Pandemic Impact To City's Portfolio Into The Millions

By Robert Thomas

No matter whether or not you see it as 6.2 or 3.5 there is a multi-million dollar loss on the City's reserves investment portfolio due to COVID - 19's impact on financial markets.

Speaking before Council finance director Brian Acker said the markets took initial drops of 30 to 40 percent but prudent investing on part of the City limited the City's exposure.

As of April 9th the moderate term investment pool was down 3.5 percent from 4.8 percent on March 30th whereas the long term investment pool was down 6.61 percent recovering somewhat from 9.02 percent loss on March 30th.

“Members of the Investment Committee have continued to stay up to date in terms of the investment portfolio,” Acker said.

The City had initially invested $100 million but previous to the pandemic drawing down $1.748 previously to fund 2020 capital programs.

“We have suffered some losses but due to the care and prudence taken by the Investment Committee…and Council as a whole really a lot of that has been mitigated,” he said.

When the City sold its bond portfolio it had bought GICs paying in the 2.35 to 2.55 percent range with 49 percent of the proceeds. The GICs pay $1.25 million on an annual basis.

Acker said the City is underweighted in terms of equities in both its moderate and long term investment portfolios.

“That has certainly been an aid to us to weather this initial decline in the financial markets,” he said. “The City has been very prudent in transition (our investments) with the investment policy the result is the City has not reached its target allocation for equities and is significantly overweight for GICs.”

Councillor Brian Swanson asked if given the percentage declines the City was not down $6.2 million from what it’s portfolio was once worth.

“It would be less than that. We had invested $100 million initially we have drawn $1.748 million of that down for capital projects. Our portfolio currently sits at $95.2 million so we are down $3.5 or $3.6 million,” Acker replied.

Councillor Swanson and Acker briefly rattled sabres with the Councillor stating the loss was $6.2 million from what the portfolio had accumulated and the finance director saying the loss was $3.5 million from the initial investment of $100 million.

During its formulation and subsequent discussion on the investment policy Councillor Swanson has at times likened the inclusion of equities as gambling a charge denied by Councillor Dawn Luhning who has said the Investment Committee has been acting prudently.

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Regarding funding $2.7 million for the water main to the Southeast Industrial Park and the upgraded playground area in the Westpark Development Acker said Administration felt there was sufficient funds in the City's bank accounts to cover it.

“If the pandemic was much worse, yes we would probably look to our line of credit,” Acker said.

SEE RELATED - Process Started For $15 million line of credit

The report was received and filed in a vote of 6 - 1 with Councillor Swanson opposed.