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6.A. - Page 2 of 40 documents and other unique financing transactions, and authorizing any deviations from the City's investment policies. The City has engaged the services of PFM, an external investment manager/advisor, to assist in the management of the City's investment portfolio in a manner consistent with the City's objectives; PFM has reviewed the Policy and provided their feedback as to the changes recommended. ANALYSIS The City Council Finance and Audit Sub -Committee provides oversight to the investment function through the periodic review of the investment report and policy. The recommended changes in the Policy were discussed at the Sub -Committee meeting on December 16, where the updated Policy was approved by Sub -Committee members and recommended for adoption by the City Council. The recommended changes are outlined in the paragraphs below. The changes impact two sections: authorized investments and reporting. Section IX. Authorized Investments Paragraph C Local Agency Investment Fund (LAIF), and Paragraph D San Mateo County Pool. The City's Policy currently limits the amount that can be invested in the County Pool to $50 million. However, given the City's need for liquidity options, staff recommends that the maximum amount be increased to match LAIF's maximum, currently $75 million. The $75 million limit is effective on January 1, 2020; the previous limit was $65 million and was effective in 2016. California Government Code (the Code) does not restrict the amount California entities may invest in LAIF or county pools. Although LAIF's advisory board chooses to set a maximum amount California public entities may invest in the fund, the San Mateo County Pool does not set a maximum amount. While not required to limit the City's County Pool allocation, it is prudent to place a limit on the amount that may be invested to ensure diversification, and, in turn, safety. The Finance and Audit Sub -Committee recommended this language change in the Policy so that the County Pool limit will always be equal to the current LAIF limit. Section XVIII. Reporting The City's new auditors, Maze and Associates (Maze), have recommended that the Policy be updated to match State code that states a Treasurer shall make a monthly report of transactions to the legislative body (code section 53607). While a detailed account of transactions is provided in the month-end statements, and staff reviews and reconciles all transactions monthly, a monthly report has not been routinely submitted to the Council; instead, a report is provided to the City Council on a quarterly basis. To satisfy the audit firm recommendation and code requirement to make a monthly report to City Council, staff will distribute the month-end investment statement along with the monthly expenditure reporting that Council already receives. As mentioned, the City currently submits a quarterly report to the City Council at a public meeting in an effort to increase transparency and to keep the City Council informed. The quarterly report staff submits to the City Council is comprehensive and meets all of the requirements of the Code except one, the timing Page 2 of 4 City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.ore