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OPENPUBLICA · PUBLIC MEETING RECORD

Record of Proceedings

City of Milford Finance & Audit Committee Meeting: Quarterly Investment Review — October 26, 2026

Council (4th Monday, workshops) & Committees — Monday, October 26, 2026

BodyMilford, Delaware

SessionCouncil (4th Monday, workshops) & Committees

DateMonday, October 26, 2026

StatusNEW · FILED

Video Record

0:00 / 39:46

Transcript — VerbatimClick a timed line to jump · ⧉ to share it

Speaker numbers apply only to this recording.

Speaker 1

0:00

Start the um finance and audit committee meeting um tonight as for each meeting with the city of Milford we do have a 15 minute public comment period.

0:09

Um there's no one present um in the audience um so could I ask Nick is there anyone on online that would like to speak?

Speaker 2

0:19

Uh anyone online who would like to make a public comment uh may do so using the raise your hand feature.

0:28

Uh I see no one coming forward,

Speaker 1

0:30

okay.

0:31

With um no one wanting to speak during the public comment period, the coming com public comment period is now closed.

0:37

And now we will 501, we will open um the finance and audit committee meeting of October 2026.

0:45

Um there's um one item on the agenda, and that's the quarterly investment review.

0:50

And I would turn this over to our um finance director, uh Mr.

0:54

Botala.

Unassigned speaker

0:56

Uh

Speaker 3

0:56

good evening, Mr.

0:56

Chairman.

0:57

Lou Vitola, Finance Director.

0:59

Um, tonight, as you mentioned, we do just have uh one uh item on the agenda.

1:03

Uh with us this evening is Jeff Facino with PFM Asset Management, PFMAM, our uh longstanding investment advisors, and I will turn it over to Jeff to uh to uh report uh the most recent quarter.

1:17

The quarter ended September 30, 2026.

Speaker 1

1:20

Hey Jeff, right before you get started, my apologies to you and whoever else is listening.

1:24

Um for a roll call, we do have three of the four members uh present for this meeting.

1:29

So we do have a quorum.

Speaker 4

1:33

Great.

1:33

Thank you all for having me today.

1:35

Council members, thanks for for having me as always, uh Jeff Asino PFM asset management.

1:41

And we'll start talking about the uh the third quarter results.

1:44

We'll begin with the the market update and then move into the uh specific uh results for the portfolio.

1:50

Uh so we'll start with the the current market themes page.

1:54

Um, and it's really uh a three-part story.

1:58

So uh in the top you'll see uh US growth remains resilient.

2:02

It's supported by we talked about this a lot last

Unassigned speaker

2:05

uh

Speaker 4

2:06

last meeting about AI spending and uh and consumer spending have really supported uh US growth.

2:12

Um part of the big story of the quarter though has been inflation and the continued uh war in Iran has really

Unassigned speaker

2:20

uh

Speaker 4

2:21

put an impact on energy prices looking at uh the market even today, you know, oil's up over 115, which is a really really elevated level.

2:31

Um, and as a person who heats my home with oil, really not looking forward to the winter.

2:37

So um well, not at all really.

2:42

So the the big story during the quarter was the Fed uh hiking rates by 25 basis points.

2:48

So the Fed funds rate now stands at 3.75 to 4%.

2:52

Uh we saw a sharp income increase in interest rates uh over the quarter.

2:58

Um if we'll get into the the yields uh in a little bit, but you saw that the two-year uh the two-year rate really steeply increase uh and we know those increases.

3:10

Well, that's bad for performance.

3:12

Um so as bond yields increase, bond prices decrease, and we'll get into that you know as we walk through the presentation.

3:19

But that kind of sets the stage uh for what we're gonna talk about today.

Unassigned speaker

3:25

And

Speaker 4

3:25

as always, feel free to stop and pause with any questions that you have as we go through.

3:29

Um

Unassigned speaker

3:30

but

Speaker 4

3:31

we'll tell we'll begin by talking about that's September rate hike on this page uh and really the Fed looking at kind of a higher for longer uh policy path.

3:41

The Fed meets again later this week on Wednesday.

3:44

Um, the market is currently pricing in one more rate hike for this year and potentially one for next year.

3:52

Uh our anticipation is that in October rates stay steady and that that increase will come at the December meeting.

3:59

So we do think there is going to be one more hike this year.

4:01

We think it'll come in December.

4:03

There's typically not a rate hike or rate movement prior to an election.

4:08

Um, so we think that'll happen in December.

4:13

Um we'll look real quick on the bottom of this page, and it's kind of the potential paths for for Fed policy on what would kind of have to happen for no hikes, kind of the two or more hikes and the one additional hike.

4:26

Um, and you could see it's really uh the big biggest part of the story is gonna be inflation and whether it can cool, whether it's gonna kind of stay where it is, or if it continues to accelerate.

4:37

Over the quarter, you know, the the inflation did accelerate, and we saw that that hike happen.

Unassigned speaker

4:46

So

Speaker 4

4:46

looking at inflation on the next page, um, you can see on the left-hand chart, core PCE.

Discussion Breakdown — Share of Meeting

Investment Policy█████████████████████████████████████████████77%

Procedural█████9%

Economic Development███5%

Election Process███5%

Public Engagement██4%

Summary of Proceedings

City of Milford Finance & Audit Committee Meeting — Quarterly Investment Review (October 26, 2026)

The Finance and Audit Committee of the City of Milford met on October 26, 2026, at 5:00 p.m. Three of four committee members were present, establishing a quorum. The sole agenda item was the quarterly investment review for the quarter ended September 30, 2026, presented by Jeff Facino of PFM Asset Management (PFMAM), the city's longstanding investment advisor, and introduced by Finance Director Lou Vitola. The committee received the report, discussed market conditions, portfolio performance, and credit quality, and adjourned without taking any formal votes.

Public Comments & Testimony

The 15-minute public comment period was opened and closed with no speakers; no one was present in the audience, and no one came forward online via the raise-hand feature.

Discussion Items

Quarterly Investment Review (Quarter Ended September 30, 2026) — Presented by Jeff Facino, PFM Asset Management

Market conditions: Mr. Facino described U.S. growth as resilient, supported by AI-related and consumer spending, but noted that inflation accelerated during the quarter. He cited the conflict involving Iran as a driver of elevated energy prices (oil above $115 per barrel) and supply-chain disruptions, including sharply reduced ship traffic through the Strait of Hormuz.
Federal Reserve policy: The Fed raised rates by 25 basis points during the quarter, bringing the federal funds rate to 3.75%–4.00%. PFM expects rates to hold steady in October (with no typical pre-election move) and anticipates one additional hike at the December 2026 meeting; the market is pricing in one more hike this year and possibly one in 2027. Mr. Facino cited the enactment of an independent Fed as a positive, noting the new Fed chairman made an independent decision to raise rates despite presidential opposition.
Economic indicators: The labor market was described as steady and resilient; GDP through the second quarter was 2.2%, and private domestic final purchases (PDFP) indicated strong underlying demand. Negative factors in PFM's outlook include persistent inflation, geopolitical uncertainty, and supply-chain disruptions; positive factors include resilient domestic demand, a low-unemployment labor market, and strong corporate fundamentals.
Treasury yields: The two-year Treasury yield rose sharply from 4.14% in June to 4.89% on September 30, easing to 4.68% by the end of October. Mr. Facino noted yields are now above their 10-year and 20-year averages.
Sector performance: Asset-backed securities (ABS) was the only sector with a positive return during the third quarter; triple-A corporates were the worst-performing sector.
Portfolio summary (as of September 30, 2026):
- Total portfolio just under $31 million: approximately $30.667 million in securities, $195,000 in accrued interest, and $95,000 in cash.
- Portfolio duration of 2.07 years, slightly longer than the benchmark.
- Yield at cost of 4.42%.
- Average credit quality of double-A, with approximately 4% of investments rated triple-A and the lower end of the range at triple-B plus.
- Returns: -0.52% for the three-month period; +1.75% over one year; and 4.06% annualized since inception.
Finance Director comments: Lou Vitola noted this was the first negative quarter in the entire relationship with PFM and that significant withdrawals during the quarter — to help fund the corporate center project — may have influenced results, though he had not taken a deep dive into the specific effect. He added that the city's investment policy statement constrains PFM to investment-grade securities, with protocols to restore compliance if a holding is downgraded after purchase, and that PFM's traders have the city's policy parameters loaded into their trading systems.

Committee Discussion & Questions

A council member asked which industries support the economy's resiliency. Mr. Facino cited AI, technology, and financials, noting that corporations are currently profitable (unlike during the dot-com bubble) and that the long-term effects of AI spending on labor and production remain uncertain. The council member observed that the same megacap tech companies driving the stock market are also driving the economy, and questioned whether that is cause for celebration or caution. He also expressed concern that AI is ultimately designed to increase efficiency by eliminating large portions of the workforce; Mr. Facino noted some companies have reversed large AI-driven workforce reductions after finding they needed more people than expected. A council member cited figures such as roughly $6 million in revenue per employee for Anthropic, which was described as filing for an IPO.
In response to a question about whether consumers are actually spending, Mr. Facino confirmed consumer spending remains positive (citing the PDFP data), but noted consumer debt is also still rising.
A council member asked whether PFM factors political and electoral outcomes into its analysis, referencing the upcoming November 3 midterm election. Mr. Facino said PFM's fixed-income research team monitors macroeconomic, sector, and individual-holding data daily, including geopolitical factors, and is both current- and forward-looking.
A council member asked for clarification on the portfolio's credit quality. Mr. Facino explained the double-A figure is the average credit quality of the portfolio, with roughly 4% of investments in triple-A and the remainder ranging down to triple-B plus; each individual holding's rating is disclosed. Councilman James emphasized that this information is public, posted on the city's website, and included in meeting packages, and that all investments must comply with the city's investment policy statement.
Councilman James expressed appreciation for the committee's active investment oversight during volatile markets and stressed the importance of transparency so that residents — as owners of the funds — can find answers to their questions in the public record. He also noted that yields reflect risk and that past performance does not guarantee future returns.

Key Outcomes

The committee received the quarterly investment review report from PFM Asset Management; no motions, resolutions, or formal votes were taken.
No new business was introduced, and the meeting was adjourned following the presentation and discussion.

Note on Transcript Discrepancies

The chair introduces the finance director as "Mr. Botala," but the speaker self-identifies as Lou Vitola, Finance Director; this summary uses the self-identified name.
The PFM presenter's name appears in the transcript as both "Jeff Facino" and "Jeff Asino"; this summary uses "Jeff Facino," as stated in his introduction.
The transcript describes "Tormoon straight ship traffic," which in context (the Iran conflict, the oil price spike, and supply-chain disruptions) is interpreted as ship traffic through the Strait of Hormuz.

Meeting Transcript

Start the um finance and audit committee meeting um tonight as for each meeting with the city of Milford we do have a 15 minute public comment period. Um there's no one present um in the audience um so could I ask Nick is there anyone on online that would like to speak? Uh anyone online who would like to make a public comment uh may do so using the raise your hand feature. Uh I see no one coming forward, okay. With um no one wanting to speak during the public comment period, the coming com public comment period is now closed. And now we will 501, we will open um the finance and audit committee meeting of October 2026. Um there's um one item on the agenda, and that's the quarterly investment review. And I would turn this over to our um finance director, uh Mr. Botala. Uh good evening, Mr. Chairman. Lou Vitola, Finance Director. Um, tonight, as you mentioned, we do just have uh one uh item on the agenda. Uh with us this evening is Jeff Facino with PFM Asset Management, PFMAM, our uh longstanding investment advisors, and I will turn it over to Jeff to uh to uh report uh the most recent quarter. The quarter ended September 30, 2026. Hey Jeff, right before you get started, my apologies to you and whoever else is listening. Um for a roll call, we do have three of the four members uh present for this meeting. So we do have a quorum. Great. Thank you all for having me today. Council members, thanks for for having me as always, uh Jeff Asino PFM asset management. And we'll start talking about the uh the third quarter results. We'll begin with the the market update and then move into the uh specific uh results for the portfolio. Uh so we'll start with the the current market themes page. Um, and it's really uh a three-part story. So uh in the top you'll see uh US growth remains resilient. It's supported by we talked about this a lot last uh last meeting about AI spending and uh and consumer spending have really supported uh US growth. Um part of the big story of the quarter though has been inflation and the continued uh war in Iran has really uh put an impact on energy prices looking at uh the market even today, you know, oil's up over 115, which is a really really elevated level. Um, and as a person who heats my home with oil, really not looking forward to the winter. So um well, not at all really. So the the big story during the quarter was the Fed uh hiking rates by 25 basis points. So the Fed funds rate now stands at 3.75 to 4%. Uh we saw a sharp income increase in interest rates uh over the quarter. Um if we'll get into the the yields uh in a little bit, but you saw that the two-year uh the two-year rate really steeply increase uh and we know those increases. Well, that's bad for performance. Um so as bond yields increase, bond prices decrease, and we'll get into that you know as we walk through the presentation. But that kind of sets the stage uh for what we're gonna talk about today. And as always, feel free to stop and pause with any questions that you have as we go through. Um but we'll tell we'll begin by talking about that's September rate hike on this page uh and really the Fed looking at kind of a higher for longer uh policy path. The Fed meets again later this week on Wednesday. Um, the market is currently pricing in one more rate hike for this year and potentially one for next year.

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TRANSCRIPT VIA PUBLIC VIDEO
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