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Report on the Department’s 4th Quarter Investment Report in accordance with the Public Funds Investment Act
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BACKGROUND
The Department’s investment portfolio consists of two distinct parts. One part is related to bond funds under trust indentures that are not subject to the Public Funds Investment Act (PFIA), and the remaining portion is related to accounts excluded from the indentures but covered by the PFIA. The Department’s total investment portfolio is $3,787,729,695 of which $3,710,377,180 is not subject to the PFIA. This report addresses the remaining $77,352,515 (see page 1 of the Internal Management Report) in investments covered by the PFIA. These investments are deposited in the General Fund, Housing Trust Fund, Compliance, and Housing Initiative accounts, which are all held at the Texas Treasury Safekeeping Trust Company (TTSTC), primarily in the form of overnight repurchase agreements. These investments are fully collateralized and secured by U.S. Government Securities. A repurchase agreement is the daily purchase of a security with an agreement to repurchase that security at a specific price and date, which in this case was September 1, 2024, with an effective interest rate of 5.3%. These investments safeguard principal while maintaining liquidity. The overnight repurchase agreements, subject to the PFIA, earned $978,127 in interest during the quarter.
Below is a description of each fund group and its corresponding accounts.
• The General Fund accounts maintain funds for administrative purposes to fund expenses related to the Department’s ongoing operations. These accounts contain balances related to bond residuals, fee income generated from the Mortgage Credit Certificate (MCC) Program, escrow funds, single family and multifamily bond administration fees, and balances associated with the Below Market Interest Rate (BMIR) Program.
• The State Housing Trust Fund accounts maintain funds related to programs set forth by the Housing Trust Fund funding plan. The Housing Trust Fund provides loans and grants to finance, acquire, rehabilitate, and develop decent and safe affordable housing.
• The Compliance accounts maintain funds from compliance monitoring fees and asset management fees collected from multifamily developers. The number of low income units and authority to collect these fees is outlined in the individual Land Use Restriction Agreements (LURAs) that are issued to each Developer. These fees are generated for the purpose of offsetting expenses incurred by the Department related to the monitoring and administration of these properties.
• The Housing Initiative accounts maintain funds from fees collected from Developers in connection with the Department’s Housing Tax Credit Program. The majority of fees collected are application fees and commitment fees. The authority for the collection of these fees is outlined in the Department's Multifamily Rules. These fees are generated for the purpose of offsetting expenses incurred by the Department related to the administration of the Tax Credit Program.
• The Ending Homelessness Trust Fund account maintains funds from donations collected from individuals through the Texas Department of Motor Vehicles in connection with the Department’s Ending Homelessness Program. The authority for the collection of these donations is outlined in Tex. Transp. Code §502.415. These donations are collected and disbursed for the purpose of providing grants to counties and municipalities to combat homelessness.
This report is in the format required by the Public Funds Investment Act. It shows in detail the types of investments, their maturities, their carrying (face amount) values, and fair values at the beginning and end of the quarter. The detail for investment activity is on Pages 1 and 2.
During the 4th Quarter, as it relates to the investments covered by the PFIA, the carrying value increased by $8,331,053 (see page 1) for an ending balance of $77,352,515. The change is described below by fund groups.
General Fund: The General Fund increased by $2,725,937. This consists primarily of $1,130,065 received in multifamily bond fees and $1,400,000 transferred from the Single Family Bond Program.
The State Housing Trust Fund: The Housing Trust Fund decreased by $158,593. This consists primarily of $1,373,703 received in loan repayments and interest earnings offset by disbursements including $1,500,967 for loans, grants, and escrow payments.
Compliance: Compliance funds increased by $2,187,893. This consists primarily of $1,957,025 received in compliance fees.
Housing Initiative: Housing Initiative funds increased by $3,689,142. This consists primarily of $3,689,803 received in fees and interest earnings related to tax credit activities.
Ending Homelessness Fund: Ending Homelessness funds decreased by $113,326. This consists of $66,542 donations and interest earnings on current investment balances, offset by disbursements of $179,801 for grants.