comprehensive annual financial report - City of St. Petersburg

CITY OF ST. PETERSBURG, FL
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2010
NOTE 6 – DEPOSITS AND INVESTMENTS – (Continued)
The State Board of Administration is part of the Local Government Surplus Funds Trust Fund and is
governed by Ch. 19-7 of the Florida Administrative Code. These rules provide guidance and establish the
general operating procedures for the administration of the Local Government Surplus Funds Trust Funds
A and B. Additionally, the State of Florida Office of the Auditor General performs the operational audit
of the activities and investments of the State Board of Administration. The fair value of the position in
the external investment Fund A (Florida Prime) is the same as the value of the pool shares. The fair value
of the positions in the external investment Fund B is currently less than the book value of the fund’s
shares, and the Fair Value Factor at September 30, 2010 is .707058094 of each 1.00 share in the fund.
The Local Government Surplus Funds Trust Fund A (Florida Prime) is not a registrant with the Securities
and Exchange Commission, however, the board has adopted operating procedures consistent with the
requirements for a 2a-7 fund. The Local Government Surplus Fund B does not meet the requirements of a
2a-7 – like fund.
The City continues to maintain accounts with Local Governmental Surplus Funds Trust Fund and the
remaining assets are separated into two funds, the “A” fund, which is the more liquid fund and the “B”
fund, which holds the questionable remaining assets and no direct withdrawals can occur from this fund.
As assets in the “B” fund mature or are sold the cash flow would be redistributed to the “A” fund and are
available for withdrawal. The balances in these funds are identified below.
The Bank of America - Columbia Strategic Fund account is a separately run investment account for the
City. Money is withdrawn from the account when investments mature or are sold. All investments
within this separately managed account are included below under the Bank of America – Columbia
Strategic Fund and are divided into five different categories of investments. There are seventeen
investment positions with a fair value of $1.29 million that are rated below investment grade or not rated.
The fair market values of these investments by category are as follows: Corporate Bonds $228,438, Asset
Backed Obligations $67,778 and the Mortgage Backed Securities $992,179.
In May 2009, the city ended its participation in the Securities Lending program with Wachovia. All loans
were repaid and the City was required to purchase a $15,000,000 Lehman Brothers Note, at par, which is
recorded at fair market value. Lehman Brothers is currently in bankruptcy and the city intends to hold the
Note until bankruptcy court liquidation. The City recorded a $13.1 million dollar unrecognized loss in
Fiscal Year 2008 and had a $695,000 unrecognized gain in 2009 and a $542,007 unrecognized gain in
2010 due to the market value increase of the Lehman Position.
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