DATE:
September 1, 2026
TO:
Mayor and Council Members
City Council, as Successor Agency to the Hesperia Community Redevelopment Agency
Chair and Board Members, Hesperia Housing Authority
Chair and Commissioners, Community Development Commission Chair and Board Members, Hesperia Fire Protection District Chair and Board Members, Hesperia Water District
FROM:
Rachel Molina, City Manager
BY:
Casey Brooksher, Assistant City Manager
Keith Cheong, Deputy Finance Director
SUBJECT:
2026-27 Statement of Investment Policy
RECOMMENDED ACTION
It is recommended that the Council/Board/Commission adopt Joint Resolution No. 2026-45, Successor Agency to the Hesperia Community Redevelopment Agency Resolution No.
SA 2026-01, Hesperia Housing Authority Resolution No. HHA 2026-06, Community Development Commission Resolution No. HCDC 2026-01, Hesperia Fire Protection District Resolution No. HFPD 2026-05, and Hesperia Water District Resolution No. HWD 2026-17, approving the Fiscal Year 2026-27 Statement of Investment Policy.
BACKGROUND
The City Treasurer is authorized to invest public funds in accordance with California Government Code (CGC) Sections 53600 et seq. and 5922(d). The Statement of Investment Policy (Policy) that guides the investment activity of the City, Successor Agency to the Hesperia Redevelopment Agency, Hesperia Housing Authority, Community Development Commission, Fire District, and Water District was adopted by the City Council consistent with CGC Section 53646, and any changes to the Policy are considered by the Council on an annual basis. The external auditors of the Council/Agency/Authority/Commission/Districts also review the Statement of Investment Policy during the annual financial audit process.
Additionally, City staff work with Shuster Advisory Group, A Hub International Company, through regular meetings to review and evaluate the City's investment portfolio. Shuster Advisory Group, LLC (“Shuster”) is an independent SEC-Registered Investment Advisor with over $11 billion in assets under management that specializes in serving the unique investment needs of governmental agencies. Shuster provides fiduciary investment management services, including investment selection, monitoring, and oversight, as well as managing the City and Water District’s Pension and Other Post-Employment Benefits (OPEB)Trusts, helping public agencies optimize liquidity, preserve capital, and enhance yields across reserve and long-term funds
ISSUES/ANALYSIS
Currently, City funds under the control of the City Treasurer that were not required for the City's immediate cash flow needs or were otherwise invested in accordance with bond indentures and trust agreements are placed with the State Local Agency Investment Fund (LAIF).
An advantage of investing in LAIF is that the funds are available same day, based upon the cash management needs of the City. LAIF is part of the Pooled Money Investment Account that was created by statute and is governed by a five-member board, which is chaired by the State Treasurer. Under Government Code Section 16429.3, funds deposited are precluded from being transferred or seized by any State agency. Due to grant and reimbursement-funded construction projects, such as the Ranchero Road Widening and Aqueduct Crossing projects, the ability to draw funds same day (free of penalties) for payment of peak cash flow obligations is important in the City’s ability to effectively manage cash for City operations. For this reason, continued investments with LAIF are recommended, as the City’s ability to withdraw immediately available funds is essential.
Consistent with Government Code 53600.5, the City’s primary objective is to safeguard the principal of the funds under its control, with a secondary objective of meeting the liquidity needs of the organization, and a tertiary objective of achieving return on invested funds. Staff continue to monitor LAIF performance, while also evaluating the potential incorporation of other investment options that may offer higher yields, and may bring forward potential viable options that can maintain safety and liquidity, along with enhancing return are presented to the City Council for consideration.
In addition to the annual review of the City’s Investment Policy, Government Code Section 53607 requires the City to reconfirm annually the delegation of investment authority to the City Treasurer. The Treasurer and the City Council are “fiduciaries” subject to the prudent investor standard. The Investment Policy is the outline from which the Treasurer operates to ensure that investments are safe, liquid, and achieving returns. Section 53607 further requires monthly investment reports be presented to the City Council. The City Treasurer and Staff, working with Shuster Advisory Group, recommends updating the Investment Policy to include:
Revisions to the concentration, maturity, and rating limits for all securities listed under Authorized and Acceptable Investments (Section XV); Language to include weighted-average-life when determining investment limits; monthly monitoring by the City’s Investment Advisor for compliance with the weighted-average-life maximum of 5 years, and regular discussions with City staff to ensure compliance.
Inclusion of reverse repurchase agreements, mortgage pass-through securities, or collateralized mortgage obligations permitted under California Government Code Section 53601.
Enhancing reporting data inputs for more informative monitoring of the City’s bond portfolio’s exposures and risk across security types.
To note, the recommended updates to the Investment Policy remain conservative in comparison to other cities within San Bernardino County, including the County of San Bernardino, and remain below the maximum amounts allowed by the State of California.
The date changes to the Policy are as shown in a “track changes” version (Attachment 2) of the draft Statement of Investment Policy for Fiscal Year (FY) 2026-27. The date changes have also been included in the “clean” version (Attachment 1) of the FY 2026-27 Policy and are recommended for approval.
CITY GOAL SUPPORTED BY THIS ITEM
Financial Health – Maintain a balanced budget and adequate reserves.
FISCAL IMPACT
Adoption of the Statement of Investment Policy has no direct financial impact on the City’s Budget.
ALTERNATIVE(S)
Failure to adopt an update to the Statement of Investment Policy could result in an audit exception, as the Policy indicates the need for an annual review and approval by the City Council.
Provide alternative direction to staff.
ATTACHMENT(S)
Statement of Investment Policy for FY 2026-27 (clean)
Statement of Investment Policy for FY 2026-27 (track changes) Joint Resolution No. 2026-45, SA 2026-01, HHA 2026-06, HCDC 2026-01, HFPD 2026-05, and HWD 2026-17 City of Hesperia STAFF REPORT City of Hesperia STAFF REPORT City of Hesperia
STAFF REPORT
City of Hesperia
STAFF REPORT
Staff Report to the Mayor and City Council. Chair and Board Members 2026-27 Statement of Investment Policy
September 1, 2026