DATE:
September 3, 2024
TO:
Paul Buddenhagen, City Manager
FROM:
Lawrence Chiu, Finance Director
SUBJECT:
Resolution Of The City Council Of The City Of Emeryville Adopting The Annual Statement Of Investment Policy And Delegation Of Authority To The Finance Director/Treasurer Recommendation
Staff recommends that the City Council adopt the resolution approving the attached annual Statement of Investment Policy and delegate authority for investment transactions to the Finance Director/Treasurer.
Background
California Government Code Section 53646 requires a Statement of Investment Policy (Investment Policy) to be submitted annually to the local agency legislative body for consideration at a public meeting. At its meeting on June 16, 2020, the City Council adopted the Statement of Investment Policy (Resolution No. 20-67).
The Investment Policy places a high priority on ensuring the safety of principal investments first and then ensuring that the liquidity needs for payment of City obligations are met prior to considering any yield on investments. The City continues to abide by the highest professional standards for the management of public funds. While investment strategy is flexible and can change based on market and economic conditions, the legal and policy guidelines governing these investment decisions remain relatively static.
Prior to the dissolution of the Emeryville Redevelopment Agency (RDA), the City and RDA pooled cash and investments; after dissolution, the former RDA cash and investment balances are classified as accounts under the control of the City as Successor Agency to the RDA and not pooled with City assets. discussion
Investment Policy
The proposed Investment Policy reflects the most recent changes to California Government Code 53601 (Code). The following proposed changes, organized by section and shown in redlines, are included in the attached Investment Policy.
Authorized and Suitable Investments
The proposed Investment Policy added language to:
(a) allow the investment in California Local Government Investment Pools, aside from Local Agency Investment Fund (LAIF), to provide options for additional liquid investment diversification; and (b) refine Medium term notes to mirror the provisions set forth in the Code regarding the rating categories. The City of Emeryville’s Investment Policy is more stringent than the Code. To reflect the City’s preference to limit credit quality to a higher level, it is recommended keeping the minimum rating category to “AA”. The rating category encompasses “AA-, AA, and AA+”.
Prohibited Investments
The proposed Investment Policy removed “Other Investment Pools” from the list of prohibited investments for clarity; and added language to specify the prohibition of the purchase of a security with a forward settlement exceeding 45 days from the time of the investment per SB 1489.
Glossary
Added language to clarify the term of maturity is measured from the date of settlement per California Government Code SB 1489.
Delegation of Investment Authority
California Government Code Section 53607authorizes a legislative body to delegate its authority over investment transactions to the Treasurer of the local agency. The authority may be delegated for a one-year period. Subject to review, the legislative body may renew its delegation of authority each year.
The City Council adopted the current Investment Policy on September 5, 2023 (Resolution No. 23-120). As part of its approval, the City Council delegated authority for investment transactions to the Treasurer as authorized by Government Code Section 53607. The proposed updated Investment Policy continues this delegation of investment transactions authority to the Treasurer.
Fiscal Impact
The proposed updated Investment Policy conforms to California Government Code 53601 and reflects best practices designed to meet the City’s investment objectives and cash flow needs by managing safety, liquidity and return on investments in a prudent manner.
ADVISORY BODY REVIEW
The Budget and Governance Committee reviewed the proposed Statement of Investment Policy on August 13, 2024, and approved the staff’s recommendation.
Conclusion
Staff recommends that the City Council approve the updated Statement of Investment Policy and delegate authority for investment transactions to the Finance Director/Treasurer.
PREPARED BY: Lawrence Chiu, Finance Director
Approved and Forwarded to the
City Council of the City of Emeryville:
Paul Buddenhagen, City Manager
Attachments
Draft Statement of Investment Policy (Redline)
Draft Resolution
Exhibit A – Statement of Investment Policy (Clean)
Annual Statement of Investment Policy
City Council Meeting | September 3, 2024
City of Emeryville
CALIFORNIA
MEMORANDUM