Laserfiche WebLink
REPORT <br />To the Honorable Mayor and City Council <br />From the City Manager <br /> <br />September 25, 2017 <br />SUBJECT <br />Annual Investment Policy Update <br /> <br />RECOMMENDATION <br />Adopt, by motion, updates to the Investment Policy <br /> <br />BACKGROUND <br />The City has an investment portfolio of approximately $230 million, which consists of <br />reserves and fund balances held by the City for general operations, capital projects, <br />utilities, and various other special purpose funds. The return on the investments in the <br />form of interest income is a significant component of City revenues and it varies <br />annually depending on the interest rates in the market. <br /> <br />Investments are governed by State law (referenced as “Code” in this report) and the <br />City’s Investment Policy (Policy) in order to achieve the City’s investment objectives of <br />safety, liquidity and return. The original Policy was adopted in the early 1990s. In June <br />2016, the Council adopted a new Policy to address the City’s investment objectives in <br />light of the growth of the City’s investment portfolio and changing market conditions, in <br />addition to incorporating best practices as informed by the California Municipal <br />Treasurers Association (CMTA). <br /> <br />The City’s professional investment manager, PFM, is beginning their second year of <br />providing professional investment services to the City. PFM has consulted with staff and <br />has suggested additional updates to the Policy to better align with the City’s investment <br />strategy and return objectives. <br /> <br />Finance/Audit Committee Action <br />The Policy directs the Finance/Audit Subcommittee to provide oversight through <br />periodic review of the investment report and policy, and the City Council is required to <br />review the Policy annually and approve any modification thereto. On August 28, 2017, <br />the Subcommittee met and received a presentation from PFM on the recommended <br />changes. The Subcommittee discussed and subsequently approved the recommended <br />Policy updates. <br /> <br />ANALYSIS <br />The Policy includes recommended updates that are necessary to clarify Code language, <br />modify credit quality and issuer limits for investments, and propose additional permitted <br />investments to increase financial opportunities while still maintaining the Policy’s <br />6.1.B. - Page 1