Business Item 5b
STAFF REPORT
City Council Business Item
DATE: November 7, 2022
TO: Honorable Mayor and Council Members
FROM: Aaron Felmlee, Finance Director
THROUGH: Merritt Perry, City Manager
SUBJECT: Approve Revisions to the Investment Policy for Fiscal Year 2022-2023; Resolution 2022-32
STAFF RECOMMEDATION:
Approve the revisions to the Investment Policy for Fiscal Year 2022-2023 by adopting Resolution 2022-32.
EXECUTIVE SUMMARY:
The purpose of the Investment Policy (Policy) is to establish cash management and investment guidelines for the City Treasurer, who is responsible for the administration of the City of Fortuna Investment Program. It is the policy of the City of Fortuna to meet the short and long-term cash flow demands of the City in a manner, which will provide for the safety of principal and sufficient liquidity, while providing an investment return.
The City last revised the Investment Policy on July 15, 2013. As such, it is long overdue for a formal review by the City Council. Staff has provided a red-lined version of the Investment Policy with suggested changes to bring the Policy up to date to both current practices and Government Code requirements. Moving forward it is staff’s intention to bring forward the Investment Policy on an annual basis for the Council to review.
There are two changes that I would like to highlight from the proposed Policy. First, staff is proposing to increase the maximum percentage amount allowed to be invested in Certificate of Deposits (CD’s) from 25% to 30%, which is the maximum amount allowed by Government Code Section 53601. The City currently works with Edward Jones to invest in CD’s and it has proven to be a successful investment strategy and has consistently brought in higher returns than the Local Agency Investment Fund (LAIF) which is run by the State and is widely considered to be the benchmark for investments.
Second, Government Code Section 53646 previously mandated that annual investment policies and quarterly reports be rendered to the legislative body. AB2853 amended the Government Code Section 53646 to remove the requirements; the rendering of these documents is now permissive rather than mandated. Upon AB2853 becoming effective it became the City’s practice to no longer bring forward the annual investment policy nor provide quarterly reports to the City Council, however, the Investment Policy was not updated to reflect this change in practice. Although not required, staff is recommending bringing back the annual investment policy review to Council and either an annual or quarterly investment report as well. Staff will be looking for direction from Council on this matter.
Business Item 5b
Attached is the September 30, 2022 investment report for Council review. Please note that the total funds listed in the investment report are pooled funds comprised of the many general funds, restricted funds, and enterprise funds held by the City and therefore a majority of the funds are restricted to specific projects and purposes.
RECOMMENDED COUNCIL ACTION:
1. Receive staff report and review questions with staff
2. Open public comment
3. Close public comment
4. Motion to adopt Resolution 2022-32 and read by title only. Roll call vote.
ATTACHMENTS
Resolution 2022-32, A Resolution of the City Council of the City of Fortuna Approving the Investment Policy for the Fiscal Year 2022-23.
City of Fortuna Investment Policy red-lined version
September 30, 2022 Investment Report and Supporting Bank/Investment Statements Business Item 5b
RESOLUTION 2022-32
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF FORTUNA APPROVING THE INVESTMENT POLICY FOR THE FISCAL YEAR 2022-2023 WHEREAS, sound investment practices are facilitated by the preparation of written governing policy statements, and;
WHEREAS, such policies should cover all substantive aspects of the investment of funds, and; WHEREAS, the City Treasurer has prepared a comprehensive Investment Policy document pursuant to which the City will manage and conduct investment of the City’s pooled funds, and; WHEREAS, in furtherance of the prudent management of the City’s treasury pools, the Investment Policy is in compliance with State law provisions establishing investment objectives and setting forth permissible investment of public funds not required for immediate expenditure, and;
WHEREAS, the Fortuna Municipal Code designates the City Finance Director as the City Treasurer, and;
WHEREAS, the delegation of investment authority and responsibility from the City Council to the City Treasurer will allow the City Treasurer and his staff to continue the prudent investment of the City’s pooled funds and the effective and efficient support of the City’s efforts to meet its cash flow needs.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Fortuna that the Council hereby
Section 1. Approves and adopts the Investment Policy submitted by the City Treasurer, attached hereto as Exhibit A.
Section 2. The City Council, pursuant to Government Code section 53607, delegates to the City Treasurer for a period of twelve (12) months the authority to invest the City’s pooled funds in accordance with the Investment Policy.
Section 3. Exhibit A is part of this resolution.
PASSED AND ADOPTED on this 7
th day of November 2022 by the following vote:
AYES:
NAYS:
ABSENT:
ABSTAIN:
Sue Long, Mayor
ATTEST:
Siana L. Emmons, City Clerk