Fred Ortega
The city's investment portfolio has seen a drop of $20 million over
the past fiscal year, but earnings on interest rose slightly thanks
to a boost in short-term rates by the Federal Reserve Board,
according to a report by City Treasurer Ronald T. Borucki.
The city's portfolio is down to $540 million, from $560 million at
the end of the last fiscal year in June 2004. The drop is due to
large city expenditures over the past year, Borucki said.
"This is just part of the normal ebb and flow of city finances,"
Borucki said. "This last year we had some rather large expenditures,
the first of which comes to mind is the gas field purchases."
At the beginning of July, the city closed a deal with a consortium
of local cities to become a part owner of a Wyoming natural gas
reserve. Glendale spent $14.1 million in Glendale Water and Power
funds for a 4.2% share of the gas fields, a move that helped
diversify the city's sources of energy, water and power officials
said.
Other expenditures included purchases of open space near Chevy
Chase Canyon, Borucki said.
Despite the loss of $20 million in investment capital, the city's
earnings on interest rose slightly, from $15.8 million to $16.1
million in the 2004-05 fiscal year, Borucki added.
"Despite the helter-skelter year in interest rates, short-term
rates were up sharply while longer term rates were standing still,"
Borucki said. "Through all of that, we were pleased with our efforts.
The average interest rate of return for the city's investments in
2004-05 was 2.92%, the same as in the previous year. So how did the
city make more in interest with less money to invest?
"The oil field purchase did not happen until the last month of the
fiscal year," Borucki said. "So while the year was going on, we
actually had more dollars to invest on average, every day, during
this last year than the previous year."
The city's rate of return on investments, more than 90% of which
are in U.S. Treasury bonds and triple-A rated, government-guaranteed
investments such as Freddie Mac and Fannie Mae, was more than half a
percent better than the Local Agency Investment Fund return.
The Local Agency Investment Fund is the state investment pool, a
benchmark that many municipalities use to measure their returns
against, Borucki said.
That more than half-a-point gain translated to about $3.5 million
more than if the city's investments had merely matched the state
pool's performance.
Borucki's performance in managing the city's finances has
