Manteca has a $144 million portfolio

Automobile sales are helping to drive investment from the town of Manteca – literally.

Investments in corporate securities issued under auto companies, their receivables, leasing and credit arms – installment debt owed by car owners – accounted for more than a third of the 21, $5 million the city had invested in corporate securities as of June 30.

Overall, the city as of June 30 had $144 million in its investment portfolio.

US Treasury issues accounted for $54.7 million or 38% of the city’s overall investments.

The snapshot of Manteca’s investment portfolio is shared with city council on Tuesday.

The quarterly reports have been presented to council since former city manager Miranda Lutzow informed elected officials three years ago that the city’s financial accounting was in such disarray that it was unclear whether more than $68 million was correctly accounted for by the finance department. .

These issues were related to the general ledger not being kept up to date as well as redundant expense entries and income being placed in the wrong accounts.

Although there were never any signs of theft or the like detected, it was determined that money was borrowed from restricted accounts and used for purposes other than those for which it was lawfully collected and which should be repaid with interest.

That amount — which reached $20 million at one point — involved growth fees collected for work such as road improvements that were used for water and sewer projects.

The exact amount of what must be reimbursed by taxpayers will require rate increases for sewer and water services. Studies determining what those rate hikes might need to be will be reported to the board later this year.

The final amount should be large enough that the ongoing water rate study can be split into two rate increases enacted at different times and spread over several years. The city must not only repay interfund loans made on behalf of the water fund, but it must also raise funds for necessary capital improvement projects involving aging water infrastructure, as well as cover maintenance costs and current operation.

A sewer rate hike study is also underway.

Neither water rates nor sewer rates have increased in 13 years.

Most investment portfolio funds represent money that the city has raised for a specific purpose or has received from the state or federal government for a specific purpose. As such, it cannot be leveraged for day-to-day city operations such as police and fire or to augment personnel in either department or the entire city.

A portion of the funds represents reserves, including those in the general fund accounts. It also reflects property tax receipts that are remitted to the city twice a year as well as quarterly sales tax receipts.

Property and sales taxes represent the largest source of revenue for the city’s general fund. While funds come in two to four times a year, about 85% of the city’s general fund costs involve salaries and benefits that are spread fairly evenly over 12 months.

The accounting problem has been largely corrected and procedures have been put in place to prevent this from happening again.

Among the debt securities the city holds in its portfolio managed by PFM Asset Management that are related to automobiles are related to BMW, Ford GM, Harley-Davidson, Honda, Hyundai, Mercedes-Benz, Nissan, Toyota, Volkswagen and CarMax.

All of the debt is at the top of the ratings issued by S&P, Moody’s and Fitch, the three firms that assess the solvency of companies and municipalities.

To contact Dennis Wyatt, email [email protected]

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