Date: June 3, 1997
                                           CC File No.: 1306-5

   TO:       Vancouver City Council

   FROM:     Director of Finance

   SUBJECT:  New Position - Treasury Analyst


        THAT a position of Treasury Analyst be created, subject to
        classification review by the Director of Human Resources, at an
        estimated cost of $70,000, with funding from the Operating Budget.


        The General Manager of Corporate Services RECOMMENDS approval of
        the foregoing.


   The Vancouver City Charter sets out the City s authorities to borrow by
   means of promissory notes, overdraft, and debentures. The Charter also
   sets out the permitted investments for cash of the Sinking Fund,
   proceeds of debenture issues, and other cash not immediately required.
   The authority to invest surplus cash and borrow for a short term is
   delegated to the Director of Finance, with periodic reports to Council
   on the exercise of that authority.

   It is Council policy that increases in expenditures related to the
   addition of new programs or staffing should be offset by matching
   expenditure reductions or revenue increases.


   This report proposes the creation of a Treasury Analyst position in
   Financial Services Department to provide improved management of City
   financial resources, with the expectation of improved earnings, lower
   borrowing costs, and less exposure to interest rate risk.


   The management of the City s financial resources and financial
   liabilities is a major activity of the Director of Finance Office, with
   significant financial consequences. At any one time, the City has funds
   invested in temporary investments in the money market with totals
   ranging from a low of $150 million (typically in January) to a high of
   $750 million (after the Main tax billing). Annual earnings from short
   term investments of the City s cash pool, for 1996, was $20 million. 
   Further, the City borrows, through long term debentures, to finance that
   portion of the City s capital program not funded by other sources. Those
   borrowings total about $75 million per year. 


   The management of a Treasury Operation involves a number of key
   activities, including:

   1.   Cash forecasting - identifying the cash needs for the City, on a
        daily basis, and identifying cash surpluses which are available for

   2.   Short term investments - investing surplus cash in financial
        instruments, in accordance with the City Charter.

   3.   Interest rate management - develop strategies and implement actions
        which maximize interest earnings while mitigating against interest
        rate fluctuations.

   4.   Credit risk - develop and implement policies and strategies to
        prevent financial loss due to default of creditors.

   5.   Liquidity risk - develop strategies to prevent financial loss due
        to the need to liquidate investments to meet cash  flow, while
        maximizing earnings and ensuring flexibility to trade investments.

   6.   Borrowing Decisions -develop forecasts and evaluate strategies with
        regards to borrowing decisions, including timing, and structure and
        term of debt.

   The foregoing activities require a significant amount of analysis,
   monitoring of financial markets, and maintaining personal contacts with
   financial institutions. To date, this has been done by the Director or
   Deputy Director, but due to the demands of other priorities, has
   precluded the investment of sufficient time to attend adequately to
   these Treasury functions. While it would be desirable to delegate some
   of these activities to other staff, recruitment efforts over the past
   two years has demonstrated that these skills and abilities are not often
   linked to other skills utilized in Finance, except when high rates of
   compensation are offered. 

   After considerable consideration, we have concluded that the best
   staffing model would involve hiring a treasury analyst who would assist
   the Director in the management of the Treasury function
   (investing/borrowing), and who would undertake the detailed research and
   analysis and computer modelling in that regard to support the financial
   management decisions of the Director. 


   The cost for hiring a treasury analyst will be about $70,000.
   Recognizing that the City earns in the order of $20 million per year in
   short term investments, and expends significantly larger amounts for
   borrowing through debentures, the revenue impacts of marginally improved
   financial decisions would easily cover the additional salary costs for
   this position. 

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