's housing market has been a mixed bag so far this year. According to CoreLogic, the median home price in California was $481,100 in the second quarter, up 8.6% year-to-year. The median price is still about 7% below its pre-recession peak despite a string of yearly price gains going back several years. Still, home sales have been average, at best, and disappointing when considered against the backdrop of the state's long economic expansion. on CA Residential 122,500 I 132,100 Building Permits New home construction moved up a notch in the first half of this year compared with last year, a development that should also temper, but not halt, price increases. Overall, housing permits rose 9.4% in the first half of 2018 compared to one year earlier, with increases of 7.3% in single-family permits and 11.4% in multi-family permits. The state is on track to add about 130,000 new units this calendar year, still far below its needs which are closer to 200,000 units annually. As long as home construction lags what the state needs, high housing costs will be a painful thorn in the side of the California economy. Beacon Economics I BeaconEcon.com