Yorba Linda's investment portfolio earns less cash but still outperforms comparison index; city updates accessory dwelling units regulations

 

While earnings on Yorba Linda's $49 million investment portfolio were lower for the past fiscal year, the earnings from the nine investment sectors “outperformed the index against which performance is measured,” according to a recent report from Finance Director Dianna Honeywell.

The city's portfolio is handled by PFM Asset Management, a nationwide firm that provides investment advice to public sector and non-profit institutions. The company's most recent report to the City Council noted a 0.53% “yield at market,” compared to 0.41% by the index.

Honeywell also noted in her March 1 report that the firm “continues to reposition the city's holdings in response to the current economic conditions in an effort to maximize earnings while ensuring that the city's funds remain invested in high-quality investments.”

Some $20.9 million or 42.7% of the city's portfolio is held in U.S. Treasury securities. Other sectors, in descending order, are federal agency securities, corporate notes, asset-backed securities, municipal obligations, negotiable certificates of deposit, supranationals, federal agency collateralized mortgage obligations and money market funds, all as permitted by law.

The portfolio's annualized returns: 0.24% for one year, 3.2% for three years and 2.43% since March 31, 2017, when PFM was hired, versus the custom index of -0.27%, 2.89% and 2.09%.

In other financial news, the city-owned Black Gold Golf Club “has seen an uptick in all categories (golf rounds, range visits, pro shop and food and beverage sales),” according to a March 15 report from Honeywell.

The increase will mean additional revenue of $1.1 million by the end of the fiscal year June 30, according to Honeywell's projection.

Financial staffers are recommending the council authorize payments totaling $476,790 from the Black Gold fund to the city's Master Plan of Drainage fund to repay a loan the latter fund made to Black Gold to eliminate the club's past negative cash flow.

And Honeywell is estimating a general fund budget surplus of $1.9 million at the end of the fiscal year June 30. That would put surplus operating reserves at 59.3% of general fund expenditures, more than exceeding the city's policy of keeping at least 50% in reserves.

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Yorba Linda processed 39 new permits for second units – often labeled accessory dwelling units or “granny flats” – in 2021, bringing the total to 86 since 2014, during the fifth cycle of the state-mandated Regional Housing Needs Assessment program.

The city also updated second unit ordinance regulations to comply with the most recent state law changes, including a temporary fee waiver pilot program for all plan check and permitting fees related to second units.

And the city reports assisting 120 lower-income households with financing for home repairs during the 2014-2021 housing cycyle, including five households helped with funds last year.