AgdaPkt 2012-02-27 - Laserfiche WebLink

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6A.A. - Page 1 REPORT To the Honorable Mayor and City Council From the City Manager February 27, 2012 SUBJECT Resolution Authorizing the Opening of an Investment Account in the State of California Treasurer's Local Agency Investment Fund RECOMMENDATION Adopt a resolution authorizing the City as the Successor Agency to the City of Redwood City Redevelopment Agency to invest funds in the State of California Treasurer's Local Agency Investment Fund. BACKGROUND For several decades the City, along with many public agencies throughout California, has used the State of California Treasurer's Local Agency Investment Fund (LAIF) as a short -term investment vehicle that provides a high degree of safety and liquidity. Historically, the City has maintained at least two accounts at LAIF; one for the City and one for the Redevelopment Agency. With the recent dissolution of Redevelopment Agencies, staff at LAIF notified each Redevelopment Agency that funds in the Agency's LAIF account would be frozen as of February 1 (the date upon which Redevelopment Agencies were dissolved). The Redeveloment Agency, along with many public agencies throughout the State, withdrew these funds and placed them in other investments. LAIF has subsequently advised that cities are welcome to open a new account at LAIF on behalf of the Successor Agency to the Redevelopment Agency ANALYSIS Opening an account at LAIF on behalf of the Successor Agency to the City of Redwood City Redevelopment Agency will provide the City with a valuable investment alternative for investing funds that the Successor Agency expects to receive later this fiscal year. ALTERNATIVES Not passing adopting this resolution will require staff to identify an alternative investment vehicle for funds received by the Successor Agency. Given the need for liquid funds it is most likely that staff would place these funds in a money market fund. Due to the low interest rate environment money market funds currently pay little or no interest while LAIF is presently paying about 0.37% interest.