Staff Report
City Council
Item No. {{section.number}}.D
Meeting Date: May 14, 2025
From: Kevin Biersack, Financial Services Director
Title: Investment Policy Annual Update/Review
RECOMMENDATION:
To approve the updated investment policy.
BACKGROUND:
Each fiscal year staff, in coordination with the City Treasurer, presents the investment policy to City Council for review and approval. It is the policy of the city to invest public funds safely and in compliance with the requirements of the California Government Code to meet the daily cash flow needs while achieving a market rate of return minimizing the potential for losses arising from market changes or issuer default. This Statement of Investment Policy is intended to provide guidelines for the prudent investment of the city’s cash and to identify the city’s policies regarding the investment process. Investments of public funds shall be made in accordance with this investment policy. All participants in the city’s investment process shall seek to act responsibly as custodians of the public trust. Any investment transaction shall be avoided that might impair public confidence in the city’s ability to manage its assets or to govern effectively. Our primary investment strategy continues to be the safety of principal and the guidelines to keep all investments made in accordance with the California Government Code.
DISCUSSION:
In accordance with updates made to Government Code Sections 16429.1, 53601, 63601.6, 53635, 53638, and 53646, and Local Agency Investment Fund (LAIF) procedures, the City of Cathedral City’s Investment Policy is required to be reviewed according to guidelines set forth in the government code and updated, where applicable, on an annual basis. Our policy incorporates the key investment policy components of the League of California Cities, the California Society of Municipal Finance Officers (CSMFO), the California Municipal Treasurers Association (CMTA), the Government Finance Officers Association (GFOA) and the Government Accounting Standards Board (GASB) Statement No. 40, Deposit and Investment Risk Disclosures. This policy positions the City of Cathedral City to continue to provide the conservative stewardship of our funds, while maximizing earnings and maintaining liquidity of funds.
The proposed investment policy includes these authorized investments:
Bankers’ Acceptances may be used at a maximum of forty percent of all investments, although no more than thirty percent with one bank. The maturity period may not exceed 180 days.
The California Asset Management Program (CAMP) Pool is permitted for all local agencies under California Government Code Section 53601(p). It invests in obligations of the United States Government and its agencies and high-quality short-term debt obligations of U.S. companies and financial institutions. The average portfolio maturity is 60 days or less. CAMP is an alternative to the State of California LAIF. Similar to the LAIF program, a maximum of $75 million/account may be invested in an account.
Commercial Paper is limited to forty percent of investments, and no more than ten percent with one issuer. They must be rated A-1 and maturities cannot exceed 270 days.
The city may invest in Government Agency Issues without a dollar limit, but the investments may not be committed to one agency. These agency issues include local bonds, state bonds, U.S. Treasury Notes, other Federal Agency securities, and State of California obligations such as Treasury Notes or General Obligation Bonds.
Medium-Term Notes can also be up to thirty percent of investments but no more than ten percent with one issuer. They must be A rated with a maturity not to exceed five years.
Money Market Mutual Funds are limited to twenty percent or less of investments with no more than ten percent in shares of beneficial interest in any one mutual fund.
Negotiable Certificates of Deposits must be FDIC insured and can be up to thirty percent of investments. They are limited to national or state-chartered banks and state or federal credit unions.
The changes to the investment policy may be summarized as follows:
All investment maturities must be five years or less. Liquidity shall be maintained in such a manner that no less than 20 percent of the portfolio shall have a term of one year or less.
FISCAL IMPACT:
No fiscal impact at this time.
FIVE-YEAR STRATEGIC PLAN:
Goal C - FISCAL STABILITY AND SUSTAINABILITY
Objective: Cathedral City has economically prospered by facilitating the investment of private dollars in high quality development which benefits the community. We remain financially solvent by instituting prudent fiscal policies and transparent financial practices.
Action C-7 – Continually review and streamline internal financial policies, procedures, and practices to remove unnecessary controls without sacrificing accountability and transparency.
ATTACHMENTS:
1.20310_Investment Policy_May2025