official san diego housing commission (sdhc) website ......attachments: 1) sdhc quarterly financial...

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INFORMATIONAL REPORT DATE ISSUED: June 6, 2019 REPORT NO: HCR19-076 ATTENTION: Chair and Members of the San Diego Housing Commission For the Agenda of May xx, 2019 SUBJECT: Investment Report – Third Quarter Fiscal Year 2019 COUNCIL DISTRICT: Citywide NO ACTION IS REQUIRED ON THE PART OF THE HOUSING COMMISSION SUMMARY The attached Quarterly Investment Report details the San Diego Housing Commission’s (Housing Commission) investment portfolio as of March 31, 2019. The report includes both summary and detailed information on all liquid cash and cash equivalents, and core investments owned by the Housing Commission. These funds, however, are not indicative of funds available for discretionary use as they have been: 1) earmarked for loans and grants that the Housing Commission has committed to fund through Board approval; 2) restricted to federal/state/local programmatic requirements; 3) designated for property maintenance; and 4) required 5 percent of budgeted new revenue contingency reserves. The market value of the portfolio at March 31, 2019, was $159.44 million, compared to $165.10 million in the previous quarter, resulting in an overall investment portfolio decrease of $5.66 million, primarily due to housing assistance payments and disbursements of multifamily housing loan funds. On March 31, 2019, the overall investment portfolio had a yield to maturity of 2.09 percent, average days to maturity of 486, and an effective duration of 1.26 years, compared to the overall investment portfolio at December 31, 2018, which had a yield to maturity of 1.97 percent, average days to maturity of 472, and an effective duration of 1.21 years. Cash and cash equivalents (liquid) 1. $22.53 million is held in various accounts, including the Housing Commission’s bank, US Bank ($14.17 million) and other various authorized accounts required by lending agreements and program obligations ($8.36 million). 2. $36.65 million is held in pooled investment funds. Pooled funds include California’s Local Agency Investment Fund (LAIF), The San Diego Foundation (TSDF) and the San Diego County Investment Pool (SDCIP). The blended yield on these liquid accounts was 1.64 percent for the quarter, which is an increase of 0.17 percent from 1.47 percent in the previous quarter primarily due to an increase in yield received from both LAIF and SDCIP. Core investments 3. $96.81 million is held in Agency Debentures and/or Agency Mortgage-Backed Securities (MBS).

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Page 1: Official San Diego Housing Commission (SDHC) Website ......Attachments: 1) SDHC Quarterly Financial Investment Report Ending March 31, 2019 Hard copies are available for review during

INFORMATIONAL REPORT DATE ISSUED: June 6, 2019 REPORT NO: HCR19-076 ATTENTION: Chair and Members of the San Diego Housing Commission For the Agenda of May xx, 2019 SUBJECT: Investment Report – Third Quarter Fiscal Year 2019 COUNCIL DISTRICT: Citywide

NO ACTION IS REQUIRED ON THE PART OF THE HOUSING COMMISSION

SUMMARY The attached Quarterly Investment Report details the San Diego Housing Commission’s (Housing Commission) investment portfolio as of March 31, 2019. The report includes both summary and detailed information on all liquid cash and cash equivalents, and core investments owned by the Housing Commission. These funds, however, are not indicative of funds available for discretionary use as they have been: 1) earmarked for loans and grants that the Housing Commission has committed to fund through Board approval; 2) restricted to federal/state/local programmatic requirements; 3) designated for property maintenance; and 4) required 5 percent of budgeted new revenue contingency reserves. The market value of the portfolio at March 31, 2019, was $159.44 million, compared to $165.10 million in the previous quarter, resulting in an overall investment portfolio decrease of $5.66 million, primarily due to housing assistance payments and disbursements of multifamily housing loan funds. On March 31, 2019, the overall investment portfolio had a yield to maturity of 2.09 percent, average days to maturity of 486, and an effective duration of 1.26 years, compared to the overall investment portfolio at December 31, 2018, which had a yield to maturity of 1.97 percent, average days to maturity of 472, and an effective duration of 1.21 years. Cash and cash equivalents (liquid)

1. $22.53 million is held in various accounts, including the Housing Commission’s bank, US Bank ($14.17 million) and other various authorized accounts required by lending agreements and program obligations ($8.36 million).

2. $36.65 million is held in pooled investment funds. Pooled funds include California’s Local

Agency Investment Fund (LAIF), The San Diego Foundation (TSDF) and the San Diego County Investment Pool (SDCIP).

The blended yield on these liquid accounts was 1.64 percent for the quarter, which is an increase of 0.17 percent from 1.47 percent in the previous quarter primarily due to an increase in yield received from both LAIF and SDCIP. Core investments

3. $96.81 million is held in Agency Debentures and/or Agency Mortgage-Backed Securities

(MBS).

Page 2: Official San Diego Housing Commission (SDHC) Website ......Attachments: 1) SDHC Quarterly Financial Investment Report Ending March 31, 2019 Hard copies are available for review during

June 6, 2019 Third Quarter FY2019 Investment Report Page 2

4. $3.43 million is held in various FDIC-insured Certificates of Deposit (CD).

The blended yield on core investments for the quarter was 2.36 percent, which is an increase of 0.07 percent from 2.29 percent in the previous quarter. The reinvestment of interest payments along with maturing bond proceeds into higher yielding Agency bonds were the primary reasons for the increase in yield. DISCUSSION The overall market value of the investment portfolio was lower at $159.44 million compared to the prior quarter of $165.1 million. The $5.66 million decrease was primarily a result of the advance payment of $3.0 million for April Housing Assistance Payments at the end of March and the funding principally of multifamily loans in the amount of $2.6 million (Wakeland Beacon Apartments LP, Grantville Veteran Housing LP, and Vista del Puente). The overall investment portfolio yield was 2.09 percent, compared to 1.97 percent in the prior quarter. The increase was the result of reinvesting principal and interest payments into higher yielding Agency bonds, coupled with the maturity of lower yielding bonds. With the diminished uncertainty of Federal funding, the effective duration had a modest increase (1.21 to 1.26), as the Housing Commission purchased longer-termed government bonds to partake in higher yields, with minimal risk. CONCLUSION The Federal Reserve held steady the Fed Funds rate at both the January 30 and March 20, 2019, meetings. With indicators pointing to slower growth of household spending and overall inflation declining, rate hikes in 2019 are not anticipated. The Housing Commission will continue to monitor Federal policy, and the Housing Commission’s investment strategy will continue to focus on ensuring the safety of the principal, adding duration while maintaining sufficient liquidity to meet operational requirements, generating investment yield and where possible, investing locally. The Housing Commission will continue to manage its investment portfolio with these underlying objectives in mind. Respectfully submitted, Approved by,

Marie Lalas Jeff Davis

Marie Lalas Jeff Davis Controller Executive Vice President & Chief of Staff Financial Services Department San Diego Housing Commission Attachments: 1) SDHC Quarterly Financial Investment Report Ending March 31, 2019 Hard copies are available for review during business hours at the security information desk in the main lobby and the fifth floor reception desk of the San Diego Housing Commission offices at 1122 Broadway, San Diego, CA 92101 and at the Office of the San Diego City Clerk, 202 C Street, San Diego, CA 92101. You may also review complete docket materials in the “Governance & Legislative Affairs” section of the San Diego Housing Commission website at www.sdhc.org

Page 3: Official San Diego Housing Commission (SDHC) Website ......Attachments: 1) SDHC Quarterly Financial Investment Report Ending March 31, 2019 Hard copies are available for review during

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