Municipal
Investment
For Success
What are Public Agency Investment
Requirements?
Investment of Surplus: Government agencies must comply with California Government Code (GC) Section 53600
Quarterly report to the governing body outlining cash assets invested, investment types, purchases, sales, market conditions, and affirming agency projection of sufficient cash availability to meet operating needs. (GC Section 53607) COTATI - Administrative Services Provides Quarterly Financial Updates Summary of Cash and Investments. Annual Investment Policy update (GC Section 53646)
COTATI - Evaluated as part of Budget Process for inclusion with the overall City Financial Policies Compliance with GC Section 53600.3
Prudent Investor Standard – Safeguarding of principal and liquidity Compliance with GC Section 53600.5
1. Safety of Principal
2. Liquidity
3. Yield
*Requirements include but are not limited to other governmental compliance and regulatory provisions.
Permitted Investments (GC 53601)
Government Code Permitted Investments Cotati Policy Permitted Investment (Y/N) US Treasury Notes, Bonds, Bills Yes
Federal or US Government Sponsored Enterprises
(GSE’s)
Yes
Negotiable Certificates of Deposit (CD’s) Yes
JPA Pool Yes
County Pool Yes
LAIF Yes
Placement Service Deposits Yes
Trustee Held Funds Yes
Other Investments as approved by Board/Council No
Local Agency Bonds Yes
State Treasury Notes & Bonds Yes
Bonds of other 49 states Yes
Permitted Investments (GC 53601)
Government Code Permitted Investments Cotati Policy Permitted Investment (Y/N) Other local agency bonds Yes
Banker’s Acceptance Yes
Commercial Paper Yes
Repurchase Agreements Yes
Medium Term Notes Yes
Collateralized Securities No
Mortgage-Backed Securities No
Supranationals Yes
Public Bank Securities No
Portfolio Management Types
ACTIVE MANAGEMENT
Cash flow modeling increases funds available to invest while leaving sufficient funds in checking account for
day-to-day operations
Invest over five-year horizon to guarantee investment returns over time
Requires some dedicated staff time or
consultant/advisor
Safe, with increased yields
Utilize investment types that support the District’s
investment policy
Industry Challenges
Smaller agencies get ignored – Many investment advisors do not provide services to agencies with less than $25 million in liquid assets.
Smaller agencies lack resources – While larger agencies have dedicated staff to support each function, smaller
agency staff must wear a lot of hats. Most simply lack the internal resources to manage investment activities.
Investments is a very specialized field – Smaller agencies typically lack the specific education, experience, and
technical expertise required to manage investments.
All public agencies would like more revenue – Whether it is new equipment, pay down debt, facility maintenance, or
new and enhanced services, the taxpayers would like more for their money.
Initial Portfolio Analysis – City of Cotati
Cash in Bank/On Hand - $2,504,984 (Yielding near 0%)
LAIF- $15,732,385 (Yielding 2.12%)
Current Market Interest Rates
CAMP 4.25% (Liquid Pool)
1 month 4.32%
3 month 4.70%
6 month 4.83%
1 year 4.69%
3 year 3.93%
5 year 3.66%
4.37%
4.70% 4.83% 4.69%
4.19%
3.93%
3.66%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
1 month 3 month 6 month 1 year 2 year 3 year 5 year
Next Steps – If Moving to Active Management
Come back to Council in April
City Evaluate and Adopt a revised Investment Policy
City Evaluate contracts for Investment Advisory Services (OPI), a Custodial Bank (BNY, US Bank, etc.), and a Broker/Dealer (TVI, Mutual, Piper, etc.) Investment Advisors recommend initial investments and City execute trade tickets using the Broker Dealer
Investment Advisors provide ongoing investment recommendations based on Cash Flow Modeling
City incorporate new quarterly cash flow update and investment reporting based on Investment Advisors reports
Continue to evaluate investment policy for annual updates Questions?
More about OIP
Contact Us
Website: www.optumip.com
Email: [email protected]
Phone: (619) 324-9510
Our Team
David Bilby, MSBA
President, CEO, & Chief Compliance Officer
David’s work has covered all areas of city finance,
including budgeting, municipal debt management,
accounting, user fee studies, fiscal impact analysis, asset management, public/private partnerships, and
procurement. He has completed dozens of public
financings, together totaling over $1 billion, including CFDs, ADs, COPs, RDA, POBs, and LRBs. As an integral
part of a team, he helped complete two successful sales tax measures. The municipal investment portfolios he
has directly managed ranged from $50M to $400M.
Credentials:
M.S., Business Administration, Finance concentration,
San Diego State University
B.S., Business Administration, Finance concentration,
San Diego State University
Certified Public Finance Officer (CPFO), Government
Finance Officers Association
Series 50 Municipal Advisor Representative, Municipal
Securities Rulemaking Board (MSRB)
Series 65 Registered Investment Adviser
Representative, North American Securities
Administrators Association (NASAA)
Our Team
Robert Michalik, BSBA
Executive Vice President & Chief Operating Officer
Robert is a savvy, results-oriented, strategic executive leader and change agent with over 24 years of experience driving and optimizing business operations and services for large and diverse organizations, including J.P. Morgan Chase, Caliber Home Loans, and First American. He has led teams of up to 300 employees across international locations, tightly
managed operating budgets exceeding $14M, and has an
impeccable track record in internal- and external-facing audits.
Credentials:
B.S., Business Management, University of Phoenix
Series 65 Registered Investment Adviser Representative, North American Securities Administrators Association
(NASAA)
Three Steps Optum Investment Partners
Success
1. Our unique experience in managing a variety of government projects allows us to create a customized cash-flow model that includes items such as grants, capital projects, and one-time revenues and expenses. This enables us to actively invest more of your cash.
2. In a normal interest rate environment, yields are higher the longer out you invest. By combining our cash flow model with our laddering strategy, we can invest in longer term securities (up to five years) without the risk of running out of cash for operations.
3. Our strategic investment selection approach can be especially effective for smaller agencies. By investing smaller increments, we can utilize CD’s and other federally insured/collateralized products to achieve above market rate returns.