Staff Report
PREPARED BY: STEPHEN CONWAY
FINANCE DIRECTOR
Reviewed by: Town Manager, Assistant Town Manager, and Town Attorney
110 E. Main Street Los Gatos, CA 95030 ● 408-354-6832
www.losgatosca.gov
TOWN OF LOS GATOS
COUNCIL AGENDA REPORT
MEETING DATE: 02/20/2018
ITEM NO: 02
DATE: FEBRUARY 15, 2018
TO: MAYOR AND TOWN COUNCIL
FROM: LAUREL PREVETTI, TOWN MANAGER
SUBJECT: RECEIVE THE SECOND QUARTER INVESTMENT REPORT (OCTOBER
THROUGH DECEMBER 2017) FOR FISCAL YEAR 2017/18.
RECOMMENDATION:
Receive the Second Quarter Investment Report (October through December 2017) for Fiscal
Year 2017/18.
DISCUSSION:
As of December 31, 2017 the Town’s weighted portfolio yield of 1.53% continues to outperform
the Local Agency Investment Fund (LAIF) yield of 1.23% (difference of 30 basis points). As a
result, staff continues to replace matured or called investments with similar investments with
respect to maturity and credit quality. For the quarter, the Town’s weighted average rate of
return increased 16 basis points (0.12%) from 1.37% to 01.53%.
Cash balances remained steady this quarter due to the receipt of an apportionment of property
taxes that began later in the quarter. During the quarter, the receipt of property tax from the
County of Santa Clara offset uses of cash for capital projects and equipment purchases totaling
approximately $2.7 million in this quarter. Significant payments made in the quarter include
approximately $1.7 million in expenditures related to the Almond Grove Street project, LED
streetlights of approximately $342,000, ABAG annual insurance premiums totaling $242,000, a
new wheel loader in the amount of $169,000, among other smaller outlays.
During the quarter, yields have generally been increasing in anticipation of stronger economic
growth. Passage of the new tax provisions also added to investors’ belief in growth in the
economy and inflation, while also increasing the federal budget deficit and supply of
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SUBJECT: SECOND QUARTER INVESTMENT REPORT (OCTOBER THROUGH DECEMBER
2017) FOR FISCAL YEAR 2017/18
DATE: FEBRUARY 15, 2018
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DISCUSSION (Cont’d):
Treasury debt. Many investors believe the stimulus may lead to higher potential for inflation
and higher future interest rates.
Because of the rising interest rate forecast, the Town’s investment strategy continues to focus
on the purchase of new short-term (two years or less in maturity) investments as the rewards
for longer term investments in the three to five year maturity do not have adequate spreads to
justify the risk of holding longer term maturities.
CONCLUSION:
Staff recommends that the Town Council receive the Second Quarter Investment Report
(October through December 2017) for Fiscal Year 2017/18.
ENVIRONMENTAL ASSESSMENT:
This is not a project defined under CEQA, and no further action is required.
Attachment:
1. Second Quarter Investment Report for FY 2017/18 (October through December 2017)