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HomeMy WebLinkAbout12/18/1989 City Council MINUTES OF THE CITY COUNCIL MEETING HELD ON DECEMBER 18, 1989 The Regular Session of the City Council of the City of The Colony, Texas was called to order at 7:00 p.m. on the 18th day of December, 1989 at City Hall with the following Council roll call: Don Amick, Mayor Present Rick Harris, Mayor Pro-tem Present Steve Withers, Councilman Present Mike Alianell, Councilman Present Steve Glazener, Councilman Present Dick Weaver, Councilman Present Joel Marks, Councilman Present and with seven present, a quorum was established and the following items were addressed: PRE-COUNCIL WORK SESSION I. DISCUSSION OF CONSENT AGENDA ITEMS 5B - Councilman Marks asked if staff will go~ through all buildings to bring them up to code or will those buildings built after this ordinance goes into effect have to be up to code. There was a discussion regarding those buildings in Eastvale addition which are not up to code now. David Rolbiecki and Mike Russell both responded explaining that this ordinance merely adopts the most current national codes for our use. 5C - Councilman Marks asked for an explanation. Bill Hall stated that recent legislation exempts certain personal products from taxes, if those products are to be exported and are kept in the city over 175 days. This ordinance allows our city to tax that personal property. Mr. Hall said if we act on this tonight, then we can act again in April 1990 and that it can be reversed at a later date, but if we do not act tonight, then we will not ever be able to pass the ordinance. 2. DISCUSSION OF REGULAR AGENDA ITEMS There was none at this time. Recess - 7:20 7:30 Called back to order REGULAR SESSION AGENDA I. PLEDGE OF~ALLEGIANCE Mayor Amick led the audience and the Council in the Pledge of Allegiance to the flag of the United States of America. 2. CITIZEN INPUT ' Donald Houston, representing R.S.V.P. stated that the group had volunteered 394 hours in November, 182 hours in October and that from January - September 1989 a total of 1150 hours had been volunteered making the total for 1989 1720 hours of time given to the city by this group. Darlene Whitten, stated she is to be a candidate for County Court at Law No, I in Denton and wanted to introduce herself, noting that she had worked with children for years and that she would like to have the job of judge, going on to say she will be campaigning in The Colony and wanted staff and Council to know who she is. 3. MAYORAL PROCLAMATION DECLARING 1990 THE CENTENNIAL YEAR FOR THE UNIVERSITY OF NORTH TEXAS Mayor Amick read the Proclamation in it's entiretY. See attachment "A". ~' 4. FIRST READING OF AN ORDINANCE AMENDING CHAPTER 10,. ARTICLE' II OF THE CODE OF ORDINANCES ADOPTING A REQUIREMENT TO HAVE A CERTIFIED FOOD SERVICE OPERATOR; REQUIRING CERTIFICATION; AND PROVIDING A PENALTY Bill Hall said that David Rolbiecki and Judy Talbot,. Health Director, had been working on this project and that soon Ms Talbot will be teaching the certification course mentioned in this ordinance, here in the City, not only to residents but to non-residents also. Mayor Amick directed this item to be on the January 8, 1990 meeting for action, and any appropriate fees. 5. CONSENT AGENDA Mayor Amick summarized the items on the Consent Agenda. A. CONSIDERATION OF APPROVAL OF MINUTES OF THE NOVEMBER 27, AND DECEMBER 11 COUNCIL MEETINGS Councilman Glazener noted he was present at the November 27 meeting and the minutes reflect he was absent. The correction was noted by the City Secretary. Councilman Alianell moved to approve the minutes with correction and Councilman Glazener seconded the motion, which carried with a unanimous roll call vote. B. CONSIDERATION OF AN ORDINANCE AMENDING CHAPTER 6, SECTION 1, ADOPTING THE 1988 UNIFORM BUILDING CODE; SECTION 6-2, ADOPTING THE 1990 NATIONAL ELECTRICAL CODE; SECTION 6-4 ADOPTING THE 1988 UNIFORM MECHANICAL CODE; SECTION 6-5 ADOPTING THE 1988 UNIFORM PLUMBING CODE; AND AMENDING CHAPTER 9, SECTION 2, ADOPTING THE 1988 UNIFORM FIRE CODE Councilman Alianell moved to approve the ordinance as written and Councilman Glazener seconded the motion, which carried with a unanimous roll call vote. C. CONSIDERATION OF AN ORDINANCE TAKING OFFICIAL ACTION TO TAX TANGIBLE PERSONAL PROPERTY OTHERWISE EXEMPT PURSUANT TO ARTICLE VIII, SECTION I-J OF THE TEXAS CONSTITUTION Councilman Withers said this item was voted on by the voters of the State of Texas and he has a problem with undoing what voters did. Bill Hall said his understanding is that part of the amendment was so that cities can have an option. Councilman Withers said he felt this gives Texas a better position than other states and he sees no point in The Colony passing this ordinance. Councilman Harris said this was presented at the State level to create jobs in the State and if it is place in The Colony it will generate revenue and can be offer.ed as an abatement to new businesses. Councilman Withers agreed in could be used to provide incentive, but went on to say the small businesses would be paying the bill for the larger ones. Darlene Whitten noted that the Denton County Commissioners Court voted this date not to allow the tax at the county level and that Tarrant and Wise Counties did the same, however, she did say that Dallas County is going to allow the tax. Councilman Alianell asked if this can be reversed and Mayor Amick said it can. Councilman Marks agreed with Councilman Withers about the small businesses paying. Councilman Alianell said he is in favor of this, noting it could be an incentive to a larger company. Councilman Marks said we could show our intent to attract businesses by acting against the ordinance. Councilman Harris said attracting small businesses will not help our tax base, we need big business and abatement of this tax can be offered to them. Mayor Amick said this will provide additional tax revenue and that it can be offered as a tax abatement to larger companies if the city so desires. Councilman Withers asked why a company would locate here if another city doesn't have this tax to begin with. Bill Hall noted that this ordinance only affects companies taxed in 1989 calendar year and that there are none in The Colony, however this ordinance has to be passed tonight in order for The Colony to have any choice. Mr. Hall went on to say that we will have to act again in April 1990 to make the tax permanent, noting again that the ordinance can be repealed. Councilman Harris moved to approve the ordinance, and Councilman Alianell seconded the motion, which carried with the following vote: Harris - Aye, Withers - No, Alianell - Aye, Glazener, Aye, Weaver - Aye, Marks - No, Amick - Aye. D.CONSIDERATION OF AN ORDINANCE AUTHORIZING AND ALLOWING, UNDER THE ACT GOVERNING THE TEXAS MUNICIPAL RETIREMENT SYSTEM, "UPDATE SERVICE CREDITS" IN SAID SYSTEM FOR SERVICE PERFORMED BY QUALIFYING MEMBERS OF SUCH SYSTEM, GRANTING ADDITIONAL RIGHTS, CREDITS AND BENEFITS AUTHORIZED BY SENATE BILL 505, RELATING TO DISABILITY Bill Hall explained the purpose of the ordinance. Councilman Alianell moved to approve the ordinance and Councilman Glazener seconded the motion, which carried with a unanimous roll call vote. E. CONSIDERATION OF APPROVAL OF RE-APPOINTMENT OF POLICE RESERVES Councilman Alianell moved to approve the appointments and Councilman 'Glazener seconded the motion, which carried with a unanimous roll call vote. F.. CONSIDERATION OF APPROVAL OF COUNCIL EXPENDITURES " Councilman Alianell moved to approve the expenditures and Councilman Glazener seconded the motion, which carried with a unanimous roll call vote. 6. ANNUAL REVIEW OF THE INVESTMENT POLICY James England covered his report to council regarding 1989 investments and the policy set out for investments of the City to be made in the future. See attachment "B". Mr. England said that John Boyle, City Attorney, and George Scott, Auditor had both reviewed the report and the policy and were pleased. There was discussion regarding the length of bonds (Page 7- maturity), with Mr. England stating that 30 year bonds were not the best, however one year bonds are. Councilman Withers asked about 2 - 3 year bonds and Mr. England said that ties up funds that may be needed for operations, noting there is safety in 2- 3 year bonds, but we may need those funds and if we have to pull them out, then we would have to pay a penalty. Mr. England completed his report to Council. 7. COUNCIL COMMITTEE REPORTS (OPTIONAL) Councilman Weaver said he attended a C.O, G. meeting and that he is discouraged about the chances we have for receiving the grant for improvements to' the 'Eastvale sew~_r system. Councilman Weaver said they only expect to award l@%nd we are about number 30. Councilman Weaver also reported on 9-1-1, stating all is very promising and that the meeting in January will be held at The Colony City hall. 8. CITY MANAGER'S REPORT 1. Mr. Hall praised Mr. England, stating he is a very prudent, professional Finance Director. 2. Mr. Hall stated that at the meeting with Lewisville, Frisco, Commissioners Court and the Highway Dept. held last Friday, it was noted that the R.O.W. donations from IBM and Centex have been confirmed and due to those donations, the monies to be paid by the above named entities have been deemed unnecessary. Mr. Hall said this will save The Colony $50,000, Denton County $166,000, Lewisville $240,000 and Frisco $72,000, going on to say there will be a letter of agreement forthcoming from the Highway Department. Mayor Amick noted that he had received a letter from the Highway Department sometime ago stating this would never happen and now it is. Mr. Hall went on to say that the fence on IBM property will have to be moved back and a cost of $21,000 and that Commissioners Court has committed $16,000 and that Lewisville and Frisco may half the balance. The Colony may be reimbursed for part of the engineering fees incurred when obtaining R.O.W. Mr. Hall advised all of the Chip-in Program whereby the City will mulch Christmas Trees for citizens, noting that the mulch not wanted by citizens will be used on city parks and medians. Mr Hall said the city will also be taking old batteries during this time also. The Pool Heater is not working due to corrosion generated by the chemicals stored in the same area Mr. Hall said this is a major repair which will run $2000-$3000. 9:00 Recess 9:10 9. CLOSED DOOR SESSION AS AUTHORIZED BY ARTICLE 6252-17, V.A.C.S., SECTION 2G, REGARDING PERSONNEL, TO-WIT: A. MUNICIPAL COURT JUDGE B. DEPARTMENTAL EVALUATIONS 9:35 10. CONSIDERATION OF ANY APPROPRIATE ACTION TO BE TAKEN AS A RESULT OF THE CLOSED DOOR SESSION Mayor Amick asked for a motion regarding a request from Judge Roller for a salary. Councilman Harris moved to deny that request and Councilman Marks seconded the motion which carried with a unanimous roll call vote. Councilman Alianell moved to approve adjourn and Councilman Marks seconded the motion, which carried with all members voting Aye. Mayor Amick adjourned the meeting at 9:40 p.m. APPROVED: Don Amick, Mayo~ ATTEST: Patti A. Hicks, Cit~ Secretary [SEAL] ATTACHMENT "A" MAYORAL PROCLAMATION TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETINGS: WHEREAS, in 1890 the citizens of Denton and of Texaswere conscious of the need for more education facilities, particularly normal schools to improve the quality of teachers, and WHEREAS, the City Council of Denton recognized teh potential for the private normal school founded by Joshua Crittenden Chilton in 1890 and took steps to secure a site for the Texas Normal College and Teachers' Training Institute, and WHEREAS, the evolving role and scope of this institution has been reflected in the subsequent names of the institution-- North Texa Normal College, 1893-1901; North Texas State Normal College, 1901-1923; North Texas State Teachers College, 1923- 1949; North Texas State College, 1949-1961; North Texas State University, 1961-1988; and University of North Texas, since 1988; and WHEREAS, from its beginnings as an institution solely devoted to teacher training, the University of North Texas has developed into an important educational institution offering 135 majors, including 476 at the doctoral level; has grown to an enrollment of 24,500; and has awarded over 113,000 undergraduate, masters's, and doctoral degrees by 1988, and WHEREAS, the University of North Texas is fulfilling its mission as a comprehensive institution serving the North Texas region and the State of Texas, and WHEREAS, during 1990 the University of North Texas will celebrate the Centennial of its founding, NOW THEREFORE, I, Don Amick, Mayor of the City Council of the City of The Colony, Texas, do hereby declare and proclaim the year of our Lord One Thousand Nine Hundred and Ninetieth as "THE UNIVERSITY OF NORTH TEXAS CENTENNIAL YEAR" in the City of The Colony, Texas, and urge and advise all its citizens to participate in the year-long celcbration of said Centennial and to join in honoring those who teach and those who learn. IN WITNESS THEREOF, ! have hereunto set my hand and caused the official seal of the City of The Colony, Texas to be affixed this 18th day of December, 1989. Don Amick, Mayor ATTEST: Patti A. Hicks, City Secretary ATTACHMENT "B" 00345b CITY OF THE COLONY INVESTMENT POLICY DECEMBER, · 1989 INTRODUCTION The purpose of this Investment Policy is to identify various policies and procedures that develop a prudent and systematic investment process. The initial step toward a prudent investment policy is to organize and formalize it,vestment-related activities. Related activities which comprise good cash management include accurate cash projection, the expeditious collection of revenue, the control of disbursements, cost-effective banking relations, and a short-term borrowing program which coordinates working capital require- ments and the purchase of capital assets. In concert with these requirements are the many facets of an appropriate and secure short-term investment . program. SCOPE This Investment Policy is intended to cover all financial assets under the direct authority of the City of The Colony. These funds include all govern- mental, proprietary and fiduciary funds that are accounted for in the City of The Colony Comprehensive Annual Financial Report. All transactions involving the financial assets and related activity of all the foregoing funds shall be governed by this Investment Policy. .OB,JBCTIVBS ~. Safety of principal is the foremost overriding objective in the management of finahcial assets.~ Bach investment transaction shall seek to first ensure that capital losses are avoided, whether they be from securities defaults or erosion of market value. Investment decisions should not in.q.ur unreasonable-in.v, estment risks in 6r'der to obtain current investment income. 3. T~e tote/ investment portfolio will .remain sufficiently liquid to meet all financial operating requirements which may be reasonably anticipated. 4. The investment portfolio shall be designed to attain a market-average rate of return throughout budgeting and economic cycles, always taking into account governmental investment risk constraints, the cash flow characteristics of the portfolio, and the state law that restricts the place- ment of governmental funds. 5. Investments will be diversified to avoid incurring unreasonable and avoidable risks regarding specific security types or individual financial institutions. 8. Investments will not be made for the purpose of trading or speculation as the dominant criteria, such as anticipating an appreciation of capital  through changes in market interest rates. All investments shall be made according to the guidance provided by the "Prudent Pe ,, rson Rule , which obligates a fiduciary to ensure that: "...investments shall be made with the exercise of that degree of judgment and care, under circumstances then prevailing, which persons of prudence, discretion and intelligence excercise in the management of their own affairs, not for speculation but for investment, considering the probable safety of their capital as well as the probable income to be derived." 8. The investment portfolio shall be designed with the objective of regularly exceeding the average return on three-month U. S. Treasury Bills, or the average rate of Federal Funds, whichever is higher. These indices are considered benchmarks for riskless investment transactions and, --2-- therefore, comprise a minimum standard for the pqrtfolio's rate of return. The investment program shall seek to augment returns above this thresh- hold, consistent with risk limitations identified herein and prudent invest- ment principles. 9. In the management of the investment portfolio, all purchases of investments, or any investment practice or procedures will be avoided that are not specifically authorized under the terms of this document. 10. All participants in the investment process shall seek to act responsible as custodians of the public trust. Investment officials shall avoid any trans- action that might impair public confidence in the total investment program. Investment officials shall recognize that the investment portfolio is subject to public review and evaluation. The overall investment program shall be designed and managed with a degree of professionalism that is worthy of ~ the public trust. 11. The City of The Colony will not enter into Repurchase or Reverse .!~/.~ _ Repurchase Agreements, nor trade in options or futures contracts. I~.?;!~ ~2/.~ The City of The Colony may deposit or invest funds through third parties !~i~¢~ ~.!~}~ that are qualified primary securities dealers registered with the Federal ~.~\'L~\ !~!?~-~ Reserve Bank of New York City. The appointed Fiscal Agent for the City of The Colony is also qualified The City of The Colony may deposit or invest funds through investment pools as authorized by Senate Bill 1340. Investment Pools authorized for deposit and investment purposes are listed below: /a./ Texas Local Government Investment Pool, Texas Treasury, Safekeeping Trust Company. -3- ~ Local Government Investment Fund for Texas c/o Fidelity Investments Institutional Services Company. RESPONSIBILITIES The Director of Finance, as the chief financial officer, is responsible for overall supervision of the City's cash management and investment program. The D"rector of Finance is designated as the City's Investment Officer and is responsible for the day-to-day administration of the investment program and for the duties described below. The City Manager may designate another City employee to serve as the Investment Officer for a temporary period, or may serve in that capacity himself. The Investment Officer and other City employees with investment responsibilities shall be knowledgeable of laws concerning the investment of public funds, current investment practices and investment opportunities available to the City. DUTIES OF THE INVESTMENT OFFICER. Duties of the Investment Officer shall include the following: a. maintain current information as to available cash balances in all City funds and bank accounts, and as to the amount of idle cash available for investment; b. develop and maintain cash flow projections to allow for the prudent investment of idle funds; c. make investments in accord with these rules; d. maintain current information as to investment transactions, including the maturity date, yield and interest earnings of each investment; e. ensure that all investments are adequately secured, that safekeeping receipts are held by the City in accord with these rules, and ensure --4-- that other requirements placed on financial institutions by these rules are observed; and f. prepare an annual written report describing investment transactions for the prior fiscal year, and submit this report to the City Council by no later than ninetY (90) days following the end of each fiscal year. REPORTING: INTERIM AND ANNUAL The Director of Finance shall submit monthly a comprehensive investment schedule clearly itemizing the total investment portfolio of all funds to the City Manager and City Council. Within ninety (90) days of the end of the fiscal year the Director of Finance --- shall, present a comprehensive annual report on the investment program and in, vestment activity. This annual report shall be presented to the City Manager and City Council. The annual report shall include a review of the activities and interest rate return of the twelve (12) months, shall suggest policies and improvements that might enhance the investment program, and ir~clude an investment plan for the ensuing fiscal year. AUTHORIZED INVESTMENTS City of The Colony funds may be invested only in the below listed investment instruments: a. Obligations of the United States or its agencies and instrumentalities; b. Obligations guaranteed by agencies and instrumentalities of the federal government; c. Direct obligations of the State of Texas or its agencies; -5- d. Other obligations, the principal and interest on which are uncondi- tionally guaranteed or insured by the State of Texas or the United States; e. Obligations of states, agencies, counties, cities and other political subdivisions of any state having b~en rated as to investment quality by a nationally recognized investment rating firm and having received /a rating of not less than A or its equivalent; Certificates of deposit issued by state and national banks domiciled in this state that are: 1. Guaranteed or insured by the Federal Deposit Insurance Corpor- ation, or its successor; or 2. Secured by obligations that are described by Subdivisions (a)-(d) of this section, which are intended to include all direct agency or instrumentality issued mortgage backed securities rated AAA by a nationally recognized rating agency, or by Chapter 726, Acts of the 67th Le§~islature, Regular Session, 1981 (Article 2529 b-l, Tex. Rev. Civ. Stat. Ann.) and that have a market value of not less than the principal amount of the certificates. g. Certificates of deposit issued by savings and loan associations domiciled in this state that are: 1. Guaranteed or insured by the Federal Savings and Loan Insurance Corporation, or its successor; or 2. Secured by obligations that are described by Subdivisions (a)-(d) of this section, which are intended to include all direct agency or instrumentality issue mortgage backed securities rated AAA by a nationally recognized rating agency, or by Chapter 726, Acts of the 67th Legislature, Regular Session, 1981 (Article 2529 b-l, Tex. Rev. Civ. Stat. Ann.) and that have a market value of not less than the principal amount of the certificates. INVESTMENT OF BOND FUNDS a. City of The Colony bond proceeds may be invested in common trust funds or comparable investment devices owned or administered by banks domiciled in Texas and whose assets consist exclusively of all or a combination of the obligations described in subsections (a), (b), (c), and (d) of the subsection on Authorized Investments. Common trust funds may only be used if they: 1. Are available; 2. Comply with the provisions of the Tax Reform Act of 1986, as amended, and other applicable federal regulations governing the investment of bond proceeds; and 3. Meet the cash flow requirements and the investment needs of the City of The Colony. b. Investment of bond proceeds made pursuant to this Section shall be made only after competitive bids, either orally or in writing, have been solicited from qualified banks. Such bids shall be made in accordance with the provisions of Section 3(b) of the Public Funds Investment Act, Art. 842a-2, Tex. Rev. Civ. Stat. Ann. MATURITY L./~Tih~City of The Colony shall only invest in instruments whose maturities do not exceed"one (1) year at the time of purchase unless specifically approved by the City Council. --7-- QUALIFYING INSTITUTIONS Except as provided in the section on Investment of Bond Funds, investments may be made with or through federally insured banks or savings and loan associations domiciled in the State of Texas, primary securities dealers, approved investment pools, and the appointed Fiscal Agent. DIVERSIFICATION Where possible, it is the policy of the City of The Colony to diversify its investment portfolio. Assets held in the common treasury fund, and other ' inYestment funds, shall be diversified to eliminate the risk of loss resulting from over concentration of assets in a specific maturity, a specific issuer, or a specific class of securities. In establishing specific, diversification strategies the following general policies and constraints shall apply: a. Portfolio maturities shall be staggered in a way that avoids undue concentration of assets in a specific maturity sector. Maturities shall be selected which provide for stability of income and reasonable liquidity; b. The investment of bond proceeds and other significant amounts of non-operating funds shall be based on taking competitive bids on such investments with various maturity dates and investment amounts; c. Liquidity shall be ensured through planned investment practices to ensure that the next disbursement date and payroll date are covered through maturing investments. COLLATERAL AND SAFEKEEPING a. Ce~rtificate of Deposit. The City of The Colony will accept as collateral for its certificates of deposit and other evidences of deposit listed as follows: --8-- The City Manager or the Investment Officer must approve release of collateral in writing prior to its removal from the safekeeping account. Collateral shall be reviewed on a monthly basis by the City's Invest- ment Officer and may be audited by the City at any time during normal business hours of the safekeeping bank. In addition, collateral shall be reviewed annually for adequacy by the independent auditor. The financial institutions with which the City of The Colony invests and/or maintains other deposits shall provide monthly, and as requested by the City, a listing of the City's certificates of deposit and other deposits at the financial institution, and a listing of the collateral pledged to the City marked to current market prices. The -- listing shall include total pledged securities itemized by: Name, type and description of the security; Safekeeping receipt number; Par Value; Current market value; Maturity date; and Moody's or Standard and Poor's Rating (both if available). The City of The Colony and the financial institution shall assume joint responsibility for ensuring that the pledged collateral is suf- ficient. B. U. S. Government Securities. All securities pledged by the City of the Colony, including U. S. Treasury Bills, notes, or bonds, and other securities guaranteed by the full faith and credit of the United States Government shall be purchased on a "delivery versus payment" -10- basis. This actually means that the City shall authorize release of its funds only after it has received notification from the safekeeping bank that purchased security has been received in the City's safe- keeping account. This notification may be oral, but must be followed in writing with the original safekeeping receipt provided to the City. INVESTMENT POLICY ADOPTION The City of The Colony Investment Policy shall be formally reviewed and approved by the City Council within ninety (90) days after the beginning o~ each fiscal year. -11- TO: William M..Hall, City Manager FROM: James R. England, Director of Finance SUBJECT: 1988-89 Annual Investment Report DATE: December 1, 1989 In August, 1988, the City Council approved a written Investment Policy which complied with all the legal requirements of Texas House Bill No. 1488 regarding governmental investment practices and policies. This new Investment Policy states that an Annual Investment Report will be presented to the City Manager and City Council within (90) days after the end of each fiscal year. In accordance with the new Investment Policy, this 1988-89 Annual Investment Re~}ort has been prepared and is presented to you and the City Council at this time. SCOPE This second Annual Investment Report, like the first report, will be divided into two (2) sections. The first section will tabulate all investment activity by fund in the 1988-89 Fiscal Year. The second section will discuss the investment of funds in the current (1989-90) Fiscal Year' Included in this section will be an analysis of the availability of funds for investment purposes and a discussion of current and future interest rates. 1988-89 INVESTMENTS Ail investment activity for the 1988-89 Fiscal Year is listed and shown utilizing summarized investment tables. These investment tables, segregated by fund, indicate the number of investments at a specific interest rate for a defined time period. These investment tables are attached for your review and analysis. UTILITY SYSTEMS FUND JUMBO CERTIFICATES OF DEPOSIT Interest 30-Day 60-Day 90-Day 180-Day Rate C.D.'s C.D.'s C.D.'s C.D.'s 7.00 2 1 7.10 1 7.15 1 7.25 5 1 7.30 1 7.35 1 1 7.40 3 7.45 I 1 7.50 5 2 7.55 1 7.60 7.75 1 7.80 1 7.90 1 7.95 i 2 8.00 i 3 · 8.05 1 1. 8.10 1 1 8.15 8.25 1 1 8.35 2 8.40 1 8.45 2 8.50 1 8.60 1 8.70 3 8.85 I 1 9.30 2 1 Average Interest Rate 7.43% 7.79% 8.18% 8.68% The Systems Fund and Customer Meter Deposit Fund investment activity generated $91,274.00 in investment income for the 1988-89 Fiscal Year. UTILITY DEBT SERVICE FUND U. S. TREASURY BILLS Interest 30-Day 60-Day 90-Day 120-Day 180-Day Rate T-Bills T-Bills T-Bills T-Bills T-Bills 4.06 1 6.37 1 7.43 1 7.46 1 7.50 1 7.54 1 7.67 1 7.96 8.35 1 8.75 ,1 8.79 1 1 8.80 1 8.83 8.92 1 9.56 1 2 Average Interest Rate 6.03% 9.56% 7.92% 7.73% 8.59% The Debt Service Fund investment activity generate~"$100,392.~n investment income for the 1988-89 Fiscal Year. UTILITY 1982 CONSTRUCTION FUND JUMBO CERTIFICATES OF DEPOSIT Interest 30-Day 60-Day 90-Day 180-Day Rate C.D.'s C.D.'s C.D.'s C.D.'s 7.25 1 7.35 1 7.40 1 7.50 1' 7.55 1 7.70 1 7.90 1 7.95 2 8.00 2 3 8.15 2 8.20 1 8.30 1 8.50 1 8.80 1 8.85 2 Average Interest Rate 8.06% 8.04% --3-- UTILITY 1988 WASTEWATER CONSTRUCTION FUND JUMBO CERTIFICATES OF DEPOSIT Interest 30-Day 60-Day 90-Day 180-Day Rate C.D.'s C.D.'s C.D.'s C.D.'s 7.50 1 7.60 1 8.05 1 8.20 1 8.90 1 9.15 2 Average Interest Rate 8.28% 8.90% UTILITY 1982 CONSTRUCTION ESCROW FUND U. S. TREASURY BILLS Interest 30-Day 60-Day 90-Day 120-Day 180-Day Rate T-Bills T-Bills T-Bills T-Bills T-Bills /' 7.43' 1 7.44 2 7.54 1 Average Interest Rate 7.54% 7.43% _7.44% The Construction Fund investment activity generated $77,911.00 in investment inqome for the 1988-89 Fiscal Year. GENERAL FUND OPERATIONS JUMBO CERTIFICATES OF DEPOSIT Interest 30-Day 60-Day 90-Day 120-Day 180-Day Rate C.D.'s C.D.'s C.D.'s C.D.'s C.D.'s ' 6.60 1 ,i 7.40 1 1 7.55 1 7.75 1 7.80 1 7.95 1 8.00 1 1 8.05 2 8.10 1 1 8.15 3 1 ' 8.20 3 8.25 i 1 8.30 3 8.40 1 8.44 1 8.45 1 8.50 1 1 ' 8.55 i 2 8.60 1 9.65 1 8.70 1 8.75 2 8.85 1 8.90 1 8.95 2 9.00 1 9.05 1 9.15 2 9.25 1 Average Interest Rate 8.08% 8.36% 8.65% General Fund Operations investment activity gener~ted~ $78,2671;~ l~'n investment income for the 1988-89 Fiscal Year. ~ .... / -5- GENERAL FUND DEBT SERVICE FUND /JUMBO CERTIFICATES OF DEPOSIT Interest 30-Day 60-Day 90-Day 12 O-Day 180-Day Rate C.D.'s C.D.'s C.D.'s C.D.'s C.D.'s 7.75 1 7.80 1 7.94 1 8.00 1 8.10 1 8.13 1 8.25 1 8.50 1 8.80 1 9.02 1 Average Interest Rate 8.02% 8.28% 7.90% 8.48% The General Fund Debt Service Fund investment activity generate'd~-$~3-6,415.00~ in investment income for the 1988-89 Fiscal Year. ~ /"" 1985 GENERAL OBLIGATION BOND FUND JUMBO CERTIFICATES OF DEPOSIT Interest 30-Day 60-Day 90-Day 120-Day 180-Day Rate C.D.'s C.D.'s C.D.'s C.D.'s C.D.'s 7.45 1 7.50 2 7.55 1 7.60 1 7.70 1 8.00 1 8.05 1 8.15 I 2 8.20 2 1 8.25 1 8.30 1 8.50 1 ~. 1 8.60 1 9.00 i 1 9.10 2 Average Interest Rate 8.09% 8.44% 7.89% ( .... The 1985 General Obligation Bond Fund investment activity generat__~ $_0,6 ,, in investment income for the 1988-89 Fiscal Year. [ .... ./ --6-- LAND FUND JUMBO CERTIFICATES OF DEPOSIT Interest 30-Day 60-Day 90-Day 120-Day 180-Day ~'~ate C.D.'s C.D.'s C.D.'s C.D.'s C.D.'s 7.50 1 7.65 2 7.70 8 7.75 8 7.80 2 8.05 1 8.15 1 8.20 3 8.25 3 8.30 5 9.00 2 i 3 9.16 1 9.20. 3 9.25 1 9.45 9.50 4 9.75 1 Average Interest Rate 7.15% 8.05% 7.99% 9.00% 9.30% The Land Fund investment activity generated $161,796'i~0-in investment income for the 1988-89 Fiscal Year.'~- Three (3) smaller funds also generated investment income in the 1988-89 Fiscal Year. Those funds and their corresponding investment income balances for the 1988-89 Fiscal Year are listed below: Fund Investment Income Stewart Creek Park $ 4,074.00 I.B.M. Contingency 5,903.00 Fox and Jacobs Contingency 10,411.00 The total investment portfolio for the City of The Colony was ~6, 438 , 689 . 00 on October 1, 1988, the first day of the 1988-89 Fiscal Year. At t}{~-e-n~l~'-6f'the 1988-89 Fiscal Year the total investment portfolio had been reduced to'($~4.,.653,358~00--~ on September 30, 1989. The large reduction in the total investment portf-~ii~ during the 1988-89 Fiscal Year was attributed to the factors listed below: 1. Removal of the Utility Interest Demand Bank Account from the Investment Schedule ($250,000.00). 2. Settlement payment for Bright Dallas Water Line Easement in 1982 Construction Fund ($100,000.00). J 3. Utilization of 1982 Construction Escrow Funds for Utility Debt Service Fund ($600,000.00). ~4. A portion of the General Fund, Debt Service Fund Balance utilized for ) annual General Debt Service payment ($150,000.00). ~ 5 Transfer of Fire Station Bond Funds to General Fund Debt Service Fund for annual debt service payment ($200,000.00). 6. Remodeling of Fire Station No. i with balance of Fire Station Bond Funds ($400,000.00). INVESTMENT INCOME TWO YEAR ANALYSIS 1987-88 1988-89 Fund Fiscal Year Fiscal Year Utility Systems $ 83,437.00 $ 91,274.00 Utility Debt Service 70~660.00 100,392.00 Utility Construction 91. 009.00 77,911.00 General Fund Operations 57.867.00 78,267.00 General Debt Service 36 690.00 36,415.00 General Bond 61 448.00 30,639.00 Land 140 970.00 161,796.00 ~ Totals $542,081.00 ~' ~ $576,694.00 As you can easily see, on the Investment Income chart listed above, more investment income was generated in the 1988-89 Fiscal Year as compared to the previous year. Total investment income increased six and one-half percent (6.5%) in the 1988-89 Fiscal Year. Because of increased interest rates we were able to generate additional investme}it income even with a substantial r~duetio-ri----~ --Tn-6-(f~- total investmeiit'-'isbrtfolio-~ 1989-90 FISCAL YEAR Interest rates on Certificates of Deposit and U. S. Treasury Bills have decreased drastically during the first two (2) months (October-November) of the 1989-90 Fiscal Year. A statistical table comparing interest rates on Certificates of Deposit and U. S. Treasury Bills from October, 1989, through November, 1989, is provided for your review and is displayed below: INTEREST RATE ANALYSIS* CERTIFICATES OF DEPOSIT October, 1989 November, 1989 One Month 8.23% 7.71% Two ~Months 8.25 7.72 ,, ..... Three Months 8.23 8.25 t Six Months 8.21 7.50 --8-- UNITED STATES TREASURY BILLS October, 1989 November, 1989 13 Weeks 7.72% 7.63% 26 Weeks 7.79 7.45 e: Wall Street Journal sly, after reviewing the above interest rate table, interest rates are ~.declining rapidly. With the continuing reduction in interest rates, investment /)income on current investments will be reduced drastically in the 1989-90 Fiscal Numerous bankers and investment managers expect lower interest rates by year end because of mounting signs of economic weakness. Many major economists predict the Federal Reserve will continue to drive down short-term interest rates in the weeks and months ahead in an effort to reverse the sharp slide in the nation's manufacturing sector. Donald J. Fine, chief market analyst at Chase Manhattan Bank, stated he expects lower interest rates soon. Mr. Fine stated, "The direction of interest rates isn't the issue. Rates are headed down." "The major issue is timing and extent of the Federal Reserve reducing rates because the industrial sector is still sagging," Mr. Fine continued.* *Credit Markets, Wall Street Journal .' All of the above observations predict the continued lowering of interest rates. Reduced interest rates will result in our interest income on all investments in the 1989-90 Fiscal Year to be substantially lower than last fiscal year. There are three major reductions in the availability of funds for investment purposes in the 1989-90 Fiscal Year. These three major reductions in funds available for investment purposes are listed below: 1. Utility Fund Cash Reimbursement to General Fund Operations $600,000.00 2. Fox and Jacobs Contingency Fund Cash Transfer to /' General Fund Debt Service Fund 140,000.00 / 3. Utility Construction Escrow Fund Cash Transfer to Utility / Debt Service Fund 785,000.00 s we pointed out in last year's Annual Investment Report, our budgeted cash transfers drastically reduce our total investment portfolio and funds to invest during the 1989-90 Fiscal Year. SUMMARY As you will recall we encountered extremely low interest rates in the 1987-88 Fiscal Year. Last year, at this same point in time, we preducted somewhat higher interest rates for the 1988-89 Fiscal Year. Fortunately, interest rates accelerated during the last quarter of 1988, and continued to rise during the first and second quarters of 1989. However, the third quarter of 1989 saw a sharp decline in interest rates. The reduction in interest rates is still continuing into the .fourth quarter of 1989 and all predictions indicate these low interest rates will continue into the 1990 calendar year. Ail of the above factors --9-- and considerations indicate that total net investment income will be extremely Iow for the 1989-90 Fiscal Year. Earlier, we itemized and discussed the three cash transfers included in the 1989-90 Annual Budget. Approximately $1,525,000.00 in these three cash trans- fers will be utilized for current operational costs and annual bond debt service payments. This large reduction in cash available for investments in the 1989-90 Fiscal Year will significantly reduce our total investment income and the total investment portfolio. James R. England ~/ Director of Finance tad cc: Mayor and Councilmembers Jane Barton, Financial Assistant Ruthann Devlin, Financial Coordinator Bob Scott, Manager, Deloitte-Touche George Scott, Partner, Deloitte-Touche Boyd London, First Southwest Co.