City’s investment portfolio earns nearly 9% in 2023

City investments earned almost 9 per cent last year, making up for a poor 2022, and grew further thanks to an influx of cash from city business units at the same time as city debt fell.

City treasurer Ryan Wright reported to council’s audit committee that all cash and financial holdings of the municipality now total $733 million at Dec. 31 — about $96 million more than the same time last year.

Aside from withdraws — including $32 million for utility rate relief last fall — and deposits, the holdings earned 8.8 per cent over a variety of investment classes.

“That lags slightly behind our benchmark, but our investment strategy is quite stable,” said Wright. “It’s a long-term approach to avoid volatility — we’re not chasing the market.”

The portfolio lost 6.86 per cent in 2022, following gains of 6.7, 3.6 and 6 from 2019 to 2021, respectively.

The target is a 5.5 per cent annual return over five years.

For the year ahead, the city treasury department still believes the Bank of Canada could provide a lending rate cut in later 2024, but notes the situation is unpredictable.

“Inflation has moderated significantly,” said Wright, adding that only cash the city holds for short-term use is affected by lending rates, and that is set to decrease this year. “We’re set up to see positive returns when interest rates go lower.”

Officials told committee they will evaluate new borrowing against expected lower rates later this year, but currently the average rate paid by the city is 3.48 per cent over a host of long-term debentures.

Those total $398.6 million, including just $28.3 million related to non-utility municipal operations, about $3 million less than last year and

$10 million less than 2019.

The city’s space under a mandated debt limit of two times revenue fell to 43 per cent because debt decreased and revenue grew, mostly due to electricity sales.