AGENDA ITEM NO. 11
CITY OF HAWTHORNE
City Council
AGENDA BILL
For the meeting of March 26, 2024
Originating Department: Finance
City Manager: __________
Vontray Norris
City Treasurer: ___________
Marie Hornback
SUBJECT:
Increased Investments in 1-5 year lettered fixed investments through Multi-Bank Securities (MBS).
RECOMMENDED MOTION:
Approve City Treasurer’s request to increase investments through MBS and authorize certain designated City of Hawthorne Officers (pursuant to Resolution 8010) to execute transfers of up to $5.5 million of City's General Fund to invest in fixed investments through Multi-Bank Securities.
DISCUSSION:
The City Treasurer has determined that the City has amble reserves for operation and believes the City should add diversity to its fixed investment portfolio at Multi-Bank Securities to earn better returns. The Treasurer plans to add to the City’s fixed income ratio portfolio on a rolling basis as she sees good options for the City.
The City Treasurer plays a crucial role in managing the financial affairs of a city or municipality.
City Treasurers, duties and responsibilities will align with the city's mission statement. I'm recommending a strategic investment opportunity that will benefit our city's financial portfolio and ensure the prudent management of our resources. After thorough analysis and consultation with economic experts, I recommend the city consider investing some of our surplus funds in a money market account. I have outlined the rationale behind this proposal and its potential benefits for our community. I have provided best practices I will continue to work on during my time as the Elected City Treasurer.
• Safety and Liquidity
• Competitive Returns
• Flexibility and Accessibility
• Stability and Security
• Prudent Financial Management
I respectfully request that the Council authorize the allocation of a portion of our surplus funds ($5,500,000) to the existing MBS account. This decision reflects our commitment to safeguarding the financial interests of our community and ensuring the long-term prosperity of our city.
Benefits and Risks:
All investments will be bound by the City's investment policies. These investments will be in fixed income securities mainly CDs and have no loss of principle risk if held to maturity. These investments can provide returns of .65% - 4.92% vs. LAIF current returns of 4.10%. The only risk, the city could face is if they need to cash out the fixed securities before their term is up. This loss could occur if the current interest rates increase and the fix security needs to be sold at a discount. That is why the city is only investing excess reserves that it plans to hold to maturity. .
FISCAL IMPACT:
Increase City’s interest income.
NOTICING PROCEDURES:
72 hours posted notice pursuant to the Ralph M. Brown Act