AGENDA
LEGISLATIVE POLICY COMMITTEE
SPECIAL MEETING NOTICE
DECEMBER 18, 2025
PUBLIC MEETING 5:30 P.M.
MEMBERS
Steve Madison, Chair, District 6
Gene Masuda, District 4
Jess Rivas, District 5
STAFF
Brenda Harvey-Williams, Assistant City Manager
Arnold Lee, Chief Assistant City Attorney
Tamer Sabha, Recording Secretary
MISSION STATEMENT
The City of Pasadena is dedicated to delivering exemplary municipal services, responsive to our entire community and consistent
with our history, culture and unique character.
In compliance with the Americans with Disabilities Act of 1990, Assistive Listening Devices are available from the City Clerk’s Office with a 24-hour advance notice.
Please call (626) 744-4124 to request use of a listening device.
Language translation services are available for this meeting by calling (626) 744-4124 at least 24 hours in advance.
Habrá servicio de interpretación disponible para éstas juntas llamando al (626) 744-4124 por lo menos con 24 horas de anticipación.
Items on the agenda may not be called in order listed.
Agendas and supporting documents are available on the Internet at http://www.cityofpasadena.net/commissions/city-council-legislative-policy-committee/ Materials related to an item on this Agenda submitted to the Legislative Policy Committee after distribution of the agenda packet will be posted online and listed as: “Supplemental Agenda Material Received after the Posting of the agenda”
PUBLIC COMMENT ON ITEMS ON THE SPECIAL AGENDA AT THE LEGISLATIVE POLICY COMMITTEE MEETING FOR DECEMBER 18, 2025, AT 5:30 P.M. WILL BE ACCEPTED IN-PERSON AND BY VIDEOCONFERENCE/TELECONFERENCE.
Link to City Meeting Policy:
cityofpasadena.net/CityCouncilMeetingPolicy
TO VIEW A LIVE STREAM OF THE MEETING:
http://pasadena.granicus.com/MediaPlayer.php?publish_id=9 AND
WWW.PASADENAMEDIA.ORG
In order to facilitate public participation at meetings the City will accept public comment in the following manner:
1. Whether participating in-person or virtually at the meeting, members of the public may provide public comment by submitting a speaker card prior to the start of public comment on that item, at the following webpage:
www.cityofpasadena.net/commissions/public-comment/
If a public comment speaker wishes to speak on more than one agenda item, please indicate which items on the online form (multiple item speakers will be handled according to the process posted on the agenda and as specified in the City meeting policy). Public comments are limited to 3 minutes each, and the Chair and Committee may limit this time if reasonable under the circumstances.
2. In-person Meeting Participation: Complete an online speaker card at the following website: www.cityofpasadena.net/commissions/public-comment/ After submitting a public speaker card, members of the public may attend the meeting in-person by coming to the Pasadena City Council Chamber, Room S249 at City Hall at the date and start-time of the posted meeting.
Virtual Meeting Participation: For virtual participants, you may attend by connecting to the meeting using a computer, other electronic device, or by telephone. Please review the agenda to identify the published start time for the meeting and connect to the meeting just prior to, or at the start of the meeting.
To participate in public comment for an item and to be recognized to speak, it is required that the speaker login to the meeting using the same name or telephone number used on the Speaker Card form. This will allow City staff to locate and promote the speaker into the meeting when it is time for their public comment.
Participants’ phone calls to the Committee meeting will be recorded as part of the Committee meeting. By staying on the line and making public comment during the Committee meeting by phone, you are agreeing to have your phone call recorded. Following is the connectivity information for virtual participation:
Computer or electronic devices, join the meeting at: cityofpasadena.net/cczoom Telephone only dial-in: 1-669-900-6833, Meeting ID: 161 482 446
3. Speaker Card Help Line: If a public comment speaker needs assistance in completing a speaker card, please call the City Clerk’s Office at: (626) 744-4124.
Help line will open 30 minutes prior to the posted start time of the meeting.
4. Members of the public may submit correspondence of any length prior to the start of the meeting, at the following email address:
Written correspondence will be forwarded to the Legislative Policy Committee prior to the start of the meeting, posted online, and made part of the legislative record for the item.
LIVESTREAM WITH CAPTIONING IS AVAILABLE AT WWW.PASADENAMEDIA.ORG, AND ALSO AT WWW.CITYOFPASADENA.NET/COMMISSIONS/AGENDAS,
IF YOU NEED A REASONABLE MODIFICATION OR ACCOMMODATION PURSUANT
TO THE AMERICANS WITH DISABILITIES ACT
BECAUSE YOU ARE UNABLE TO PARTICIPATE ELECTRONICALLY AS SET FORTH ABOVE, CONTACT THE CITY CLERK’S OFFICE
AS SOON AS POSSIBLE AT (626) 744-4124 OR
[email protected].
SPECIAL MEETING
AGENDA
LEGISLATIVE POLICY COMMITTEE
DECEMBER 18, 2025
Public Meeting: 5:30 P.M.
Council Chamber, Pasadena City Hall
100 North Garfield Avenue, Room S249
The Committee may take action within its authority on any item listed on this agenda as it deems appropriate following consideration and discussion of the matter.
NOTE TO PUBLIC: PUBLIC COMMENT IS LIMITED TO ITEMS ON THIS SPECIAL
MEETING AGENDA
PUBLIC MEETING - 5:30 P.M.
ROLL CALL
APPROVAL OF MINUTES
July 1, 2025 – Regular Meeting*
August 5, 2025 – Cancelled Meeting*
September 2, 2025 – Regular Meeting*
October 7, 2025 – Regular Meeting*
November 4, 2025 – Cancelled Meeting*
December 2, 2025 – Cancelled Meeting*
OLD BUSINESS
1. REQUEST BY CHAIR MADISON TO CONSIDER REVISIONS TO THE CITY’S
FAIR CAMPAIGN PRACTICES AGREEMENT RELATED TO CAMPAIGN
MATERIALS, THE TIMING OF NOTIFICATIONS TO OPPONENTS FOR CAMPAIGN MESSAGING, AND OTHER RELATED MATTERS*
2. CONSIDERATION OF REVISED PROTOCOLS AND PROCEDURES
GOVERNING CITY COUNCIL MEETINGS FOR RECOMMENDATION TO THE
FULL CITY COUNCIL
NEW BUSINESS
3. INVESTMENT POLICY DISCUSSION REGARDING ETHICAL,
ENVIRONMENTAL, SOCIAL AND GOVERNANCE CONSIDERATIONS*
4. REVIEW AND DISCUSSION OF SB 684 (MENJIVAR) POLLUTERS PAY CLIMATE SUPERFUND ACT OF 2025
5. CONSIDERATION OF NEW START TIME FOR LEGISLATIVE POLICY
COMMITTEE
INFORMATION ONLY
Information only items contain no staff recommendations. The committee may, however, take action within its authority relating to informational items on the agenda as it deems appropriate following consideration and discussion of the matter.
6. BRIEFING BY KYRA EMANUELS ROSS ON STATE LEGISLATIVE MATTERS
7. BRIEFING BY CHRIS GIGLIO ON FEDERAL LEGISLATIVE MATTERS
8. CITY ADVOCACY POSITIONS
a. Department of Housing and Urban Development’s Continuum of Care Renewal
b. Senator Schiff’s Housing BOOM (Building Occupancy Opportunities for Millions) Act
9. PAST AGENDAS FOR CITY BOARDS AND COMMISSIONS*
a. Accessibility and Disability Commission – October 28, 2025 b. Arts & Culture Commission – October 8, 2025
c. Code Enforcement Commission – October 29, 2025, November 6, 2025 d. Commission on the Status of Women – November 5, 2025, December 3, 2025
e. Community Police Oversight Commission – October 9, 2025, November 13, 2025, December 11, 2025
f. Design Commission – October 14, 2025, October 28, 2025, November 25, 2025
g. Environmental Advisory Commission – December 9, 2025 h. Historic Preservation Commission – December 2, 2025
i. Human Relations Commission – November 4, 2025, December 2, 2025 j. Human Services Commission – November 12, 2025, December 10, 2025 k. Library Commission – November 19, 2025,
l. Northwest Commission – November 13, 2025
m. Recreation and Parks Commission – December 2, 2025
n. Senior Commission – November 18, 2025, December 9, 2025 o. Transportation Advisory Commission – October 23, 2025 p. Urban Forestry Advisory – December 10, 2025
ADJOURN
* INDICATES ATTACHMENTS INCLUDED
APPROVAL OF MINUTES
July 1, 2025 – Regular Meeting*
August 5, 2025 – Cancelled Meeting*
September 2, 2025 – Regular Meeting*
October 7, 2025 – Regular Meeting*
November 4, 2025 – Cancelled Meeting*
December 2, 2025 – Cancelled Meeting*
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01 07/01/2025
CITY OF PASADENA
LEGISLATIVE POLICY COMMITTEE MINUTES
PASADENA CITY HALL
100 NORTH GARFIELD AVENUE
COUNCIL CHAMBER – ROOM S249
JULY 01, 2025
OPENING The Chair called the meeting of the Legislative Policy Committee to order at 4:41 p.m.
ROLL CALL:
Staff:
Councilmember Steve Madison, Chair
Vice Mayor Jess Rivas
Councilmember Gene Masuda
Brenda Harvey-Williams, Assistant City Manager
Mark Jomsky, City Clerk
Alexander Hernandez, Assistant to the City Manager
Matthew Hawkesworth, Acting Assistant City Manager/Director of Finance
Arnold Lee, Chief Assistant City Attorney
Dion O’Connell, Assistant City Attorney
Danielle St. Clair, Assistant City Attorney
Tamer Sabha, Recording Secretary
PUBLIC COMMENT Yadi, Pasadena resident, advocated for the Committee to agendize discussions on immigration raid protection s and expedite consideration of an anti-discrimination policy.
APPROVAL OF MINUTES
It was moved by Councilmember Masuda, seconded by Vice Mayor Rivas to approve the minutes of March 4, 2025, and April 1, 2025 (Cancelled meeting), as submitted. (Motion unanimously approved) (Absent: None)
OLD BUSINESS REVIEW OF “AN ORDINANCE AMENDING PASADENA
MUNICIPAL CODE TITLE 2, ARTICLES 3 AND 4 TO UPDATE
PROVISIONS REGARDING TERM LIMITS AND TRAINING OF
MEMBERS OF ADVISORY BOARDS, COMMISSIONS,
COMMITTEES AND BOARDS OF OPERATING COMPANIES
CREATED BY CITY COUNCIL”
Alexander Hernandez, Assistant to the City Manager, summarized the ordinance fact sheet as part of the PowerPoint presentation on the item, including providing information on the proposed draft ordinance, options for expired terms, and operating company terms and options; and responded to questions.
In response to C hair Madison’s inquiry related to operating companies, Dion O’Connell, Assistant City Attorney, responded that operating companies’ community appointments are structured differently in the Pasadena Municipal Code and that the proposed 002
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ordinance applies to City Council appointed positions; and responded to questions.
Vice Mayor Rivas voiced support for a 180-day limit for expiration of term, have one extended term, remove the hiatus provision, and emphasized that commissioners are only required to disclose limited financial interests on the Form 700.
Chair Madison and Vice Mayor Rivas recommended that staff formally codify that all appointments remain nominations by councilmembers with approval by the City Council, if not already reflected in the Pasadena Municipal Code.
Mark Jomsky, City Clerk, asked staff to clarify term language to ensure staggered terms are properly reflected for board members.
Vice Mayor Rivas asked staff to return to the Committee with information on the impacts of the proposed ordinance to the current board member terms for the Rose Bowl Operating Company Board.
Following discussion, the Committee asked staff to remove the hiatus provision in the proposed ordinance language.
Yadi, Pasadena resident, expressed concerns with long-term service limits that may prevent new members from bringing fresh ideas to boards and commissions.
Following further discussion, the Committee asked staff to return to the Committee for consideration and discussion including guidance as detailed above.
CONSIDERATION OF REVISED PROTOCOLS AND
PROCEDURES GOVERNING CITY COUNCIL MEETINGS FOR
RECOMMENDATION TO THE FULL CITY COUNCIL
Brenda Harvey -Williams, Assistant City Manager, provided introductory comments, opened the topic for discussion on City Council Retreat Efficiencies and Protocols , and responded to questions.
Chair Madison briefly summarized the City Council’s discussion on the item at the City Council retreat in June and recommended that the Committee discuss the process to move the matter to the City Council for consideration.
In response to Vice Mayor Rivas’ inquiry on Committee quorum requirement, Mark Jomsky, City Clerk, clarified staff would need to prepare an ordinance to amend the number of committee members required for a quorum, and responded to questions.
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Vice Chair Rivas asked staff to determine which recommended protocols and/or procedures can be implemented by policy or ordinance referenced in the supplemental material, City of Pasadena City Council Retreat Efficiencies and Protocols.
Chair Madison suggested having a running clock timer to encourage Councilmembers to be mindful of speech time during meetings , which was suggested at the retreat. He stated for the record, “If you look at 3(e) (of the City of Pasadena City Council Retreat Efficiencies and Protocols document) it says a visible time clock showing speaking elapsed time for each councilmember” and stated that the report notes the time clock would be considered, b ut he recalls the matter was a definite action.
Yadi, Pasadena resident, advocated for the Committee to discuss clarifying the City’s c ommittee roles; and expressing concerns with the fast-tracking of content, City Council decision- making practices and meeting scheduling.
Vice Mayor Rivas asked staff to revisit concerns related to other municipalities using the City’s license plate readers data that could potentially compromise individuals’ privacy.
Following discussion, on the order of the Chair, and by consensus of the Committee, the information was received and filed.
INFORMATION ONLY BRIEFING BY KYRA EMAN UELS ROSS ON STATE
LEGISLATIVE MATTERS
Kyra Emanuels Ross, State Legislative advocate for the City, provided an update on state and local legislative matters listed below and responded to questions:
• Governor signed $321 billion state budget including for wildfires’ emergency loans, home hardening program, film and television tax credits, housing streamline for AB 130 and AB 131;
• AB 131 allocates $500 million in Homeless Assistance
Program (HAP) funds , nearly half of what was received
previously;
• California Environmental Quality Act (CEQA) exemptions changes;
• Notable legislative bills discussed:
o SB 750 for housing finance and credit;
o AB 130 for homeowner associations;
o AB 306 for building codes;
o SB 681 for housing and building standards.
• Anticipates with supplemental budget bills, California Cap - and-Trade Program reauthorization, and D elta Conveyance Program;
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• AB 805, AB 627, and AB 549 are set for upcoming Committee hearings.
Yadi, Pasadena resident, advocated for staff to post the City’s legislative policy platforms on the City’s website.
In response to public comment, Brenda Harvey -Williams, Assistant City Manager, noted that the platforms are developed each fall, with the 2025 platform scheduled for later this year.
Chair Madison asked staff to name the City’s Legislative Platforms by the fiscal year the documents represent.
Following discussion, on the order of the Chair, and by consensus of the Committee, the information was received and filed.
NEW BUSINESS SUPPORT FOR SB 805 (PEREZ AND WIENER); CRIMES
SUPPORT FOR SB 627 (WIENER, ARREGUIN, AND PEREZ);
LAW ENFORCEMENT: MASKS
Brenda Harvey-Williams, Assistant City Manager, summarized the agenda reports as part of the PowerPoint presentation on the items, including providing information on background, other bill provisions, and responded to questions.
Vice Mayor Rivas voice d support for both bills and expressed concerns with the City’s ability to enforce state law against federal agencies.
Danielle St. Clair, Assistant City Attorney, responded that federal law enforcement officers would likely be immune when acting under federal authorities.
Chair Madison expressed opposition to federal immigration raids and raised concerns regarding federal preemption and officer safety. He abstained from taking a position, noting the need to balance support for legislators with adherence to the rule of law.
Councilmember Ma suda echoed Chair Madison’s comments , expressing support for local legislators, and agreeing that the matter may face challenges under federal authority.
Yadi, Pasadena resident, provided comments related to
transparency and privacy, license plate reader, and/or provided other related comments on the matter.
In response to public comment, Vice Mayor Rivas requested that license plate reader privacy concerns be agendized for a future meeting. Chair Madison further requested that Kyra Emanuels Ross 005
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return to the Committee with additional information on the license plate readers.
Following discussion, the Committee asked staff to forward the items to the City Council for consideration and further discussion.
REVIEW AND DISCUSSION OF SENATE BILL 549 (ALLEN);
LOCAL GOVERNMENT: SECOND NEIGHBORHOOD INFILL
FINANCE AND TRANSIT IMPROVEMENTS ACT: RESILIENT
REBUILDING AUTHORITY FOR THE LOS ANGELES WILDFIRES
Brenda Harvey -Williams, Assistant City Manager, provided introductory comments, and Ma tthew Hawkesworth, Acting Assistant City Manager /Finance Director, summarized the agenda report as part of the PowerPoint presentation on the item, including providing information on the background and analysis of SB 549 , with both responding to questions.
Following discussion, the Committee recommended that staff continue to monitor Senate Bill 549 and return to the Committee with an update at a future meeting.
Following further discussion, on the order of the Chair, and by the consensus of the Committee, the information was received and filed.
INFORMATION ONLY
(Continued)
BRIEFING BY CHRIS GIGLIO ON FEDERAL LEGISLATIVE
MATTERS
Chris Giglio, Federal Legislative advocate for the City, provided an update on the following legislative matters listed below and answered questions on the following topics:
• One Big Beautiful Bill Act passed with the budget
reconciliation bill;
• Extended 2017 tax cuts on individuals and corporations; • Increased spending on immigration enforcement;
• Loss of benefit and program coverages;
• Provided permanent extensions of tax credits; and
• N ew fiscal year starts October 1st.
Chair Madison expressed concerns with current proposed federal financial deep budget cuts on food, health, education, and environmental programs.
Following discussion, on the order of the Chair, and by consensus of the Committee, the information was received and filed.
PAST AGENDAS FOR CITY BOARDS AND COMMISSIONS
a. Accessibility and Disability Commission – June 24, 2025 b. Arts & Culture Commission – June 11, 2025
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c. Commission on the Status of Women – June 21, 2025
d. Community Police Oversight Commission – June 12, 2025 e. Environmental Advisory Commission – June 10, 2025
f. Human Services Commission – June 11, 2025
g. Library Commission – June 18, 2025
h. Northwest Commission – June 17, 2025
i. Recreation and Parks Commission – June 3, 2025
j. Senior Commission – June 3, 2025
k. Transportation Advisory Commission – June 26, 2025
l. Urban Forestry Advisory – June 11, 2025
Following brief discussion, on the order of the Chair, and by consensus of the Committee, the information was received and filed.
The Committee expressed appreciation and gratitude to
Councilmember Lyon for his thoughtful input and passionate advocacy related to the Legislative Policy Committee’s work.
ADJOURNMENT
On the order of the Chair, the meeting of the Legislative Policy Committee was adjourned at 6:47 p.m.
_________________________________
Councilmember Steve Madison, Chair
Legislative Policy Committee
ATTEST:
____________________
Betty Gao
Recording Secretary
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08/05/2025
CITY OF PASADENA
LEGISLATIVE POLICY COMMITTEE MINUTES
PASADENA CITY HALL
100 NORTH GARFIELD AVENUE
COUNCIL CHAMBER – ROOM S249
AUGUST 5, 2025
MEETING
The me eting of the Legislative Policy Committee, scheduled for Tuesday, August 5, 2025, at 4:30 p.m., was cancelled as ordered on July 31, 2025, and posted by staff.
ATTEST:
____________________
Betty Gao
Recording Secretary
_________________________________
Councilmember Steve Madison, Chair
Legislative Policy Committee
008
09/02/2025
CITY OF PASADENA
LEGISLATIVE POLICY COMMITTEE MINUTES
PASADENA CITY HALL
100 NORTH GARFIELD AVENUE
COUNCIL CHAMBER – ROOM S249
SEPTEMBER 2, 2025
MEETING
The regular meeting of the Legislative Policy Committee, scheduled for Tuesday, September 2, 2025, at 4:30 p.m., was cancelled as ordered on August 28, 2025, and posted by staff.
ATTEST:
____________________
Sandra S. Robles
Recording Secretary
_________________________________
Councilmember Steve Madison, Chair
Legislative Policy Committee
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01 10/07/2025
CITY OF PASADENA
LEGISLATIVE POLICY COMMITTEE MINUTES
PASADENA CITY HALL
100 NORTH GARFIELD AVENUE
COUNCIL CHAMBER – ROOM S249
OCTOBER 7, 2025
OPENING The Chair called the meeting of the Legislative Policy Committee to order at 4:35 p.m.
ROLL CALL:
Staff:
Councilmember Steve Madison, Chair
Vice Mayor Jess Rivas
Councilmember Gene Masuda (Absent)
Alexander Hernandez, Assistant to the City Manager
Aaron Ganser, Deputy City Attorney
Nicholas G. Rodriguez, Assistant City Manager
Arnold Lee, Chief Assistant City Attorney
Betty Gao, Recording Secretary
PUBLIC COMMENT The following individuals advocated for the City Council to adopt a resolution in support of the Polluters Pay Climate Superfund Act (SB 684); and to agendize the topic at a future Committee meeting:
Carlos Rosales Jr., Pasadena resident and representing the Environmental Sustainability Club (Pasadena City College) Teresa Wong, President of the Environmental Sustainability Club (Pasadena City College)
Vice Mayor Rivas shared that she asked staff to agendize SB 684 at a future Committee meeting.
APPROVAL OF MINUTES
It was moved by Vice Mayor Rivas , seconded by Councilmember Madison to approve the minutes of June 3, 2025, as submitte d. (Motion unanimously approved) (Absent: Councilmember Masuda)
OLD BUSINESS
REVISION TO “AN ORDINANCE AMENDING PASADENA
MUNICIPAL CODE TITLE 2, ARTICLES 3 AND 4 TO UPDATE
PROVISIONS REGARDING TERM LIMITS AND TRAINING OF
MEMBERS OF ADVISORY BOARDS, COMMISSIONS,
COMMITTEES AND BOARDS OF OPERATING COMPANIES
CREATED BY CITY COUNCIL”
Alexander Hernandez, Assistant to the City Manager , summarized the memorandum as part of a PowerPoint presentation on the item, and responded to questions.
Vice Mayor Rivas spoke in support of a continued service provision being applicable only for members of operating company boards and keeping the process of term limit s for advisory bodies as straightforward as possible.
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Recording Secretary Gao reported one letter of correspondence related to this item was received by the City Clerk's Office, distributed to the Committee, posted online, and made part of the record for this item.
Chair Madison stated that he received correspondence for this item that will be forwarded to the City Clerk and made part of the record.
Following discussion, it was moved by Vice Mayor Rivas, seconded by Chair Madison, to approve the staff recommendation and forward the item to the City Council for consideration. ( Motion unanimously approved) (Absent: Councilmember Masuda)
REVIEW OF ANTI -DISCRIMINATION POLICY STATEMENT
INCLUDING ENFORCEMENT OPTIONS AND PROVIDE
DIRECTION ON NEXT STEPS
Alexander Hernandez, Assistant to the City Manager, summarized the agenda report as part of a PowerPoint presentation on the item, and responded to questions.
Aaron Ganser, Deputy City Attorney, provided additional information on protected characteristics under State law , proposed protected characteristics under the City’s draft policy ; and responded to questions.
The Committee discussed options for enforcement of the Anti - Discrimination Policy , through civil or administrative actions , with penalties up to $1,000 , and expressed concerns with enforcement through criminal prosecution and creating an enforcement apparatus considering there may be overlap with State law.
Following discussion, it was moved by Vice Mayor Rivas, seconded by Chair Madison, to approve the staff recommendation , to include the Committee’s comments on options for enforcement, and forward the item to the City Council for consideration. ( Motion unanimously approved) (Absent: Councilmember Masuda)
CONSIDERATION OF REVISED PROTOCOLS AND
PROCEDURES GOVERNING CITY COUNCIL MEETINGS FOR
RECOMMENDATION TO THE FULL CITY COUNCIL
On the order of the Chair, and by consensus of the Committee, the above referenced item will be continued to a future Committee meeting.
INFORMATION ONLY
BRIEFING BY KYRA EMANUELS ROSS ON STATE
LEGISLATIVE MATTERS
Kyra Emanuels Ross, State Legislative advocate for the City, provided an update on state and local legislative matters listed below and responded to questions:
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• California Legislative session ended with approximately 800 bills sent to Governor Newsom to sign into law;
• Governor Newsom signed Budget Bill Jr. and 10 trailer bills:
o State Legislative advocates working with City s taff for potential grant opportunities;
o Energy and environmental package, including extension of the Cap-and-Trade program ( renamed Cap-and-
Invest);
o Wildfire Fund extension , opportunity to provide stable funding and protections for funding and payouts to Eaton Fire victims; and
o Immigration package, two bills support by the City (SB 627 and SB 805) , additional protections for school sites and hospitals
• Polluter Pays Climate Superfund Act (SB 684 and AB 1243).
Following discussion, on the order of the Chair and by consensus of the Committee, the information was received and filed.
BRIEFING BY CHRIS GIGLIO ON FEDERAL LEGISLATIVE
MATTERS
Chris Giglio, Federal Legislative advocate for the City, provided an update on the following legislative matters listed below and answered questions on the following topics:
• Federal Fiscal Year 2026 (FY 2026) began on October 1 , 2025;
• Congress did not finalize or enact the budget before start of FY 2026;
• Partial government shutdown will begin to impact the community in several weeks;
• Termination, freezing, or pausing of federal programs; and • Democratic party response and demands to the Trump
administration.
Following discussion, on the order of the Chair and by consensus of the Committee, the information was received and filed.
ANNUAL REPORT – FISCAL YEAR 2024 – 2025 AND WORK
PLAN FOR FISCAL YEAR 2025 – 2026 FOR:
a. Accessibility and Disability Commission
b. Arts & Culture Commission
c. Commission on the Status of Women
d. Environmental Advisory Commission
e. Human Relations Commission
f. Senior Commission
Following discussion, on the order of the Chair and by consensus of the Committee, the information was received and filed.
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CITY ADVOCACY LETTERS
The Committee reviewed advocacy letter s regarding SB 79 (Wiener), SB 740 (Harabedian), and SB 346 (Durazo), written by the Office of the Mayor and sent to Assemblymember Harabedian and Governor Newsom.
Following a brief discussion, on the order of the Chair and by consensus of the Committee, the information was received and filed.
PAST AGENDAS FOR CITY BOARDS AND COMMISSIONS
a. Accessibility and Disability Commission – September 23 , 2025
b. Arts & Culture Commission – September 10, 2025
c. Code Enforcement Commission – September 9, 2025,
October 2, 2025
d. Commission on the Status of Women – September 30, 2025 e. Community Police Oversight Commission – September 11 , 2025
f. Design Commission – September 23, 2025
g. Historic Preservation Commission – September 16, 2025 h. Human Relations Commission – September 2, 2025
i. Human Services Commission – September 10, 2025
j. Library Commission – September 17, 2025
k. Northwest Commission – September 9, 2025
l. Recreation and Parks Commission – September 9, 2025
m. Senior Commission – September 9, 2025
n. Transportation Advisory Commission – September 25, 2025 o. Urban Forestry Advisory – September 10, 2025
Following a brief discussion, on the order of the Chair and by consensus of the Committee, the information was received and filed.
Chair Madison requested cancelling the Legislative Policy Committee meeting scheduled for Tuesday, November 4, 2025, due to coinciding with Election Day, with the next meeting scheduled for Tuesday, December 2, 2025.
ADJOURNMENT On the order of the Chair, the meeting of the Legislative Policy Committee was adjourned at 5:48 p.m.
ATTEST:
____________________
Betty Gao
Recording Secretary
_________________________________
Councilmember Steve Madison, Chair
Legislative Policy Committee
013
11/04/2025
CITY OF PASADENA
LEGISLATIVE POLICY COMMITTEE MINUTES
PASADENA CITY HALL
100 NORTH GARFIELD AVENUE
COUNCIL CHAMBER – ROOM S249
NOVEMBER 4, 2025
REGULAR MEETING
The regular meeting of the Legislative Policy Committee, scheduled for Tuesday, November 4, 2025, at 4:30 p.m., was cancelled as ordered on October 30, 2025, and posted by staff.
ATTEST:
____________________
Tamer Sabha
Recording Secretary
_________________________________
Councilmember Steve Madison, Chair
Legislative Policy Committee
014
12/02/2025
CITY OF PASADENA
LEGISLATIVE POLICY COMMITTEE MINUTES
PASADENA CITY HALL
100 NORTH GARFIELD AVENUE
COUNCIL CHAMBER – ROOM S249
DECEMBER 2, 2025, MEETING
The regular meeting of the Legislative Policy Committee, scheduled for Tuesday, December 2, 2025, at 4:30 p.m., was cancelled as ordered on November 26, 2025, and posted by staff.
ATTEST:
____________________
Tamer Sabha
Recording Secretary
_________________________________
Councilmember Steve Madison, Chair
Legislative Policy Committee
015
OLD BUSINESS
1. REVIEW OF REQUEST BY CHAIR MADISON TO CONSIDER
REVISIONS TO THE CITY’S FAIR CAMPAIGN PRACTICES
AGREEMENT RELATED TO CAMPAIGN MATERIALS, THE
TIMING OF NOTIFICATIONS TO OPPONENTS FOR CAMPAIGN
MESSAGING, AND OTHER RELATED MATTERS*
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018
019
020
021
022
NEW BUSINESS
3. INVESTMENT POLICY DISCUSSION REGARDING ETHICAL,
ENVIRONMENTAL, SOCIAL AND GOVERNANCE
CONSIDERATIONS*
023
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026
027
028
029
030
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07 **
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Attachment A
DEPARTMENT OF FINANCE - TREASURY DIVISION
CITY OF PASADENA INVESTMENT POLICY
Fiscal Year 2025 - 2026
I. PURPOSE
This statement is intended to provide guidelines for the prudent investment of the City's temporary idle cash and reserves, and to outline the policies for maximizing the efficiency of the City's cash management system. The ultimate goal is to enhance the economic status of the City while protecting its pooled cash.
II. OBJECTIVE
The City's cash management system is designed to accurately monitor and forecast expenditures and revenues, thus enabling the City to invest funds to the fullest possible extent. The City attempts to earn the highest yield obtainable while remaining within the investment criteria established for the safety and liquidity of public funds.
The investment portfolio will be managed in accordance to the parameters specified within this policy, The investment portfolio will be designed to obtain a reasonable market-level rate of return, given budgetary and economic cycles, commensurate with the City's investment risk and cash flow needs.
The City's portfolio management approach will be active, allowing periodic restructuring of the investment portfolio to take advantage of current and anticipated rate movements.
III. POLICY
As a Charter City, Pasadena operates its temporary pooled idle cash investments as a trustee and under the prudent person rule (Probate Code Section 16040, et seq., formerly set forth in Civil Code Section 2261, et seq,). The prudent person rule governing the standard of care of trustees, generally states, in essence, that:
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a) The trustee shall administer the trust with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims to accomplish the purposes of the trust as determined from the trust instrument.
b) When investing, reinvesting, purchasing, acquiring, exchanging, selling, and managing trust property, the trustee shall act with the care, skill, prudence, and diligence under the circumstances then prevailing, including but not limited to the general economic conditions and the anticipated needs of the trust and its beneficiaries, that a prudent person acting in a like capacity and familiar with such maters would use in the conduct of an enterprise of like character and with like aims to accomplish the purposes of the trust as determined from the trust instrument. In the course of administering the trust pursuant to this standard, individual investments shall be considered as part of an overall investment strategy.
This affords the City a broad spectrum of investment opportunities as long as the investment is considered prudent and is allowable under current legislation of the State of California (Government Code Section 53600 et seq.), It is the City's full intent, at the time of purchase, to hold all investments until maturity to ensure the return of all invested principal dollars. However, it is realized that market prices of securities will vary depending on economic and interest rate conditions at any point in time, It is further recognized that in a well-diversified investment portfolio, occasional paper losses are inevitable due to economic, bond market or individual security credit analysis and shifts in interest rates.
It is further recognized that even in a well-diversified portfolio, at any particular point in time, when security valuations are impacted by changes in interest rates and economic conditions, that securities may at times be worth less than the original purchase price. Market fluctuations and occasional measured losses may occur and must be considered within the context of overall portfolio return rather than based on the performance of any single security or investment transaction. It is also understood that in the event of the need for a forced liquidation of investments to meet unplanned or unanticipated cash flow demands, a potential loss of investment principal might occur.
The prudent and professional management of portfolio risk includes knowingly selling or changing a security to prevent further losses or to incur loss for the intent of improving credit quality or liquidity.
The City Treasurer, the Finance Director and other individuals assigned to manage the investment portfolio, acting within the intent and scope of the investment policy and other written procedures and exercising due diligence, shall be relieved of personal responsibility and liability for securities credit risk or market price changes, provided deviations from expectations are reported in a timely manner and appropriate action is taken to control adverse developments. Criteria for selecting investments in the order of priority are:
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1. Safety
The safety and risk associated with an investment refers to the potential for loss of principal, interest or both. Protection of the public funds entrusted to the Treasurer is the paramount criteria used to evaluate the investment instruments available, Safety of principal is the foremost objective of the City of Pasadena. Each investment transaction shall seek to ensure that capital losses are avoided, whether from securities default, broker-dealer default or erosion of market value. The City shall seek to preserve principal by mitigating the two types of risk, credit risk and market risk.
2. Liquidity
This refers to the ability to convert an investment to cash at any moment in time with minimal risk of forfeiting a portion of principal or interest. Liquidity is an essential investment requirement especially in light of the City's need to be able to meet emergency financing demands of the community at any time.
Because the City of Pasadena operates its own electric and water utility and bills monthly for these services, significant cash flow is generated on a daily basis. Historical cash flow trends are compared to current cash flow requirements on an ongoing basis in an effort to ensure that the City's investment portfolio will remain sufficiently liquid to enable the City to meet all reasonable anticipated operating requirements.
3. Yield
Yield is the potential dollar earnings an investment can provide, and sometimes is described as the rate of return. As a general rule, yields tend to mirror the inherent risk and liquidity characteristics of the particular investment and thus can only be evaluated after those investment criteria are satisfied.
IV. LENGTH OF MATURITIES
The City attempts to obtain the highest yield possible when selecting investments, provided that criteria for safety and liquidity are met. Ordinarily, because investments normally carry a positive yield curve, (i.e., longer term investments have higher rates than shorter maturities), the City attempts to stagger its maturities to meet anticipated cash needs in such a way that new investment money can be placed in maturities that carry a higher rate than is available in the short market of 30 days or under. Furthermore, maturities are selected to position the portfolio to anticipate market risks as well as anticipate cash needs of the City, thereby obviating the need for forced liquidation.
The Government code stipulates that no investment shall be made in securities with maturities in excess of five years without express authority from the City's legislative body. The City Treasurer shall not, at any time, invest in securities with stated maturities exceeding five years with the exception of the Power Reserve portfolio and bond reserve funds as authorized in the bond indentures or with the consent of the bond insurers.
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Stranded Investment Reserve Fund
The City Council authorizes the City Treasurer to invest monies in the Reserve Fund in securities with maturities exceeding five years. The City Treasurer shall strive to maximize the yield in this fund by extending the maturity of the investments and matching them with future cash flow needs.
V. DELEGATION OF AUTHORITY
The authority granted by the Pasadena City Council assigns the responsibility of investing idle cash to the City Treasurer who will report to the Director of Finance. In the City Treasurer's absence, the Director of Finance or the Assistant City Treasurer is authorized to initiate investment transactions.
The City Council also delegates to the City Treasurer and the Director of Finance the authority to open new bank accounts, investment and cash management accounts, letters of credit and other credit enhancement products, close bank accounts, investment and cash management accounts, and sign all documents related thereto.
VI. PORTFOLIO EVALUATION AND REPORTING
Investment performance is continually monitored and evaluated by the City Treasurer. Investment performance statistics and activity reports are reported monthly to the Director of Finance and the City Manager.
The City Treasurer shall review and render monthly and quarterly reports to the City Manager and the Director of Finance, Government Code Section 53646 (b)(1) states that the Treasurer or Chief Fiscal Officer may render quarterly reports to the legislative body of the local agency containing detailed information on all securities, investments, and moneys of the local agency, a statement of compliance of the portfolio with the statement of investment policy, and a statement of the local agency's ability to meet its pool's expenditures for the next six months. By making these reports optional, this Bill does not impose a state-mandated local program but encourages agencies to continue to report. The quarterly report shall incorporate the disclosure requirements of GASB 40 including the portfolio risk disclosure in the following four primary categories:
1. Credit Risk of Investment positions;
2. Concentration Risk;
3, Interest Rate Risk;
4. Foreign Currency Risk.
VII. QUALIFIED BROKERS/DEALERS
The City shall transact business only with national or state chartered banks, and with securities broker/dealers. The broker/dealers should be primary dealers licensed by the state as a broker- dealer or from a member of a federally regulated securities exchange, or from a brokerage firm designated as a primary government dealer by the Federal Reserve Bank. The City can also transact City of Pasadena | Department of Finance | Treasury DivisionPage 4 034
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with non-primary broker/dealers upon the City Treasurer's and the Director of Finance's approval.
Investment staff shall investigate dealers who wish to do business with the City to determine if they are adequately capitalized, have pending legal action against the firm or the individual broker and make markets in securities appropriate to the City's needs.
The City Treasurer shall annually send a copy of the current investment policy to all broker/dealers approved to do business with the City of Pasadena. Confirmation of receipt of this policy shall be considered evidence that the dealer understands the City's investment policies and intends to sell the City only appropriate investments authorized by this investment policy, VIII. COLLATERAL REQUIREMENTS
Collateral is required for investments in certificate of deposits and repurchase agreements. In order to reduce market risk, the collateral level will be at least 102% of the market value of principal and accrued interest.
In order to conform with the provisions of the Federal Bankruptcy Code which provides for liquidation of securities held as collateral, securities acceptable as collateral shall be certificates of deposit, commercial paper, eligible banker's acceptances, medium term notes or securities that are the direct obligations of, or are fully guaranteed as to principal and interest by, the United States or any agency of the United States, Mortgage securities and whole loans can also be used as collateral for the repurchase agreements as long as the collateral level is at least 102% of the market value of the principal and accrued interest.
IX. SAFEKEEPING OF SECURITIES
To protect against fraud or embezzlement or losses caused by collapse of an individual securities dealer, all securities owned by the City shall be held in safekeeping by a third-party trust department, acting as agent for the City under the terms of a custody agreement or PSA agreement (repurchase agreement collateral). All trades executed by a dealer will settle delivery versus payment (DVP) through the City's safekeeping agent.
X. ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG)
Investments will be considered in entities that support environmental, social, and governance (ESG) factors alongside traditional financial measures in the investment decision making process, ensuring that investments are financially prudent, and impact driven. Investing in companies that prioritize conservation and sustainable business practices helps protect our environment for future generations and is commensurate with the City of Pasadena's values. ESG factors may include, but are not limited to:
• Environmental: Carbon Footprint; Energy Consumption; Water/Waste; External Conservation Initiatives; and Sector-Specific Adjustments.
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Social: Labor Rights; Employee Diversity; Corporate Social Responsibility; and Human Rights/Ethics.
Governance: Leadership Structure; Executive Compensation; Human Capital Management; Transparency/Disclosure; and Shareholder Rights.
Xl. AUTHORIZED INVESTMENTS
The City shall not invest any funds in any security that could result in a zero interest accrual if held to maturity. In addition, the City shall not invest any funds in inverse floaters, range notes or interest only strips that are derived from a pool of mortgages and also common stocks, However, a local agency may hold prohibited instruments until their maturity date. These limitations will not apply to investments in shares of beneficial interest issued by diversified management companies as referenced in subparagraph 11 of this section.
The City is further governed by the California Government Code, Section 53600 et seq. Within the context of these limitations, the following investments are authorized, and further limited herein:
1. United States Treasury Bills, Bonds, and Notes or those for which the full faith and credit of the United States are pledged for payment of principal and interest. There is no limitation as to the percentage of the portfolio which can be invested in this category, although maturity limitations as stated in Section IV apply.
2. Obligations issued by the Government National Mortgage Association (GNMA), the Federal Farm Credit Bank System (FFCB), the Federal National Mortgage Association (FNMA), the Federal Home Loan Mortgage Association (FHLMC), the Student Loan Marketing Association (SLMA) and the Tennessee Valley Authority (TVA) and the Federal Home Loan Bank. There is no limitation on the dollar amount that can be invested in these issues except for maturity limitations as stated in Section IV.
3. Bills of exchange or time drafts drawn on and accepted by commercial banks, otherwise known as banker's acceptances. Banker's acceptances purchased may not exceed 180 days to maturity or 40% of the cost value of the portfolio, No more than 30% shall be invested in any one commercial bank pursuant to Section 53601 (f) of the Government Code.
4. Commercial paper of "prime" quality of the highest ranking or highest numerical rating as provided for by Moody's Investor services or Standard and Poor's Corporation, and issued by domestic corporations having assets in excess of $500,000,000 and having an "A" or better rating on its long term debentures as provided by Moody's or Standard & Poor's. Purchases of eligible commercial paper may not exceed 270 days to maturity nor represent more than 10% of the outstanding paper of the issuing corporation. Purchases of commercial paper may not exceed 15% of the cost value of the portfolio. An additional 15%, or a total of 30% of the agency's surplus money, may be invested pursuant to this subdivision. The additional 15% City of Pasadena | Department of Finance | Treasury DivisionPage 6 036
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may be so invested only if the dollar weighted average maturity of the entire amount does not exceed 31 days.
5. Negotiable Certificates of Deposit issued by nationally or state chartered banks or state or federal savings institutions. Purchases of negotiable certificates of deposit may not exceed 30% of total portfolio.
6. Investments in Repurchase agreements or securities lending agreements may be made when the term of the agreement does not exceed one year. The market value of the securities used as collateral for the repurchase agreements shall be monitored by the investment staff and shall not be allowed to fall below 102% of the value of the repurchase agreement. A PSA Master Repurchase Agreement is required between the City of Pasadena and the broker dealer or financial Institution for all Repurchase Agreements transacted.
7. Reverse Repurchase Agreements or securities lending agreement which specifies terms and conditions may be transacted with broker/dealers and financial institutions but cannot exceed 20% of the portfolio base value on the date entered into with the conditions as specified in Section 53601 (i)(3)(B) of the Government Code.
8. Local Agency Investment Fund (LAIF) which is a State of California managed investment pool may be used up to the maximum permitted by California State Law.
9. CAMP: California Asset Management Program. A Joint Powers Authority created to provide statewide local government investment pool. Maximum term of 1 day.
10. Collateralized Money Market Bank Accounts: Interest-bearing collateralized money market bank accounts in banks or credit unions. Maximum term of 1 day,
11. Time deposits, non-negotiable and collateralized in accordance with the California Government Code, may be purchased through banks or savings and loan associations. Since time deposits are not liquid, no more than 25% of the investment portfolio may be invested in this investment type,
12. Medium Term Corporate Notes, with a maximum remaining maturity of five years or less may be purchased. Securities eligible for investment shall be rated "A" or better by Moody's or Standard and Poor's rating services. Purchase of medium term notes may not exceed 30% of the cost value of the portfolio and no more than 5% of the cost value of the portfolio may be invested in notes issued by one corporation. Commercial paper holdings should also be included when calculating the 5% limitation.
13. Shares of beneficial interest issued by diversified management companies investing in the securities and obligations as authorized by subdivisions (a) to (j) inclusive of the Government Section or subdivision (m)or(n) and that comply with the investment restrictions of this article City of Pasadena | Department of Finance | Treasury DivisionPage? 037
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and Article 2 (commencing with Section 53630), To be eligible for investment pursuant to this subdivision, these companies shall either:
a) Attain the highest ranking or the highest letter and numerical rating provided by not less than two of the three largest nationally recognized rating services. b) Retain an investment advisor registered with the Securities and Exchange Commission with no less than five years of experience investing in the securities and obligations as authorized by subdivisions (a) to (j), inclusive, and with assets under management in excess of five hundred million dollars ($500,000,000). The purchase price of shares of beneficial interest purchased pursuant to this subdivision shall not include any commission that these companies may charge and shall not exceed 20 percent of the agency's surplus money that may be invested pursuant to this section, No more than 10% of the portfolio may be invested in any one mutual fund at the date of purchase.
14. Registered state warrants or treasury notes or bonds, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the state or by a department, board, agency, or authority of the state.
15. Bonds, notes, warrants or other indebtedness of any local agency within this state, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the local agency, or by a department, board, agency, or authority of the local agency including variable rate demand bonds with a daily or weekly put feature and supported by a credit facility.
16. Any mortgage pass-through security, collateralized mortgage obligation mortgage-backed or other pay-through bond, equipment lease-backed certificate, consumer receivable pass- through certificate, or consumer receivable-backed bond of a maximum of five years maturity.
Securities eligible for investment under this subdivision shall be issued by an issuer having an "A" or higher rating for the issuer's debt as provided by an a nationally recognized rating service and rated in a rating category of "AA" or its equivalent or better by a nationally recognized rating service. Purchase of securities authorized by this subdivision may not exceed 20% of the agency's surplus money that may be invested pursuant to this section.
17. Contracts issued by insurance companies that provide the policyholder with the right to receive a fixed or variable rate of interest and the full return of principal at the maturity date.
18. Notwithstanding anything to the contrary contained in this section, Section 53635 of the Government Code, or any other provision of law, moneys held by a trustee or fiscal agent and pledged to the payment or security of bonds or other indebtedness, or obligations under a lease, installment sale, or other agreement of a local agency, or certificates of participation in those bonds, indebtedness, or lease installment sale, or other agreements, may be invested in accordance with the statutory\ provisions governing the issuance of those bonds, City of Pasadena | Department of Finance | Treasury DivisionPageS 038
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indebtedness, or lease installment sale, or other agreement, or to the extent not inconsistent therewith, or if there are no specific statutory provisions, in accordance with the ordinance, resolution, indenture, or agreement of the local agency providing for the issuance.
19. Notes, bonds, or other obligations that are at all times secured by a valid first priority security interest in securities of the types listed by Section 53651 as eligible securities for the purpose of securing local agency deposits having a market value at least equal to that required by Section 53652 for the purpose of securing local agency deposits. The securities serving as collateral shall be placed by delivery or book entry into the custody of a trust company or the trust department of a bank which is not affiliated with the issuer of the secured obligation, and the security interest shall be perfected in accordance with requirements of the Uniform Commercial Code or federal regulations applicable to the types of securities in which the security interest is granted.
20. United States dollar denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development, International Finance Corporation, or Inter-American Development Bank, with a maximum remaining maturity of five years or less, and eligible for purchase and sale within the United States. Investments under this subdivision shall be rated "AA" or better by an NRSRO and invested pursuant to this section.
21. Municipal Variable Rate Demand Bonds (VRDBs) that have long-term maturities exceeding five years and have a seven day put feature and carry a short-term interest rate which is reset every seven days and are backed by a liquidity facility and/or bank letter of credit (LOG). The underlying issuer rating must be rated at least A or better.
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WASTE MANAGEMENTWATER SCARCITYENERGY EFFI
CIENCY
DEFORESTAT
ION
BIODIVERSI
TY
AIR AND WATER POLLUTION
CLIMATE CHANGE AND CARBON EMISSIONS
CUS
TOME
R SATI
SFA
CTION
DATA PROTECTION AND PRIVACY
GEND
ER AND DIVER
SITY
EMPLOYEE ENGA GEMENT
COMMUNITY RELATIONS
HUMAN RIGHTS
LAB
OR STAN
DARDS
POLITICAL CONTRIBUTIONS
LOBBYING
EXECUTIV
E C
OM
PE
NSATION
WHISTLEBL
OWER SCHEME
S
BOARD COMPOSITION
AUDIT COMMITTEE STRUCTURE
BRIBERY, FRAUD AND CORRUPTION
E
N
V
IR
O
N
M
ENTAL
SOCIA
L
G O V E R N A N C E
SOCIALLY RESPONSIBLE INVESTING – WHAT DOES IT MEAN AND WHAT’S THE RISK? CALIFORNIA DEBT AND INVESTMENT ADVISORY COMMISSION | CDIAC NO. 19.14 Attachment B
040
CALIFORNIA DEBT AND INVESTMENT ADVISORY COMMISSION
The California Debt and Investment Advisory Commission (CDIAC) provides information, educa- tion, and technical assistance on debt issuance and public funds investments to local public agencies and other public finance professionals. CDIAC was created to serve as the state’s clearinghouse for public debt issuance information and to assist state and local agencies with the monitoring, issuance, and management of public debt.
COMMISSION MEMBERS
FIONA MA, CPA
California State T reasurer and Chair
GAVIN NEWSOM
Governor
BETTY T. YEE
State Controller
SABRINA CERVANTES
Assemblymember
ASH KALRA
Assemblymember
STEVEN BRADFORD
Senator
JOHN M.W. MOORLACH
Senator
SANDIE ARNOTT
T reasurer-Tax Collector, County of San Mateo
NADIA SESAY
Executive Director, San Francisco Office of
Community Investment and Infrastructure
ACTING EXECUTIVE DIRECTOR
ROBERT BERRY
Additional information concerning this report or CDIAC programs may be obtained by contacting CDIAC directly via phone (916) 653-3269, fax (916) 654-7440, e-mail ([email protected]) or by visiting CDIAC’s website:
www.treasurer.ca.gov/cdiac.
All rights reserved. No part of the Socially Responsible Investing – What Does It Mean and What’s the Risk? may be reproduced without written credit given to CDIAC. Permission to reprint with written credit given to CDIAC is hereby granted.
041
INTRODUCTION
A growing number of local agencies in California
have received requests from their governing board
members or constituents to invest public funds
in “sustainable,” “socially conscious,” “green,” or
“ethical” investments. This practice is commonly
referred to as socially responsible investing (SRI).
In addition, the consideration of environmental,
social, and governance (ESG) criteria when in-
vesting public funds is becoming more common
among local agencies in California. SRI strategies
promote concepts and ideals a local agency seeks
to support while practicing prudent investment
management. Incorporating SRI or ESG criteria
as part of an investment decision requires local
agencies to analyze the suitability of investments
beyond traditional credit and financial risks.
This issue brief provides an overview of SRI for
local agencies, in the context of the statutory re-
quirements for the investment of public funds.
Next, this brief will address the various forms of
SRI policies currently implemented by California’s
local agencies. Lastly, this brief will provide some
guidance as well as identify available resources and
data tools for local agencies considering incorpo-
rating SRI strategies into an investment policy.
OVERVIEW OF SOCIALLY
RESPONSIBLE INVESTING
SRI integrates investment strategies that consider
environmental, social and governance criteria to
generate long-term competitive financial returns
and positive societal impact.
1 Currently, there
are no “official” standards defining SRI or ESG
criteria. Therefore, there is no single approach to
SRI and no single term to describe it - depend-
ing on the emphasis, investors use terms such as:
“sustainable investing,” “community investing,”
“ethical investing,” “green investing,” “impact in-
vesting,” “mission-related investing,” “responsible
investing,” “socially responsible investing” and
“values-based investing.”
2 While SRI strategies have been commonly em-
ployed by institutional investors, especially en-
dowments and pension funds, their broad use
among local agency investors has been a more re-
cent trend. One of the earliest and simplest meth-
ods of SRI is negative screening. When using
negative screening as a strategy, investors restrict
the purchase of securities issued by companies
or government entities that the investor believes
have business practices, products, or services that
do not meet the board-directed SRI goals. Local
agency boards practicing this strategy may for-
mally prohibit local agency investments in tobac-
co, fossil fuel or gun manufacturing businesses,
for example. Another SRI strategy is the use of
positive screening to choose investments. Positive
screening causes investors to actively seek invest-
ment products they believe promote beneficial
behaviors and endeavors such as environmental
stewardship, consumer protection, human rights,
and diversity, among others. ESG criteria are fre-
quently used to aid the screening process, see Fig-
ure 1. The integration of ESG criteria within its
investment decision process allows a local agency
to evaluate “material” risks under the ESG factors
it deems important, and build that risk analysis
into the traditional risk-reward evaluation of an
investment opportunity. With climate change
continuing to be a hot topic, a request to add
SRI policy goals may be initiated by more local
agency governing bodies.
STATUTORY INVESTMENT
REQUIREMENTS
California local agencies interested in SRI strat-
egies must be able to balance achieving the de-
sired SRI objectives with a local agency’s fidu-
1 US SIF The Forum for Sustainable and Responsible I nvestment, SRI Basics. Accessed 6/20/2019. www.ussif.org/sribasics 2 Ibid.
042
2 California Debt and Investment Advisory Commission
ciary responsibility and statutory investment
limitations. Whether members of an agency’s
governing body or the staff authorized to in-
vest public funds, all are trustees and therefore
fiduciaries subject to the “prudent investor
standard.” The standard requires that invest-
ment management decisions be made with the
care, skill and prudence of a person with simi-
lar capacity and familiarity, given the character
of funds, prevailing economic conditions and
agency circumstances, to safeguard the principal
and meet the liquidity needs of the depositor.
4 California statute reinforces the prioritization of
principal preservation and liquidity within the
“prudent investor standard” by specifically stat-
ing that achieving a return on invested funds is
the third objective of trustees. It is important
to note that while local agencies may be will-
ing to accept the risk of a reduced yield in pur-
suit of the their SRI objectives and still comply
with statute, the statute provides no authority to
agencies to sacrifice principal preservation and
maintenance of necessary liquidity to SRI ob-
jectives. Even the authority to sacrifice return is
not boundless. Statute prohibits investments in
securities, with some exceptions, that could re-
sult in a zero interest accrual if held to maturity.
6 Investment statute is “prescriptive,” meaning
that local agencies may only invest in the se-
curities and instruments under the restrictions
and conditions authorized in the Government
Code.
7 The statute not only establishes limita-
tions on the types of investments, but also on
maturity length, credit quality, security, and
portfolio composition, among others. Local
agencies must take precautions to not allow SRI
objectives to direct decisions that will cause in-
dividual investments or the investment portfo-
lio to be out of compliance with the California
Government Code.
The process of creating, amending, and reautho-
rizing the investment policy allows for the con-
vergence and reconciliation of the conflicting in-
vestment objectives that may be presented to an
agency pursuing SRI strategies. Like the invest-
Figure 1
EXAMPLES OF ENVIRONMENTAL, SOCIAL AND GOVERNANCE FACTORS3
ENVIRONMENTAL SOCIAL GOVERNANCE
• Climate change and
carbon emissions
• Air and water pollution
• Biodiversity
• Deforestation
• Energy efficiency
• Waste management
• Water scarcity
• Customer satisfaction
• Data protection and privacy
• Gender and diversity
• Employee engagement
• Communzity relations
• Human rights
• Labor standards
• Board composition
• Audit committee structure
• Bribery, fraud and corruption
• Executive compensation
• Lobbying
• Political contributions
• Whistleblower schemes
Source: CFA Institute
3 CFA Institute - Environmental, Social and Governance Issues in Investing, A Guide for Investment Professionals. Accessed 05/22/2019.
www.cfainstitute.org/-/media/documents/article/position-paper/esg-issues-in-investing-a-guide-for-investment- professionals.ashx
4 California Government Code sections 27000.3 and 27000.5 and 53600.3 and 53600.5. 5 Government Code section 53600.5.
6 Government Code section 53601.6(b).
7 California Government Code section 53601 et. seq. and 53635 et. seq. 043
3 Socially Responsible Investing – What Does It Mean and What’s the Risk? ment portfolio limitations SRI objectives may im-
pose, agencies frequently self-impose risk limita-
tions on their investment decisions that are more
restrictive than the Government Code and as a
result, sacrifice yield when compared to legal al-
ternatives. Statutory requirements do not preclude
agencies from pursuing SRI strategies as long as
the resulting investment decisions are within the
boundaries firmly established by the statutory pre-
scriptions and the “prudent investor standard.”
COMMONLY USED LOCAL
AGENCY SRI STRATEGIES
No two SRI strategies are exactly the same. An
SRI strategy that one local agency employs may
not suit a neighboring local agency. The govern-
ing body of a local agency is the elected or ap-
pointed group that has the primary policy setting
role. Therefore, a local agency should go through
a process to establish the goals of their SRI in-
vestment strategy. For example, does an agency
want to only support companies that support en-
vironmental stewardship or does the agency want
to avoid investing in certain types of businesses?
With this in mind, SRI strategies can be devel-
oped to incorporate, promote and evaluate those
ideals in a local agency’s investment decision pro-
cess. The investment policy is the vehicle for in-
corporating and formalizing a local agency’s SRI
strategy, including investment objectives, risk
preferences, authorized investments, and other
investment related priorities.
Regardless of the SRI strategy used, the goal for
a local agency is to achieve not only a monetary
return on its investment, but also influence social
or environmental good. Below are examples of
SRI strategies used by local agencies. Each strat-
egy described below has different objectives and
therefore requires different levels of analysis.
Negative Screening
Under this type of SRI strategy, local agencies
exclude buying securities of companies, other
governments or entities that invest or engage in
activities that the agency considers objection-
able.
8 Frequently cited examples of negative or
exclusionary screening include exclusion of in-
vestments in the debt of companies that profit
from or are associated with fossil fuel, weapons
manufacture and distribution, tobacco prod-
ucts, alcoholic beverages, or may have been
implicated in fraud, corruption, human rights
abuses or environmental degradation. Divest-
ment from companies that, subsequent to in-
vestment, have fallen into one of these negative
categories is also an example of the application
of a negative screening strategy. Negative screen-
ing effectively reduces the number of statutorily
permitted investment choices available to a lo-
cal agency and affects the way investment staff
review and analyze appropriate investments. In
the case of a divestment strategy element, agen-
cies may be required to consider divestment
timing and circumstances to avoid the sale of an
investment at a loss, an action that may conflict
with the “prudent investor standard.”
Local agencies that use a negative screening strat-
egy have investment policies which frequently
reference formally approved board resolutions
or locally adopted ordinances. The City of Oak-
land’s investment policy identifies a list of “Appli-
cable Ordinances” that directs staff to restrict city
investments in tobacco products, fossil fuel, and
firearms and ammunition manufacturers, in ad-
dition to prohibiting the city from doing business
with any entities that engage in nuclear weapons
work.
9 Under the nuclear free ordinance, Oak-
land is restricted from investing in U.S. T reasur-
ies unless a waiver is adopted. These ordinances
8 CDIAC - California Public Fund Investment Primer, - “SOCIAL RESPONSIBILITY” AND THE INVESTMENT OF PUBLIC FUNDS, pg. 222. www.treasurer.ca.gov/cdiac/invest/primer.pdf 9 City of Oakland - Investment Policy , Fiscal Year 2018-2019. https://cao-94612.s3.amazonaws.com/documents/ OAK071288.pdf
044
4 California Debt and Investment Advisory Commission
collectively represent the restrictions or “negative
screening” strategy imposed on city investment
staff by the city council and must be followed
when selecting additions to the portfolio.
The “Socially Responsible Investing“ section of
the City of Santa Monica’s investment policy
contains restrictions on investments in fossil fuel
companies, tobacco or tobacco-related products,
production of weapons, military systems, or nu-
clear power.
10 Although in practice, this negative
screening strategy applies to its decision process
for purchasing corporate bonds, Santa Monica
also tends to not invest in U.S. T reasuries.
As an alternative to purchasing U.S. T reasur-
ies, Oakland and Santa Monica have invested in
Federal Agency or U.S. government-sponsored
enterprise obligations under Government Code
section 53601(f). Both cities also purchase cor-
porate medium-term notes under Government
Code section 53601(k), the selection of which is
narrowed by their respective investment policies
and SRI strategies.
Positive Screening
Positive screening may vary depending on the
investment sector of the security, but usually in-
volves integrating ESG factors into the decision
process or targeting investments through impact
investing. Typically, an investor would rate a se-
curity (project/issuer) using criteria, including
ESG criteria, that are aligned with the investors
goals. Positive screening is also used in impact in-
vesting by choosing to direct the investment to a
certain community or project.
INTEGRATION OF ESG FACTORS: This form of
positive screening involves systematic and explicit
inclusion by investment managers of ESG factors
into financial analysis. Figure 1 contains a variety
of examples that may address one or more ESG
factors. Local agencies may choose to consider
whether the investment of their dollars should be
in companies or entities that also actively seek to
address and manage the effects of climate change,
for instance, or other ESG factors that could in-
crease benefits for all local stakeholders.
ESG factor integration includes analyzing ESG
data (ratings/scores) of companies and organiza-
tions selling eligible investment securities that
meet or exceed the local agency’s investment poli-
cy and SRI criteria. Pursuant to the local agency’s
investment policy and applicable SRI strategy,
company ESG scores can be compared to deter-
mine the best investment security that meets the
agency’s goals. Local agencies may also measure
the overall ESG scores of their portfolio to as-
sess how holdings are performing over time in
relation to their stated SRI objectives. Some in-
dividual company and governmental entity ESG
data is available online for free through search
features. ESG data may also be purchased directly
from credit rating agencies or other third party
providers (see ESG Data Resources and T ools
later in this brief).
In the “Socially Responsible Investing” section
of the City of Santa Monica’s investment policy,
the city is directed to invest city funds in “enti-
ties that support clean and healthy environment,
including following safe and environmentally
sound practices,” “entities that support equal-
ity of rights regardless of sex, race, age, disabil-
ity or sexual orientation,” and “in entities that
promote community economic development.”
11 These directives are considered positive screening
strategies and work in concert with the negative
screening strategies within the city’s investment
policy. T o screen for the positive investments, the
City of Santa Monica uses ESG scores from third
party data providers to help analyze and compare
10 City of Santa Monica - Investment Policy, February 2018, pg. 9. https://finance.smgov.net/Media/Default/home/Invest- ment_Policy.pdf
11 Ibid.
045
5 Socially Responsible Investing – What Does It Mean and What’s the Risk? potential investments and ESG rankings to eval-
uate companies and any other entities within the
city’s investment portfolio.
In some cases, local agency investment staff infor-
mally consider ESG factors in investment deci-
sions instead of having those objectives contained
in a written policy directive.
12 In a recent update to
its investment policy, the City of Palo Alto added
both negative and positive screening objectives to
their policy - some of which had been practiced by
staff informally for years. The “ESG Responsibili-
ties” section formalized policy restating the city’s
primary investment objectives as safety, liquidity
and yield, and to encourage investments that sup-
port sound environmental, social and governance
(ESG) investing. Specifically Palo Alto’s invest-
ment policy encourages investment in entities that
support community well-being through safe and
environmentally sound practices and fair labor
practices; and equality of rights regardless of sex,
race, age, disability, or sexual orientation. As in the case of Santa Monica, Palo Alto’s policy also uses
negative screening by discouraging direct invest-
ments in entities that manufacture tobacco prod-
ucts, firearms, and engage in direct production or
drilling of fossil fuels.
13 IMPACT INVESTING: Another form of positive
screening is through targeting investments to
help solve social or environmental problems. For
example, local agencies may choose investments
that help bolster and revitalize a local communi-
ty. This type of investment contributes to capital
within a local area and ultimately, provides the
investor with opportunities that help promote
job creation, improved access to community ser-
vices, public infrastructure, and other improve-
ments to the quality of life.
The City of Palo Alto invests in local or com-
munity banks through the purchase of negotia-
ble certificates of deposit, targeting banks with
ten or less branches for amounts of $250,000
or less so they are fully insured by the Federal
Deposit Insurance Corporation (FDIC). The
County of Alameda also uses collateralized cer-
tificates of deposit as investments with small
and medium-sized local banks as a way to di-
rect its investment and subsequent impact to a
specific local community.
Purchasing eligible securities that are consid-
ered “green,” such as green bonds, is another
example of impact investing. Green bonds have
been issued as medium-term notes, federal agen-
cy mortgage-backed securities, supranationals,
asset-backed securities, and municipal bonds.
14 The level of impact an agency’s investment may
create may be a function of the level and type of
certification the green bond carries. Some green
bonds have been self-certified as “green” by the
issuer whereas others have been certified by third-
party verifiers under Climate Bonds Standard,
for example.
15 Some green bonds may be issued
by companies a local agency has restricted using
negative screening SRI strategies. Looking ahead,
local agencies may consider including certain ex-
ceptions from negative screening strategies to al-
low the purchase of securities offered by restricted
companies engaged in positive ESG projects or
ventures. In this way, a local agency may retain
broader flexibility in its investment decision pro-
cess to promote its SRI goals.
12 City of Palo Alto - Investment Policy Update, Adoption of Fiscal Year 2019 Investment Policy. www.cityofpaloalto.org/ civicax/filebank/documents/66466
13 Ibid.
14 Figure 1 of CDIAC’s Local Agency Investment Guidelines provides a summary of permitted investment instruments and limitations on each in which all
local agencies may invest, pg. 14, (2019). www.treasurer.ca.gov/cdiac/LAIG/guideline. pdf
15 Additional information, CDIAC’s Green Bonds in the Golden State: A Practical Path for Issuers, webinar series. www.trea- surer.ca.gov/cdiac/webinars/2019/greenbonds/description.asp 046
6 California Debt and Investment Advisory Commission
IS SRI RIGHT FOR YOUR COMMUNITY?
Using SRI strategies local agencies can incorpo-
rate, promote and evaluate ideals that represent
their community in their authorized investment
decision process. For example, some local agen-
cies adopted investment policies in the 1970s and
1980s, restricting investment of public funds in
companies doing business in South Africa, which
supported apartheid at the time.
16 As other con-
troversial issues emerge, evolve and change af-
fecting political, budgetary, economic and mar-
ket conditions over time, local agencies should
be mindful of how those issues may affect their
stakeholders and whether their public fund in-
vestment strategies could influence the contro-
versy one way or another. As a result, governing
bodies of local agencies may request to establish
or change policies to include SRI.
Local agencies should be aware that adding SRI
criteria will add complexity to the investment pro-
cess and require additional analysis. SRI criteria
may limit available investment options which will
require contingencies, in light of changing mar-
ket conditions, to identify alternatives that meet
principal safety and liquidity requirements and the
agency’s return needs or expectations. Incorporat-
ing any SRI policy changes must include a review
of current investment practices to identify the type
of expertise needed to manage SRI objectives and
evaluate ESG factors including the availability
and cost of ESG data and resources. With careful
planning and preparation, SRI and the incorpo-
ration of ESG factors into the investment selec-
tion process can lead to more complete investment
analysis, better-informed investment decisions and
higher quality risk-adjusted returns on a portfolio.
Local agency governing boards should consider
the following when implementing an SRI strategy:
1. Adopt a comprehensive investment policy to
provide a level of accountability for investment
officials and promote public trust in invest-
ment decisions. Serving as a guide for setting
and achieving program objectives, the invest-
ment policy should define rules and establish
benchmarks, and reduce the exposure to liabil-
ity of both the investment staff and the govern-
ing body. (See Appendix A)
2. Consider adding SRI negative/positive screen-
ing strategies as an appendix to the investment
policy or directing staff to start practicing them
informally before officially adopting new goals
and objectives.
3. Endeavor to use language that is flexible enough
to accommodate the intent of the investment
goals over time as markets change.
4. Consider narrowing investment types or sectors
to which ESG factors apply to those that have
an established use of ESG criteria in order to
better evaluate authorized securities. Consider
targeting investments that provide positive so-
cietal impact such as local banks or affordable
housing. Exempt or provide policy exceptions
from SRI or ESG investing objectives to cer-
tain investments such as certificates of deposit
and negotiable certificates of deposit.
RESOURCES
Despite the lack of a definitive national or in-
ternational authority for SRI standards, there
are a number of organizations actively promot-
ing these concepts including the Principles for
Responsible Investment (PRI), United Nations
Global Compact Principles, Chartered Financial
Analysts (CFA) Institute, Forum for Sustainable
and Responsible Investing (US SIF), Sustain-
ability Accounting Standards Board (SASB) and
the Coalition for Environmentally Responsible
Economies (Ceres). A description of these enti-
ties are contained in Appendix B.
16 Silverstein, Ken. “Sullivan Principles: Corporations Must Contribute to the Culture of Peace and Help End Gun Violence.” Forbes, December
, 25, 2012. Accessed 5/22/2019. www.forbes.com/sites/kensilverstein/2012/12/25/sullivan-princi- ples-corporations-must-contribute-to-the-culture-of-peace-and-help-end-gun-violence/#46d4f6953fa6 047
7 Socially Responsible Investing – What Does It Mean and What’s the Risk? Local agencies may find the resources provided
by these organizations helpful when drafting or
revising a SRI framework for investment policy
and practices. For example, California’s two larg-
est public pension funds integrate SRI strategies
for their investments and engage with these orga-
nizations to promote SRI. The California Public
Employees’ Retirement System (CalPERS) cites
PRI’s six principles in its T otal Fund Investment
Policy.
17 CalPERS utilizes a Sustainable Invest-
ments Program to guide its sustainable invest-
ment practices, identify and address risks and
opportunities on sustainable investment topics
and maintains a Sustainable Investment Research
Initiative (SIRI) Library.
18 Similarly, the California State T eacher’s Re-
tirement System (CalSTRS) incorporates sus-
tainability concepts and ESG factors within
its Investment Beliefs, Investment Policy and
Corporate Governance Principles.
19 CalSTRS
administers a Sustainable Investment and Stew-
ardship Strategies program in addition to lead-
ing a Green Initiative Task Force (Green T eam)
to manage and assess sustainability risks and op-
portunities.
20 The Green T eam’s annual report
for Fiscal Year 2017-2018, states “CalSTRS
believes that the use of industry-specific ESG
accounting standards, such as those developed
by SASB, will help public corporations sim-
plify their ESG disclosures….”
21 Local agencies
looking to introduce or expand SRI in their in-
vestment policies and procedures must decide
which types of SRI strategies are manageable for
their staff to administer.
ESG DATA RESOURCES AND TOOLS
The Securities and Exchange Commission
(SEC) does not require companies to file spe-
cific standardized environmental, social or
governance disclosure data unless it is mate-
rial to the reasonable investor.
22 Without any
specific ESG disclosure requirements in place,
ESG data voluntarily reported by companies
may not be comparable due to the fact there is
no standard process in place. Therefore in the
absence of an ESG standard for reporting, lo-
cal agencies that choose to use ESG factors for
socially responsible investing strategies do so as
a good faith effort.
Local agencies using ESG in their investment
decision process need to find this non-financial
data to help them evaluate their investment
options. Local agencies should obtain ESG
data in the most cost-effective and efficient
manner to meet their investment needs. Op-
tions for obtaining ESG data include using ex-
isting market data platforms, requesting ESG
data from their investment or municipal ad-
visors, searching online for free ESG data or
purchasing it from a data provider. Just as each
credit rating agency uses their own methodol-
ogy, ESG data providers develop their meth-
odology for rating and scoring the ESG factors
of corporate and governmental entities. Local
agencies should become familiar and comfort-
able with the credibility of ESG data sources
they obtain and rely on.
17 CalPERS - Policies. www.calpers.ca.gov/page/investments/about-investment-office/policies 18 CalPERS - Sustainable Investments Program. www.calpers.ca.gov/page/investments/governance/sustainable-in- vestments-program
19 CalSTRS - Investment Policies. www.calstrs.com/investment-policies 20 CalSTRS - Sustainable Investment Over view. www.calstrs.com/sustainable-investment-overview 21 CalSTRS - Green Initiative Task Force. www.calstrs.com/report/green-initiative-task-force 22 SEC, Concept Release, Business and Financial Disclosur e Required by Regulation S-K, pg. 209-10. Acessed 5/22/2019. www.sec.gov/rules/concept/2016/33-10064.pdf
048
8 California Debt and Investment Advisory Commission
ESG Considerations by
Credit Rating Agencies
Many of the allowable investment instruments au-
thorized in the Government Code have minimum
credit quality requirements. Some require the high-
est letter and number rating by a nationally rec-
ognized statistical rating organization (NRSRO),
others require a rating category of “A” or its equiv-
alent or better, and there are some that have no
minimum requirements at all. As stated previously,
a local agency’s investment goals and priorities can
be more restrictive than what is permissible in the
Government Code. Investment types requiring
minimum credit ratings that are also more likely to
have ESG data include medium-term notes, asset-
backed securities and supranational obligations.
23 The top three national credit rating agencies have
all begun to analyze, incorporate and provide var-
ious forms of ESG information including cross-
sector, relative analysis on how ESG could lead
to material impacts (Moody’s and S&P Global
Ratings) as well as an integrated scoring system
(Fitch). In addition, other NRSROs are also be-
ginning to include ESG analysis as a component
of their credit rating processes (Morningstar,
Kroll). See Appendix C for descriptions and links
to ESG information by credit rating agencies.
Given these minimum threshold require-ments
and the fact that investment policies can be more
restrictive, local agencies can review ESG consid-
erations published by an NRSRO to assist with
their analysis of how ESG factors could affect dif-
ferent investment sectors and issuers.
Types of ESG Data Providers
Recently the Journal of Environmental Investing
published a guide to the growing number of ESG
data providers which they categorized as market
data providers, ESG-exclusive data providers and
specialized data providers.
24 Market data providers collect broad market data
on equities, fixed income, foreign exchange, and
commodities to characterize market trends and
offer ESG research, ratings and indices as a subset
of their product and service offerings. Examples
of market data providers include Yahoo! Finance,
Bloomberg L.P ., FTSE Russell, MSCI Inc., and
Thomson Reuters.
ESG-exclusive data providers focus on ESG re-
search, ratings and analysis instead of providing
ESG data as a subset of products and services as
the market data providers do. Examples of ESG-
exclusive data providers include Arabesque, Co-
valence, Ethos, Inrate, Oekom, RobecoSAM and
Sustainalytics.
Finally, specialized data providers focus on one or
more aspects of ESG, but not all three. For exam-
ple, The Carbon Disclosure Project (CDP) offers
extensive information and ratings on company
performance and risks related to climate change
and water while the company, RepRisk, analyzes
reputational risk of companies.
Some ESG data is available for free online by
searching for specific companies or entities on
Yahoo! Finance, CRSHub or RobecoSAM. The
data available through Yahoo! Finance is provided
by Sustainalytics, whereas the other two are pro-
prietary products. See Appendix C for descrip-
tions and links under Free Searchable ESG Data.
As more investors apply SRI strategies and in-
corporate ESG factors, data providers are being
reviewed by industry users which may help local
agencies compare the different data providers.
Not surprisingly, the rating models used by each
unique data provider vary from computer driv-
23 CDIAC - Local Agency Investment Guidelines, pg. 14, (2019). www.treasurer.ca.gov/cdiac/LAIG/guideline.pdf 24 “Responsible Investing: Guide to ESG Data Providers and Relevant T rends,” Journal of Environmental Investing 8, no 1 (2017). Accessed 5/22/2019. https://cbey.yale.edu/sites/default/files/Responsible%20Investing%20-%20 Guide%20to%20ESG%20Data%20Providers%20and%20Relevant%20Trends.pdf 049
9 Socially Responsible Investing – What Does It Mean and What’s the Risk? en models or algorithms, to analyst based evalu-
ations, to a hybrid of the two. 25 One example of
an effort to influence and improve the quality
and transparency of corporate sustainability rat-
ings is the program called Rate the Raters, by
SustainAbility. The latest report provides the
results of a global survey in which several thou-
sand sustainability professionals were polled to
assess their views on what makes a good sustain-
ability rating and which ratings they see as being
of the highest value and usefulness, concluding
that RobecoSAM, CDP , MSCI and Sustainalyt-
ics, were the leaders across all categories evalu-
ated in this study.
26 As an example, the City of Santa Monica has used
S&P Global Rating information to identify ESG
factors affecting investment sectors, and ESG
scores provided by RobecoSAM and Sustainalyt-
ics to construct ESG rankings of the companies
within its investment portfolio.
27 CONCLUSION
Socially responsible investment objectives are be-
coming increasingly popular and may be advo-
cated for by the stakeholders of California local
agencies to discourage or encourage corporate
business practices or government activities seen
as negative or positive under certain environmen-
tal, social and governance factors to the public at
large. While SRI strategies to screen authorized
investments may provide stakeholders and con-
stituents with good feelings or even resolve that
they are doing the right thing with taxpayer dol-
lars, careful planning and policy deliberation is
necessary. Regardless of the societal benefits of
SRI, CDIAC reminds California local agencies
that the primary objectives of surplus funds in-
vesting are safety of principal and maintenance
of necessary liquidity. Further, it must be noted
that using divestment, depending on timing and
circumstances, as a negative screening strategy
requires careful consideration given that it may
directly conflict with the objective of principal
preservation. The costs of staff time and SRI/ESG
evaluation tools needed to implement and man-
age additional authorized investment screening
processes must be determined to be appropriate
and cost effective. Local agencies that incorporate
Socially responsible investment goals and objec-
tives into their investment policies will provide
transparency, establish portfolio performance ex-
pectations, and create a framework for evaluating
and communicating the effectiveness of SRI and
ESG factors as these markets expand.
ACKNOWLEDGEMENTS
This issue brief was written by Tara Dunn of
CDIAC’s Research Unit and reviewed by Angelica
Hernandez.
Special thanks to Kevin Webb, CFA, Principal,
Fixed Income Sales, Piper Jaffray; David Carr,
Assistant City T reasurer, City of Santa Monica;
and David Jones, T reasury Administrator, City of
Oakland for their review and comments.
25 Ibid, pg. 14.
26 SustainAbility - Rate the Raters 2019: Expert Views on ESG Ratings. Accessed 5/22/2019. https://sustainability.com/wp- content/uploads/2019/02/sustainability-rate-the-raters-2019.pdf 27 GIOA - 2019 Conference, Dealing With ESG, pg. 12-19. Accessed 7/10/2019. www.gioa.us/presentations/2019/ Thursday/Thu-Carr_Jones_ESG_Investing.pdf
050
Appendix A
PRUDENT INVESTMENT
CONSIDERATIONS
INVESTMENT
DECISION
PROCESS
INVESTMENT OFFICIAL
INVESTMENT POLICY
FORMULATION
(documenting local
agencies objectives and
capabilities)
STRATEGY
ESG FACTORS ADJUSTMENTS IN
INVESTMENT STRATEGY
MADE AS A RESULT
OF CHANGES IN
CIRCUMSTANCES
ECONOMIC AND
MARKET CONDITIONS
CASHFLOW
REQUIREMENTS
SRI OBJECTIVES,
GOALS AND STRATEGY
051
Appendix B
ORGANIZATIONS PROMOTING
SOCIALLY RESPONSIBLE INVESTMENT
AND ENVIRONMENTAL, SOCIAL
AND GOVERNANCE FACTORS
United Nations Global Compact
The ten principles of the United Nations Global
Compact involve human rights, labor, environ-
ment, anti-corruption. By incorporating the ten
principles companies are not only upholding
their basic responsibilities to people and planet,
but setting the stage for long-term success.
Principles for Responsible
Investment (PRI)
The six Principles of Responsible Investment ac-
knowledge that ESG factors can have a material
impact on returns and can affect the investment
performance of bonds, both negatively and
positively, at the issuer, sector, geographic and
system levels.
Chartered Financial Analysts
(CFA) Institute
The CFA Institute’s mission is to lead the invest-
ment profession globally by promoting the high-
est standards of ethics, education, and professional
excellence for the ultimate benefit of society. The
incorporation of ESG data into the investment
process is encouraged so that investors can be more
informed about the decisions they are making.
Government Investment Officers
Association (GIOA)
The mission of the GIOA is the education and
training of government investment officers to as-
sist them in their responsibilities: to ensure safety
of principal through suitable investments; main-
tain sufficient portfolio liquidity; optimize and
measure investment performance; and commu-
nicate portfolio policy and plan to the governing
board and public.
Green Initiative Task Force
The Green Initiative Task Force was established
to identify, analyze and propose investment op-
portunities and risk-control strategies address-
ing climate change. Since then, the focus has
pushed beyond carbon emissions to consider
risks and opportunities related to issues such as
land use, water sourcing, mineral extraction and
waste disposal.
US SIF: The Forum for Sustainable
and Responsible Investment
The mission of US SIF Forum for Sustainable
and Responsible Investment is to rapidly shift in-
vestment practices toward sustainability, focusing
on long-term investment and the generation of
positive social and environmental impacts.
Sustainability Accounting
Standards Board (SASB)
The Sustainability Accounting Standards Board
is an independent, non-profit standard-setting
organization established in 2011 to set, inter-
pret, and maintain industry-specific sustain-
ability standards.
Coalition for Environmentally
Responsible Economies (Ceres)
Ceres is a sustainability nonprofit organization
working with influential investors and companies
to build leadership and drive solutions through-
out the economy. Ceres tackles the world’s big-
gest sustainability challenges, including climate
change, water scarcity and pollution, and inequi-
table workplaces in its mission to transform the
economy to build a sustainable future for people
and the planet.
SustainAbility
SustainAbility is a think tank and advisory firm
founded in 1987 that works to inspire and enable
business to lead the way to a sustainable economy.
052
Appendix C
ESG INFORMATION BY CREDIT
RATING AGENCIES
Moody’s
Moody’s is developing analytical tools to help
improve the market’s understanding of how ESG
factors affect credit risk; be more transparent
about how ESG risks are identified and assessed;
and to ensure that Moody’s analysts consider
ESG factors in a consistent manner across sec-
tors and geographies, with the aim of identify-
ing which sectors and issuers are most exposed to
these risks. Moody’s will also continue to publish
sector-specific reports that provide more trans-
parency into how ESG risks are incorporated into
its ratings.
S&P Global Ratings
S&P Global Ratings ESG Evaluation is a cross-
sector, relative analysis of an entity’s capacity to
operate successfully in the future and is grounded
in how ESG factors could affect stakeholders and
potentially lead to a material direct or indirect fi-
nancial impact on the entity.
Fitch
Fitch Ratings has launched a new integrated
scoring system which shows how environmental,
social and governance (ESG) factors impact in-
dividual credit rating decisions. Fitch is the only
credit rating agency that currently offers this level
of granularity or transparency about the impact
of ESG on fundamental credit.
Kroll
Kroll assesses the relevance of ESG risks to key
credit metrics as well as the possible effect of ESG
factors on the credit risk of an issuer, which may
vary based on the time horizon of the debt issu-
ance being evaluated.
Japan Credit Rating Agency, Ltd
JCR focuses its efforts on providing evaluations
to green, social and sustainable finance (includ-
ing both bonds or loans and other debt instru-
ments) to contribute to the market players.
FREE SEARCHABLE ESG DATA
CSRHub
CSRHub provides access to its corporate social
responsibility and sustainability ratings created
by aggregating more than 500 sources of data and
information on 17,268+ companies from 134 in-
dustries in 141 countries. Ratings are aggregated
using ESG datasets from Institutional Sharehold-
er Services (ISS), MSCI (ESG Intangible Value
Assessment, ESG Impact Monitor, and ESG Car-
bon Metrics), T rucost and Vigeo EIRIS as well as
other data inputs.
Yahoo! Finance
Yahoo! Finance provides access to ESG data from
Sustainalytics for companies and some govern-
mental entities (i.e. Fannie Mae) including ESG
ratings and comparisons of ESG performance for
each ESG category to other peer companies’ ESG
scores as well as a daily list of the top 30 most
sustainable and ethically responsible companies.
Specific entities can be found through the web-
site’s search feature.
RobecoSAM
RobecoSAM provides rankings for 2,686 com-
panies evaluated in 2018 as part of their annual
Corporate Sustainability Assessment. Rankings
include over 600 U.S. companies.
053
054
915 Capitol Mall, Room 400, Sacramento, CA 95814
p 916.653.3269 • f 916.654.7440
[email protected]
www.treasurer.ca.gov/cdiac
055
1 Revised 2/2025
INVESTMEN
T POLICY FOR THE CIT Y OF SANTA MONICA
1. POLICY
It is the policy of the City of Santa Monica (City) to invest public funds in a manner which will safely preserve portfolio principal, provide adequate liquidity to meet the City’s cash flow needs, and optimize returns while conforming to all federal, state, and local statutes governing the investment of public funds. Should any applicable provisions of these statutes change from those included herein, such provision shall be considered incorporated in the policy. The policy should be submitted to the City Council annually for review and approval.
2. SCOPE
This investment policy applies to all cash and financial investments of the various funds of the City of Santa Monica as identified in the City's Annual Financial Report, with the exception of those financial assets explicitly excluded from coverage by the Investment Policy for legal or operational reasons. Cemetery and Mausoleum Perpetual Care Funds are private funds held in trust and managed by the City. These funds do not fall under the guidelines of the Government Code sections noted in Section 8.0 of this Policy but are invested by an outside investment manager under guidelines established by the City Council.
All Cit
y funds are listed in Attachment 1- A. The Investment Policy will also apply to all new funds created unless specifically exempted.
Except as otherwise noted, City funds are pooled for investment purposes.
Investment income will be allocated to the various funds based on their respective participation and in accordance with generally accepted accounting principles.
Interest is allocated on a quarterly basis.
3. PRUDENCE
All inves
tments and evaluation of investments shall be made with the Prudent Investor Standard as set forth in California Government Code Section 53600.3.
Investments shall be made with judgment and care, under circumstances then prevailing, including, but not limited to, the general economic conditions and the anticipated needs of the agency that a prudent person acting in a like capacity and familiarity with those matters would use in the conduct of funds of a like character and with like aims, to safeguard the principal and maintain the liquidity needs of the agency.
The standard
of prudence shall be applied in the context of managing an overall Attachment C
056
2 portfolio. Investment officers acting in accordance with written procedures and the investment policy and exercising due diligence shall be relieved of personal responsibility for an individual security’s credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments.
4. INVESTMENT OBJECTIVES
The primary objective of all City investments, in priority order, shall be:
4.1 SAFETY
Safety of principal is the foremost objective of the investment program. City investments shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. To attain this, the City will diversify its investments by investing funds in securities of various types and maturity dates, and from various issuers offering independent returns.
4.2 LIQUIDITY
Liquidity is the ability to change an investment into its cash equivalent on short notice at its prevailing market value. The City’s investment portfolio shall remain sufficiently liquid to enable the City to meet all operating requirements which might be reasonably anticipated. This is accomplished by structuring the portfolio so that securities mature concurrently with anticipated cash needs.
Since all possible cash demands cannot be anticipated, the portfolio will maintain a liquidity “buffer” and invest primarily in securities with ac tive secondary or resale markets.
4.3 RATE OF RETURN
The City’s investment portfolio shall be designed with the objective of attaining a benchmark rate of return throughout budgetary and economic cycles, taking into account safety and liquidity requirements. The benchmark may vary from time to time depending on the economic and budgetary conditions present. At no time shall funds be invested in any security that could result in zero interest accrual if held to maturity except as specified in Section 8.2 of this policy.
5. INVESTMENT AUTHORITY DELEGATION
In accordance with the Santa Monica City Charter, Section 711, the City Council delegates to the City Treasurer the authority to invest City funds. In the absence of the Director of Finance, the Business & Revenue Operations Manager, Treasury Administrator, or the Senior Treasury Analyst may execute investment transactions per instructions from the Director of Finance or per prior written authorization.
Section 53607 of the State of California Government Code limits the authorization of the legislative body to delegate investment authority to a one- year period, renewable 057
3 annually.
5.1 INVESTMENT PROCEDURES
The Director of Finance is responsible for conducting and reporting on all City investments. To facilitate this function, the Director of Finance or their designee will prepare and maintain an Investment Procedures Manual detailing procedure for the operation of the investment program consistent with this policy. The manual should include reference to safekeeping, banking services contracts, collateral/depository agreements, and repurchase agreements. The manual shall also include explicit delegation of authority to persons responsible for investment transactions. No person may engage in investment transactions except as provided under the terms of this policy and the procedures established by the Director of Finance. Additionally, the manual will explicitly include a current listing of all City of Santa Monica financial institution deposit and investment accounts, a current copy of or link to State laws pertinent to City investments, a description of specific controls to ensure the proper execution of the City Investment Policy, and copies, with instructions, of all investment reports required by law or by City Investment Policy.
5.2 INVESTMENT COMMITTEE AND REVIEW OF INVESTMENT PORTFOLIO
An Investment Committee (the Committee) shall be established consisting of the City Manager, the Assistant City Manager, the Director of Finance, one other department head serving one-year terms on a rotating basis, and one qualified citizen representative, appointed by the City Manager for a one-year term, who possesses strong skills and knowledge in the areas of finance and economics.
The one-year terms for the citizen representative and the department head may be extended at the discretion of the City Manager. The purpose of the Committee is to provide general oversight and act in an advisory capacity. The Committee will attempt to meet once each calendar quarter to review and evaluate previous investment activity, to review the current status of all funds held by the City, to discuss anticipated cash requirements and investment activity for the next quarter, and to discuss investment strategy. Three members of the committee shall constitute a quorum to do business.
6. ETHICS AND CONFLICTS OF INTEREST
The Director of Finance and other employees involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment program, or which could impair their ability to make impartial investment decisions. The Director of Finance and other employees involved in the investment process shall disclose any material interests in financial institutions with which they conduct business within their jurisdiction, and they shall further disclose any material personal financial/investment positions that could be related to the performance of the City’s investment portfolio and shall refrain from personal investment transactions with the same individual or firm with whom business is 058
4 conducted on behalf of the City.
The Director of Finance, employees involved in the investment process and the citizen representative are required to file annual disclosure statements as required by the Fair Political Practices Commission. During the course of the year, if there is an event subject to disclosure that could impair the ability of the Director of Finance or investment employees to make impartial decisions, the City Council will be notified in writing within ten (10) days of the event.
7. AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS
The City shall transact business only with issuers, banks, savings and loans, and registered securities dealers. The purchase of any investment, other than those purchased directly from the issuer, shall be purchased from either an institution licensed by the State as a broker/dealer as defined in Section 25004 of the Corporation Code, who is a member of FINRA (Financial Industry Regulatory Authority), or a member of a federally regulated securities exchange, a national or state chartered bank, a federal or state association (as defined by Section 5102 of the Financial Code), or a brokerage firm designated as a primary dealer by the Federal Reserve Bank.
The Director of Finance’s staff shall periodically conduct a “Request for Qualifications” process to investigate broker/dealers that wish to do business with the City. All institutions that desire to become a broker/dealer for the City must complete the City’s “Broker/Dealer Request for Information” and “Broker/Dealer Certification”.
Staff will evaluate broker dealers based on the qualifications of the firm and the individual broker(s) assigned to the City. The evaluation will be based on experience of the broker in servicing public fund investment portfolios, market capitalization of the firm, the brokers’ ability to access markets in securities appropriate to the City’s needs, and the brokers’ agreement to abide by the City’s Investment Policy.
Selection as an approved broker/dealer does not guarantee that the firm will conduct any investment transactions with the City
The Director of Finance shall conduct periodic reviews of the financial condition and other qualifications of all approved financial institutions and broker/dealers to determine if they continue to meet the City’s guidelines for qualification as defined in this section. Additionally, the City shall keep the current audited financial statements on file for each approved financial institution and broker/dealer with which the City conducts investment transactions. A listing of websites where these financial statements may be viewed may substitute for physical hard copies of the statements.
The City may utilize the services of an investment advisor. The advisor must be registered with the Securities and Exchange Commission (SEC) under the Investment Advisor Act of 1940. Additionally, if the City utilizes an SEC registered investment advisor, the advisor shall maintain a list of authorized broker-dealers and complete the appropriate due diligence required by the SEC. The investment advisor may use its own list of approved broker/dealers and financial institutions for investment purposes on behalf of the City. The investment advisor shall submit the 059
5 list of approved broker/dealers to the Director of Finance on an annual basis. The Director of Finance may restrict the use of a broker/dealer which may be deemed unsuitable.
8. AUTHORIZED AND SUITABLE INVESTMENTS
Investments shall be made only in those instruments specifically authorized by California State laws, primarily Sections 53601, 53601.6, 53601.8, 16429.1, and 53684 et seq. of the Government Code and to no greater an extent than authorized by those laws. These laws are summarized in Attachment 1-B.
Additional City guidelines are as follows:
Instruments Additio nal City Guidelines
U.S. Federal Agencies No more than 50% of portfolio, per agency Banker's Acceptances (BA) Maximum of 10% of portfolio per issuer Negotiable Certificates of Deposit Maximum of 10% of portfolio per issuer (NCD)
Commercial Paper (CP) Maximum of 25% of portfolio
It is recognized that legal or other events may occur that could require exceptions to certain guidelines. The percentages listed in the above guidelines are based on book value of the portfolio at the time of purchase.
In addition to following all legal guidelines, the portfolio will preserve principal, maintain adequate liquidity to meet all City obligations, contain an appropriate level of interest rate risk, and be diversified across types of investments, maturities, and institutions to minimize credit risk and maintain an appropriate return.
8.1 REPURCHASE AGREEMENTS
Investments in repurchase agreements are allowable and shall be made only with financial institutions with which the City has an executed master repurchase agreement. The financial institution must be a primary dealer of the Federal Reserve Bank of New York.
8.2 PROHIBITED INVESTMENTS AND TRANSACTIONS
a) Prohibited investments include inverse floaters, range notes, interest only strips derived from a pool of mortgages (collateralized mortgage obligations), and any security that could result in zero interest accrual if held to maturity, as specified in Section 53601.6.
b) Notwithstanding the prohibition in paragraph (a), the City may invest in securities issued by, or backed by, the United States government that could result in zero- or negative-interest accrual if held to maturity, in the event of, and for the duration of, a period of negative market interest rates.
This shall remain in effect only until January 1, 2026. 060
6 8.3 INVESTMENTS H EL D AND/OR MANAGED BY FISCAL AGENTS
AND TRUSTEES
In addition, the main pooled portfolio, the City may hold and invest certain other funds that are restricted as to use. One example is bond proceeds held by fiscal agents. Investments of bond or loan proceeds will be made in accordance with Government Code Section 53601 (m), which states that money from bond proceeds should be invested as specified by bond documents, and in accordance with specific bond covenants. In most cases these investments will be made under the same guidelines as other City investments. Another example is funds received from legal settlements that are restricted for a certain purpose, which will be invested in accordance with legal or escrow agreements that may be more restrictive than the City’s Investment Policy.
As noted previously in this Policy, Cemetery and Mausoleum Perpetual Care Funds are private funds held in trust by the City. These funds are invested by an outside investment manager under guidelines adopted by the City Council and do not fall under the guidelines of the Government Code sections noted in Section 8.0 of this Policy. The Director of Finance’s staff monitors all investment activity of these funds to ensure guidelines are followed.
9. INVESTMENT POOLS/MUTUAL FUNDS
A thorough investigation of any pooled investment funds, including mutual funds, is required prior to investing, and on a continual basis. To accomplish this, a questionnaire will be used to evaluate the suitability of the pooled fund. The questionnaire will answer the following general questions:
• A description of eligible investment securities, and a written statement of investment policies and objectives.
• A description of interest calculations and how it is distributed, and how gains and losses are treated.
• A description of how the securities are safeguarded (including the settlement processes), and how often the securities are priced and the program audited. • A description of who may invest in the program, how often, and what size deposit and withdrawal are allowed.
• A schedule for receiving statements and portfolio listings. • Are reserves, retained earnings, etc., utilized by the pool/fund? • A fee schedule, and when and how fees are assessed.
• Is the pool/fund eligible for bond proceeds and/or will it accept such proceeds? For mutual funds, a fund prospectus can substitute for the questionnaire.
10. COLLATERALIZATION
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7 California Government Code Sections 53652, et seq. requires depositories to post certain types of collateral for public funds above the Federal Deposit Insurance Corporation (FDIC) insurance amounts. The collateral requirements apply to bank deposits, both active (checking and savings accounts) and inactive (non- negotiable certificates of deposit).
Collateralization is also required for repurchase agreements. In order to anticipate market changes and provide a level of security for all funds, the collateralization level will be 102% of the market value of principal and accrued interest, and the value shall be adjusted no less than quarterly. Collateral will be in the form of U.S. Treasury Obligations or U.S. Agency Securities.
Collateral will always be held by an independent third party with whom the entity has a current custodial arrangement. A clearly marked evidence of ownership (safekeeping receipt) must be available to be supplied to the City, if requested, and retained. The right of collateral substitution is granted.
11. SAFEKEEPING AND CUSTODY
In accordance with California Government Code Section 53601, all securities owned by the City shall be held in safekeeping by the City’s custodial bank or a third- party bank trust department, acting as an agent for the City under terms of the custody agreement. Collateral for repurchase agreements will be held by a third- party custodian under terms of the Master Repurchase Agreement.
All securities will be received and delivered using a delivery vs. payment (DVP) basis, which ensures that securities are deposited with the third-party custodian prior to the release of funds. Securities held by the third- party custodian will be evidenced by safekeeping receipts and/or bank statements. Investments in the State Local Agency Investment Fund (LAIF) or money market mutual funds are undeliverable and are not subject to delivery or third-party safekeeping.
Investment trades shall be verified against bank transactions and broker confirmation tickets. On a monthly basis, the custodial asset statement shall be reconciled with the month-end portfolio holdings.
12. DIVERSIFICATION
The City will diversify its investments by security type, institution, and maturity date.
Concentration limits are set by the State Government Code (see Attachment B) and Section 8.0 (Authorized and Suitable Investments) of this policy.
13. MAXIMUM MATURITIES
To the extent possible, the City will attempt to match its investments with anticipated cash flow requirements. Most investments will be made in securities with a term 062
8 remaining to maturity of five years or less. However, on February 22, 2022, the City Council granted authority to invest in securities with a remaining term in excess of five years as part of the City’s overall investment program. Per that authorization, up to 15% of the portfolio value may be invested in U.S. government, Federal Agency, or local agency securities with remaining maturities at the time of purchase between five and fifteen years. Per State law, the settlement date of the investment purchase is considered the start date of the remaining term to maturity. Further maturity limitations per State Code are shown in Attachment B. The weighted average maturity of the investment portfolio should be three years or less.
In order to minimize the impact of market risk, most investments will be purchased with the intent to hold to maturity. Investments may be sold prior to maturity for cash flow needs, portfolio rebalancing and/or appreciation purposes, or in order to mitigate portfolio risk by limiting potential losses. However, no investment shall be made based solely on earnings anticipated from capital gains. Due to the uncertain nature of cash flow requirements, a portion of the portfolio should be continually invested in readily available funds.
14. INTERNAL CONTROLS
The Director of Finance shall be responsible for ensuring that all investment transactions comply with the City’s Investment Policy and for establishing internal controls that are designed to prevent losses due to fraud, negligence, and third-party misrepresentation.
The Director of Finance will also establish internal control procedures addressing wire transfer controls, separation of duties and administrative controls, avoidance of collusion, separation of transaction authority from accounting procedures, documentation of investment transactions, and monitoring of results.
As part of its annual audit of the City, the City’s external auditor will review compliance with statutes, policies, and procedures.
15. PERFORMANCE STANDARDS
The portfolio shall be designed with the objective of obtaining a rate of return throughout budgetary and economic cycles, commensurate with investment risk constraints and cash flow needs.
15.1 MARKET YIELD (Benchmark)
The City’s overall investment strategy is passive. Given this strategy, the basis used by the Director of Finance to determine whether appropriate and suitable market yields are being achieved shall be to identify a comparable benchmark to the portfolio’s investment duration, e.g., the Constant Maturing Two Year Treasury bill index. Benchmarks may change over time depending on the portfolio’s duration.
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9 16. REPORTING
In accordance with State law and the City Charter, monthly reports will be made to the City Council and the City Manager describing the present status of City investments and monies held by the City, as well as summarizing all investment transactions for the month. Schedules in the monthly report should include the following:
• A complete list of investments including the type of the investment, name of the issuer, maturity date, par value, book value, and market value • The source of market value data
• The weighted average maturity and yield to maturity of the portfolio • Coupon, discount, or earnings rate for each security
• Percentage of portfolio represented by each investment category • A certification of compliance with the Investment Policy • A statement denoting the City’s ability to meet its anticipated expenditures requirements for the next six months
• Benchmark comparison
• Investment transactions (Note: this is per Cal Code 53607)
Records of all investment transactions will be kept and filed in the Finance Department in accordance with legal guidelines and records retention policies.
17. SOCIALLY RESPONSIBLE INVESTING
RESTRICTIONS – The direct investment of City funds are restricted as follows:
a. Investments should be made in entities that support clean and healthy environment, including following safe and environmentally sound practices. b. No investments will be made in fossil fuel companies as defined by “The Carbon Underground 200” list maintained and published by the organization FFI Solutions or in banking institutions that provide financing to said companies.
c. No investments are to be made in tobacco or tobacco-related products. d. No investments are to be made to support the production of chemical or biological weapons or automatic or semi-automatic rifles, machine guns and crew-served weapons, marketed for civilian sale and use.
e. Investments should be made in entities that support equality of rights regardless 064
10 of sex, race, age, disability, sexual orientation, gender identity or veteran status. f. Investments should be made in entities that promote community economic development.
g. City bans investment in cryptocurrency and crypto-related products.
Funds invested with a trustee and/or outside investment managers such as the Cemetery and Mausoleum Perpetual Care Funds will comply with this section of the policy.
18. COMMUNITY REINVESTMENT ACT (CRA)
The City will deposit funds only in those financial institutions, which have a CRA rating (as determined by the appropriate regulatory body) of "Outstanding" or "Satisfactory".
19. INVESTMENT POLICY ADOPTION
The City’s investment policy shall be reviewed and adopted by the City Council annually. The Investment Committee will review the policy periodically to ensure its consistency with the overall objectives of preservation of principal, liquidity, and return, and its conformance with current law, financial and economic trends, and cash flow needs of the City.
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A-1
ATTACHMENT 1-A
City of Santa Monica Funds for Cash Pooling
The following listed City of Santa Monica funds shall have their cash balances pooled for investment purposes.
FUND
NUMBER
FUND NAME
1 GENERAL FUND
10 SPECIAL REVENUE SOURCE FUND
11 BEACH RECREATION FUND
12 HOUSING AUTHORITY FUND
14 TENANT OWNERSHIP RIGHTS CHARTER AMENDMENT
16 CLEAN BEACHES AND OCEAN PARK PARCEL TAX FUND
17 TRAFFIC SAFETY FUND
18 SCAQMD AB2766 FUND
19 COMMUNITY DEVELOPMENT BLOCK GRANT (CBDG) FUND
20 MISCELLANEOUS GRANTS FUND
21 ASSET SEIZURE FUND
22 CITIZENS OPTION FOR PUBLIC SAFETY FUND
25 RENT CONTROL FUND
26 GAS TAX FUND
27 LOCAL RETURN FUND
28 PARKS AND RECREATION FACILITIES FUND
29 MEASURE GS FUND
41 LOW/MODERATE INCOME HOUSING ASSET FUND
50 WATER FUND
51 WASTEWATER FUND
52 STORMWATER MANAGEMENT FUND
53 PIER FUND
54 RESOURCE RECOVERY & RECYCLING FUND
57 AIRPORT FUND
59 CEMETERY FUND
60 BIG BLUE BUS FUND
61 PARKING AUTHORITY FUND
70 VEHICLE MANAGEMENT FUND
71 INFORMATION TECHNOLOGY REPLACEMENT & SERVICES FUND
72 SELF INSURANCE-GENERAL LIAB/AUTO FUND
73 SELF INSURANCE-BUS FUND
74 SELF INSURANCE WORKERS-COMPENSATION FUND
75 SELF INSURANCE-ADMIN FUND
80 GENERAL TRUST FUND
81 CEMETERY PERPETUAL CARE FUND
82 MAUSOLEUM ENDOWMENT FUND
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B-1
ATTACHMENT 1-B
Summary of State of California Statutes Applicable to Municipal Investments
The following investments are authorized by California State Code, Title 5, Division 2, and Sections 53600, 53601, 53631.5 and 53635. See code sections for complete descriptions.
Authorized Investment Legal Limit
(%)
Other Constraints
Local Agency Bonds No limit Maximum maturity 5 years.**** U.S. Treasury Obligations No limit Maximum maturity 5 years except as noted below.****
State Obligations -
California and Others
No limit Maximum maturity 5 years.
California Local Agency
Obligations
No limit Maximum maturity 5 years.
U.S. Agency Obligations No limit Maximum maturity 5 years except as noted below.****
Bankers’ Acceptance 40% Eligible for purchase by the Federal Reserve System and not to exceed 180
days to maturity. No more than 30% may
be in bankers' acceptances of any one
commercial bank.
Commercial Paper – Non
Pooled Funds
40% "A -1 /P - 1/F - 1" rating; if the issuer has
long-term debt, it must rated “A”; U.S.
corporate assets over $500,000,000;
purchases may not represent more than
10% of outstanding commercial paper
and medium-term notes. Commercial
paper may not exceed 270 days to
maturity.***
Commercial Paper –
Pooled Fund
40% "A -1 /P - 1/F - 1" rating; if the issuer has
long-term debt, it must rated “A”; U.S.
corporate assets over $500,000,000;
purchases may not represent more than
10% of outstanding paper and may not
exceed 270 days to maturity.
067
B-2
Authorized Investment Legal Limit
(%)
Other Constraints
Negotiable Certificates of
Deposit
30% Maximum maturity 5 years. State and
Federally chartered banks and savings
institutions, including U.S. branches of
foreign banks regulated by State
regulatory authorities (“Yankee CD”).
Deposit/CD Placement
Services
50%** Maximum maturity 5 years. Deposits with
any one private sector placement service
are limited to 50% of the portfolio. This
limit does not apply to placement service-
assisted CD’s.
Repurchase Agreement No limit Maximum maturity 1 year. Securities used as collateral for repo's must be
investments allowable under Govt. Code
(i.e., T-bills, Agencies, BAs, CDs, etc.);
must be collateralized at 102% of market
value or greater; securities must be safe
kept by third party.
Reverse Repurchase
Agreements/Securities
Lending Agreements
20% Must be made with primary dealers of the
Federal Reserve Bank of New York and
the securities used for the agreement
must have been held by the local agency
for at least 30 days. The maximum
maturity is 92 days.
Medium-Term Corporate
Notes
30% Maximum maturity 5 years; bonds must
be rated minimum of “A” by a nationally
recognized rating service.
Mutual Funds and Money
Market Mutual Funds
20% No more than 10% may be invested in
any one mutual fund. Funds are
invested in securities and obligations
authorized by sub- divisions (a) through
(m) of Section 53601 and
53635, (any of the authorized
investments for local agencies) the
investment company must be in highest
ranking provided by not less than two of
the three largest nationally recognized
rating services OR must have the
investment advisor registered with the
SEC with no less than 5 yrs. experience
and have assets under mgmt. in excess
of $500 million.
068
B-3
Authorized Investment Legal Limit
(%)
Other Constraints
Supra Nationals
(International Bank for
Reconstruction and
Development.
International Finance
Corporation, Inter-
American Development
Bank
30% Maximum maturity 5 years. Must be
rated AA or better by a nationally
recognized rating service. Must be
senior unsubordinated obligations
denominated in U.S. Dollars.
Money Market Funds 20% The money market funds must have an average weighted maturity of 90 days or
less and abide by SEC regulations;
funds must receive the highest ranking
by 2 of the 3 largest nationally
recognized rating agencies OR retain an
investment advisor who is registered, or
exempt from registration, with the SEC
and has at least 5 years’ experience
managing money market funds in
excess of $500 million.
Collateralized Certificate
of Deposit
No limit Maximum maturity 5 years. Banks:
deposit not to exceed the total of paid-in
capital surplus. S&Ls: deposit not to
exceed the greater of total net worth or
$500,000. State and Federal credit
unions: deposit shall not exceed the
greater of the total of unpaired capital and
surplus or $500,000. Must be
collateralized to 110% of the CD value by
other eligible securities. Investments in
certificates of deposits of state or federal
credit unions if any member of the city’s
governing or managing officers (council,
city manager, fiscal officers) serves on
the credit union board or key committee
positions is prohibited.
Mortgage Pass-Through 20% Maximum remaining maturity of 5 years; bonds must be rated in top two rating
categories by a nationally recognized
rating service. Shall not exceed 95% of
the mortgage security's fair market value.
Bank/Time Deposits No limit Maximum maturity of 5 years. 069
B-4
Authorized Investment Legal Limit
(%)
Other Constraints
Local Agency Investment
Fund (LAIF)
$ 75 million*
Monies are invested in pooled state fund
managed by State Treasurer. Maximum
15 transactions per month.
Joint Powers Authority
Pool
No limit
County Pooled
Investment Funds
No limit
Public Bank No limit Commercial paper, debt securities, or other obligations of a public bank, as
defined in Section 57600.
* Per LAIF account. Separate accounts can be established for different legal entities. ** Per AB 945, limit increased from 30% to 50% effective January 1, 2020 until January 1, 2026, at which time limit will return to 30%.
*** In effect until January 1, 2026.
**** Per Council authorization, up to 15% of the portfolio may be invested in remaining term to maturity of over five and up to fifteen years.
Bond Proceeds
Bond proceeds may be invested in accordance with the State Code and bond indenture provisions.
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ATTACHMENT 1-C
GLOSSARY
AGENCIES: Federal agency securities and/or Government Sponsored Enterprises (GSE’s).
ANNUAL COMPREHENSIVE FINANCIAL REPORT (ACFR): The official annual report for the City of Santa Monica. It includes basic financial statements for each individual fund and account group prepared in conformity with GAAP. It also includes supporting schedules necessary to demonstrate compliance with finance- related legal and contractual provisions, extensive introductory material, and a detailed Statistical Section.
ASKED: The price at which securities are offered for sale.
BANKERS’ ACCEPTANCE (BA): A draft or bill of exchange accepted by a bank or trust company. The accepting institution guarantees payment of the bill, as well as the issuer.
BASIS POINT: A basis point equals one one-hundredth of 1% (.01%).
BENCHMARK: A comparative base for measuring the performance or risk tolerance of an investment portfolio. The benchmark should represent a close correlation to the level of risk and the average duration of the portfolio.
BID: The price offered for securities.
BROKER: A broker brings buyers and sellers together for a commission.
CALLABLE SECURITY: A security that can be redeemed by the issuer before the scheduled maturity date.
CERTIFICATE OF DEPOSIT (CD): A time deposit with a specific maturity evidenced by a certificate. Large denomination CD’s are typically negotiable.
COLLATERAL: Securities, evidence of deposit or other property which a borrower pledges to secure repayment of a loan. Also refers to securities pledged by a bank to secure deposits of public monies.
COMMERCIAL PAPER (CP): An unsecured promissory note with a fixed maturity no longer than 270 days. Usually sold in discount form.
COUPON: (a). The annual rate of interest that a bond's issuer promises to pay the bondholder on the bond's face value. (b) A certificate attached to a bond evidencing interest due on a payment date.
DEALER: A dealer, as opposed to a broker, acts as a principal in all transactions, buying 071
C-2
and selling for his own account.
DELIVERY VERSUS PAYMENT (DVP): There are two methods of delivery of securities:
delivery versus payment and delivery versus receipt (also called free). Delivery versus payment is delivery of securities with an exchange of money for the securities. Delivery versus receipt is delivery of securities with an exchange of a signed receipt for the securities.
DEBENTURE: A bond secured only by the general credit of the issuer.
DERIVATIVES: (1) Financial instruments whose return profile is linked to, or derived from, the movement of one or more underlying indices or securities, and may include a leveraging factor, or (2) financial contracts based on notional amounts whose value is derived from an underlying index or security (interest rates, foreign exchange rates, equities, or commodities).
DISCOUNT: The difference between the cost price of a security and its value at maturity when quoted at lower than face value. A security selling below original offering price shortly after sale also is considered to be at a discount.
DISCOUNT SECURITIES: Non-interest-bearing money market instruments that are issued at a discount and redeemed at maturity for full face value (e.g., U.S. Treasury bills, commercial paper, Agency discount notes).
DIVERSIFICATION: Dividing investment funds among a variety of securities, issuers, and maturity dates offering independent returns.
DURATION: A measure of the timing of the cash flows, such as the interest payments and the principal repayment, to be received from a given fixed- income security. This calculation is based on three variables: term to maturity, coupon rate, and yield to maturity.
The duration of a security is a useful indicator of its price volatility for given changes in interest rates.
FEDERAL AGRICULTURAL MORTGAGE CORPORATION (FARMER MAC): Farmer Mac was created to increase access to and reduce the cost of capital for the benefit of American agriculture and rural communities. Farmer Mac provides financial solutions to a broad spectrum of the agricultural community, including agricultural lenders, agribusinesses, and other institutions.
FEDERAL CREDIT AGENCIES: Agencies of the Federal government set up to supply credit to various classes of institutions and individuals, e.g., S&L's, small business firms, students, farmers, farm cooperatives, and exporters.
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC):
A federal agency that
insures bank deposits, currently up to $250,000 per deposit.
FEDERAL FARM CREDIT BANKS FUNDING CORPORATION (FFCB): The Federal Farm Credit Banks Funding Corporation is a leading provider of loans, leases and services 072
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to rural communities and U.S. agriculture.
FEDERAL FUNDS: Non-interest-bearing deposits held by member banks at the Federal Reserve. Also used to denote "immediately available" funds in the clearing sense. "Fed Funds" also used to refer to these funds.
FEDERAL FUNDS RATE: The rate of interest at which private banks lend funds to other private banks. The Federal Open Market Committee (FOMC) sets a target rate. This actual rate is currently pegged by the Federal Reserve through open-market operations.
FEDERAL HOME LOAN BANKS (FHLB): Government sponsored wholesale banks (currently 12 regional banks) which lend funds and provide correspondent banking services to member commercial banks, thrift institutions, credit unions, and insurance companies. The mission of the FHLB’s is to liquefy the housing related assets of members who must purchase stock in their district Bank.
FEDERAL
HOME LOAN MORTGAGE CORPORATION (FHLMC): A Government
Sponsored Enterprise that provides liquidity to the mortgage markets, much like FNMA and FHLB. Also referred to as “Freddie Mac”.
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA): FNMA, like GNMA was chartered under the Federal National Mortgage Association Act in 1938. FNMA is a federal corporation working under the auspices of the Department of Housing & Urban Development, H.U.D. It is the largest single provider of residential mortgage funds in the United States. Fannie Mae, as the corporation is called, is a private stockholder -owned corporation. The corporation’s purchases include a variety of adjustable mortgages and second loans in addition to fixed-rate mortgages. FNMA's securities are also highly liquid and are widely accepted. FNMA assumes and guarantees that all security holders will receive timely payment of principal and interest.
FEDERAL OPEN MARKET COMMITTEE (FOMC): Consists of seven members of the Federal Reserve Board and five of the twelve Federal Reserve Bank Presidents. The President of the New York Federal Reserve Bank is a permanent member while the other Presidents serve on a rotating basis. The Committee periodically meets to set Federal Reserve guidelines regarding purchases and sales of Government Securities in the open market as a means of influencing the volume of bank credit and money.
FEDERAL RESERVE SYSTEM: The central bank of the United States created by Congress and consisting of a seven-member Board of Governors in Washington, D.C., 12 Regional Banks, and about 5,700 commercial banks that are members of the system. 073
C-4
GOVERNMENTAL NATIONAL MORTGAGE ASSOCIATION (GNMA or Ginnie Mae):
Securities influencing the volume of bank credit guaranteed by GNMA and issued by mortgage bankers, commercial banks, savings and loan associations and other institutions. Security holder is protected by full faith and credit of the U.S. Government.
Ginnie Mae securities are backed by FHA, VA or FMHM mortgages. The term pass - throughs is often used to describe Ginnie Maes.
GREEN BONDS: Green bonds are used to finance projects that promote environmental and/or climate benefits. Green bonds eligible for inclusion in the City’s investment portfolio are issued by government agencies, private corporations, and institutions such as the World Bank.
INVERSE FLOATERS: A structured note in which the coupon increase as interest rates decline and decrease as rates rise.
LIQUIDITY: Liquidity is the ability to change an investment into its cash equivalent on short notice at its prevailing market value. In the money market, a security is said to be liquid if the spread between bid and asked prices is narrow and reasonable size can be done at those quotes.
LOCAL AGENCY INVESTMENT FUND (LAIF): The aggregate of all funds from political subdivisions that are placed in the custody of the State Treasurer for investment and reinvestment.
MARKET VALUE: The price at which a security is trading and could presumably be purchased or sold.
MASTER REPURCHASE AGREEMENT: A written contract covering all future transactions between the parties to repurchase- reverse repurchase agreements that establishes each party's rights in the transactions. A master agreement will often specify, among other things, the right of the buyer -lender to liquidate the underlying securities in the event of default by the seller-borrower.
MATURITY:
The date upon which the principal or stated value of an investment becomes due and payable.
MONEY MARKET: The market in which short -term debt instruments (bills, commercial paper, bankers' acceptances, etc.) are issued and traded.
OFFER: The price asked by a seller of securities (When you are buying securities, you ask for an offer). See ASKED AND BID.
OPEN MARKET OPERATIONS: Purchases and sales of government and certain other securities in the open market by the New York Federal Reserve Bank, as directed by the FOMC, in order to influence the volume of money and credit in the economy. Purchases inject reserves into the bank system and stimulate growth of money and credit; sales have the opposite effect. Open market operations are the Federal Reserve's most important and most flexible monetary policy tool.
074
C-5
PORTFOLIO: Collection of securities held by an investor.
PRIMARY DEALERS: A group of government securities dealers that submit daily reports of market activity and positions and monthly financial statements to the Federal Reserve Bank of New York and are subject to its informal oversight. Primary dealers include Securities and Exchange Commission (SEC) registered securities broker-dealers, banks, and a few unregulated firms.
PRIME RATE: The rate at which banks lend to their best or "prime" customers.
PRINCIPAL: 1) the dollar cost of an issue excluding accrued interest. 2) The one who takes ownership in a transaction, as opposed to brokering or acting as agent.
PRUDENT PERSON RULE: An investment standard. In some states the law requires that a fiduciary, such as a trustee, may invest money only in a list of securities selected by the state (the so-called legal list). In other states, the trustee may invest in a security if it is one, which would be brought by a prudent person of discretion and intelligence who is seeking a reasonable income and preservation of capital.
QUALIFIED PUBLIC DEPOSITORIES: A financial institution which does not claim exemption from the payment of any sales or compensating use or ad valorem taxes under the laws of this state, which has segregated for the benefit of the commission eligible collateral having a value of not less than its maximum liability and which has been approved by the Public Deposit Protection Commission to hold public deposits.
RATE OF RETURN: The yield obtainable on a security based on its purchase price or its current market price. This may be the amortized yield to maturity on a bond or the current income return.
REPURCHASE AGREEMENT (RP OR REPO): A holder of securities sells these securities to an investor with an agreement to repurchase them at a fixed price on a fixed date. The security "buyer" in effect lends the "seller" money for the period of the agreement, and the terms of the agreement are structured to compensate him for this.
Dealers use RP extensively to finance their positions. Exception: When the Fed is said to be doing RP, it is lending money that is increasing bank reserves.
REVERSE REPO: An agreement whereby the dealer agrees to buy securities and the investor agrees to repurchase them at a later date.
SAFEKEEPING
: A service to customers rendered by banks for a fee whereby securities and valuables of all types and descriptions are held in the bank's vaults for protection.
SECONDARY MARKET: A market made for the purchase and sale of outstanding issues following the initial distribution.
SEC RULE 15C3-1: See uniform net capital rule.
075
C-6
SECURITIES AND EXCHANGE COMMISSION: Agency created by Congress to protect investors in securities transaction by administering securities legislation.
SOCIAL IMPACT BONDS: Social impact bonds are used to finance programs such as affordable housing, poverty reduction, or other positive sustainable and social outcomes.
Social impact bonds eligible for inclusion in the City’s investment portfolio are typically issued by government agencies, and institutions such as the World Bank.
STRUCTURED NOTES: Notes issued by Government Sponsored Enterprises (FHLB, FNMA, etc.) and Corporations which have embedded options (e.g. call features, step- up coupons, floating rate coupons, derivative based returns) into their debt structure. Their market performance is impacted by the fluctuation of interest rates, the volatility of the imbedded options, and shifts in the shape of the yield curve.
SETTLEMENT DATE: The date on which a trade is cleared by delivery of securities against funds. This date may be the same as the trade date or later.
SUPRA NATIONALS: For purposes of this investment policy - obligations issued by the International Bank for Reconstruction and Development, International Finance Corporation, or Inter-American Development Bank.
TRADE DATE: The date on which the buyer and seller agree to a transaction. The trade date may or may not be the date on which the securities and money changes hands (settlement date).
TREASURY BILLS: A non-interest-bearing discount security issued by the U.S. Treasury to finance the national debt. Most bills are issued to mature in three months, six months, or one year.
TREASURY BOND: Long-term coupon-bearing securities U.S. Treasury securities issued as direct obligations of the U.S. Government and having initial maturities of more than ten years.
TREASURY NOTES: Intermediate term coupon-bearing U.S. Treasury securities issued as direct obligations of the U.S. Government and having initial maturities of from one to ten years.
UNIFORM CAPITAL RULE: Securities and Exchange Commission requirement that member firms as well as non- member broker-dealers in securities maintain a maximum ratio of indebtedness to liquid capital of 15 to 1; also called net capital rule and net capital ratio. Indebtedness covers all money owed to a firm including margin loans and commitments to purchase securities, one reason new public issues are spread among members of underwriting syndicates. Liquid capital includes cash and assets easily converted into cash.
076
C-7
YIELD: The rate of annual income return on an investment, expressed as a percentage. (a) INCOME YIELD is obtained by dividing the current dollar income by the current market price for the security. (b) NET YIELD or YIELD TO MATURITY is the current income yield minus any premium above par or plus any discount from par in purchase price with the adjustment spread over the period from the date of purchase to the date of maturity of the bond.
YIELD TO MATURITY: The rate of return yielded by a debt security held to maturity when both interest payments and the investor's capital gain or loss on the security are taken into account.
077
Attachment D
078
079
080
081
082
083
084
085
086
087
088
089
090
091
092
093
094
095
096
097
098
099
100
101
102
103
104
105
106
Ordinance Fact Sheet
TO: BOARD OF DIRECTORS Date: December 7: 1988
FROM: CITY MANAGER
SUBJECT: AN ORDINANCE AMENDING CHAPTER 2.250 OF
THE PASADENA MUNICIPAL CODE RELATING TO
INDEMNIFICATION OF THE RETIREMENT BOARD
OF THE FIRE AND POLICE RETIREMENT SYSTEM
TITLE OF PROPOSED ORDINANCE:
An Ordinance Amending Chapter 2.250 of the Pasadena
Municipal Code Relating to Indemnification of the
Retirement Board of the Fire and Police Retirement System.
PURPOSE OF ORDINANCE:
The purpose of this ordinance is to extend indemnity
protection to the Retirement Board of the Fire and Police Retirement System, City Board of Directors, city officers and employees, and Retirement System investment managers with respect to divestment by the System of South African assets as requested by the Retirement Board. A copy of a letter from Richard Chernick, Special Counsel to the
Retirement Board, requesting such indemnity on behalf of the Retirement Board is attached.
REASONS WHY LEGISLATION IS NEEDED:
The requested indemnity parallels that provided by statute to the board of the State Public Employees Retirement
System. Therefore, it is most appropriate to extend such indemnity to the Retirement Board of the Pasadena Fire and Police Retirement by ordinance, a city statute.
MEEnNG 0F Dec. 19[ 1988
AGENDAITEM NO. VII‘B—Z
Attachment E
107
-
Board of Directors December 7, 1988
PROGRAMS, DEPARTMENTS OR GROUPS AFFECTED:
Present, future and former members of the Retirement Board, City Board of Directors, City officers and employees,
Retirement System investment managers, beneficiaries of the Retirement System and taxpayers of the City may be
affected.
EISCAL IMPLICATIONS:
The fiscal implications of this ordinance are speculative in that it is uncertain whether divestment of South African assets will result in claims against the Retirement System.
POLICY CHANGES:
This ordinance does not represent a change in policy;
rather, it reflects an extension of City policy with respect to divestiture of South African assets.
Respectfully submitted,
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Donald F. McIntyre
City Manager
Prepared by:
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Victor W. Kaleta
City Attorney
Concurrence:
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Mary;7.VBradley
Director of Finance
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victor Kaleta, Esq.
Office of the City Attorney
100 North Garfield Avenue
Pasadena, California 91109
Re: Indemnification of Members of the Retirement
Board of the Pasadena Fire and Police
Retirement Svstem
Dear Mr. Kaleta:
At its meeting on November 15, 1988 the Retirement
Board of the Pasadena Fire and Police Retirement System ("System") instructed us, in connection with its consideration of the divestment by the System of South African assets required by California Government Code § 16640 e; seg., to contact you concerning the question of indemnification of Retirement Board members by the City of Pasadena.
The Retirement Board voted unanimously (one member
absent) to request the City Board of Directors to expressly extend to the Retirement Board the same indemnity protection as is granted state trust fund governing board members by
Government Code § 16649 for actions taken in compliance with the divestment statute. That provision reads:
Present, future and former members of the
governing board of any trust fund. jointly-
and individually, state officers and
employees, and investment managers under
contract with the state shall be indemnified
from the General Fund by the State of
California from all claims, demands, suits,
109
Victor Kaleta, Esq.
November 18. 1988
actions, damages, judgments, costs, charges
and expenses, including court costs and
attorney's fees, and against all liability,
losses, and damages of any nature whatsoever
that these present, future, or former board
members, officers, employees, or contract
investment managers shall or may at any time
sustain by reason of any decision to
restrict, reduce, or eliminate investments
in business firms with business operations
in South Africa or business arrangements
with the government of South Africa or
investments in financial institutions
extending credit to the government of South
Africa or South African corporations.
Cal. Gov't Code 5 16649 (Deering 1988).
In the Retirement Board's discussion of the request
for indemnification it was noted that Section 1502 of the Charter of the City of Pasadena imposes upon the Retirement Board' 5 investment decisions:
the same terms, limitations and restrictions
as are imposed by the Constitution and laws
of the State upon the investment of Public
Employees' Retirement System Funds.
Recently, the Board of Directors has informed the Retirement Board that one of the legal limitations Section 1502 imposes on the Retirement Board is the California divestment statute.
The Retirement Board expressed the belief that since
it operated under the same legal restrictions as PERS it is both equitable and sound policy for the same indemnity
protection afforded the divestment decisions of PERS board members to be extended to divestment decisions of the
Retirement Board.
Very truly yours,
QM
Richard Chernick
of GIBSON, DUNN & CRUTCHER
RC:sll:50080
cc: Retirement Board Members
Harry W. Lathrop
110
........Page.......
Records,Vol..
lntro..
Adopted...............
Records,Vol..........Page.......
ORDINANCE NO. 6296
Introduced by John C. Crowley
AN ORDINANCE AMENDING CHAPTER 2.250 OF THE PASADENA
MUNICIPAL CODE RELATING TO INDEMNIFICATION OF THE
RETIREMENT BOARD OF THE FIRE AND POLICE RETIREMENT SYSTEM The People of the City of Pasadena do ordain as
follows:
SECTION 1. Section 2.250 of the Pasadena Municipal
Code is amended by adding a new Section 2.250.095 to read:
"2.250.095 Retirement board
-
Indemnity.
"Present, future and former members of the retirement
board, city board of directors, city officers and employees and retirement system investment managers shall be indemnified and defended from the General Fund by the City of Pasadena from all claims, demands, suits, actions, damages, judgments, costs, charges and expenses, including court costs and
attorney‘s fees, and against all liability, losses, and damages of any nature whatsoever that these present, future, or former members of the retirement board, city board of directors, city officers and employees and retirement system investment managers shall or may at any time sustain by reason of any decision to restrict, reduce, or eliminate investments by the retirement system in business firms with 111
business operations in South Africa or business arrangements with the government of South Africa or investments in
financial institutions extending credit to the government of South Africa or South African corporations.“
SECTION 2. This ordinance shall take effect
upon‘
its publication.
Signed and approved this l9thday of December
I
1988.
Chairman 0
of the City of Pas
I HEREBY CERTIFY that the foregoing ordinance was
adopted by the Board of Directors of the City of Pasadena at its meeting held December 19
,
1988 by the following vote:
Ayes: Directors Crowley, Glickman Hughston, Nack, Paparian Thomson
Noes: None
Absent: Director Cole
Published: December 29, 1988
Pasadena Star News
ax, £471
City Clerk
APPROVED AS TO FORM:
was: 9541
Victor J. Kaleta
City Attorney
VJK:ms
LXD:7B:l3
12/7/88 —2—
112
Agenda Report
TO: BOARD OF DIRECTORS Date: July 26
,
1989
FROM; CITY MANAGER
SUBJECT: 1989—90 INVESTMENT POLICY
RECOMMENDATION
It is recommended that the Board adopt the City Treasurer's Statement of Investment Policy for Fiscal Year 1989-1990. Included in this year's statement is an amendment allowing the City Treasurer to invest in securities with a maturity no longer than ten years as long as the total does not exceed 10% of the City's portfolio. This recommendation as amended was approved by the Finance Committee of the Board at their meeting on July 25, 1989.
BACKGROUND:
In relation to a local government's investment policy, California Government Code Section 53646 requires that "the Treasurer or Chief Fiscal Officer shall annually render to the legislative body of the local agency a statement of investment policy." Attached for yourreview and approval is the City Treasurer's Statement of Investment Policy for Fiscal Year 1989-90.
In the past, the Board has made several changes to the Investment Policy. These include the recent South Africa Investment Policy and the ability to invest in mutual funds. The Board should note that the policy for 1989-90 includes the following new section:
LENGTH OF MATURITIES
The City attempts to obtain the highest yield possible when selecting investments, providing that criteria for safety and liquidity are met. Ordinarily, because investments normally carry a positive yield curve, (i.e. longer term investments have higher rates than shorter maturities), the City attempts to stagger its maturities to meet anticipated cash needs in such a way that new investment money can be placed in
MEETING 0': Au ust 1 1989 AGENDA ITEM N0._IV'A;l
Attachment F
113
maturities that carry a higher rate than is available in the short market of 30 days or under. Furthermore, maturities are selected to anticipate cash needs of the City, thereby
obviating the need for forced liquidation.
The Government Code stipulates that no investment shall be made in securities with maturities in excess of five years without express authority from the City's legislative body.
The Board of Directors has authorized the City Treasurer to have up to 10% of the City’s invested assets in securities which have a maturity date in excess of five years, he shall review his total assets monthly to ensure compliance with the 10% limitation.
This section has been added in response to recent legislation which precludes a City from investing in securities which have a maturity longer than five years. California Government Code Section 53601, amended in 1988, states that "a legislative body of a local government having money in its treasury not required for the immediate necessities of the local government may invest anyportion of the money which it deems wise or expedient with certain exceptions. One of these exceptions is that no investment shall be made in any security, (other than a security underlying a repurchase or reverse repurchase agreement authorized by this section), which at the time of the investment has a term remaining to maturity in excess of five years, unless the legislative body has granted express authoritv to make that investment to the Citv Treasurer no less than three months prior to the investment." (Emphasis added) As stated, the investment policy recommended includes authorization by the Board of Directors for the Treasurer to invest up to 10% of the portfolio in assets with maturities in excess of five years. This measure is intended to give the City Treasurer more flexibility in maximizing the return on investment of the City’s portfolio.
The City Treasurer has requested this authorization so that he has the latitude to invest in "forwards" to maximize gain in favorable market conditions. "Forwards" are future investment vehicles bought at current prices, for future delivery, in anticipation of future advantageous price moves. In 1986 the City earned approximately $1,500,000 attributable to the buying and selling of "forwards" in mortgaged back securities without any outlay of cash.This return on investment was realized by buying forwards one to three months in advance and selling at a higher price before due date. In 1987 the market turned around, interest rates moved upward and the City stopped buying forwards. In 1988 the Government Code was amended to restrict maturity of investments to five years.However, with the interest rate environment looking more and morefor an easing of rates, it would be advantageous for the City todiversify its portfolio to enhance longer term yields and takepotential gains on the sale of securities. At worst, if interest rates took a sudden upward turn and no capital gain was realized, the City would continue to hold these securities to maturity, with no loss on the investment. In fact, recently the City sold certain 114
mortgage—backed securities that were purchased prior to 1988 for a profit of $179,000. Staff is recommending the limitation of 10% of portfolio to eliminate the risk associated with the need to liquidate securities early due to cash flow requirements.
The adoption of the proposed amendment to the City Treasurer’s Statement of Policy will evidence the City’s commitment to ensuring that our investment portfolio maximizes profits while
simultaneously maintaining the highest degree of safety.
FISCAL IMPACT
"Forwards" can be bought for various lengths of time and sold on short notice. It could only be advantageous to give the Treasurer the latitude to invest in securities longer than 5 years to maximize gain on investment. However, if interest rates go up as they did in 1987, the City might have to take securities into the portfolio yielding 9 1/2% to 10%. This yield is better than the City can obtain at the present time. When the market moves upagain, as it has presently, the Treasurer would sell the securities in the portfolio at a profit. Given that the City Treasurer cannot predict how many forwards will be purchased in the coming fiscal year, a precise fiscal impact cannot be determined. Nevertheless, it is the opinion of the Department of Finance that allowing the City Treasurer to invest longer than 5 years will favorably impact the City’s return on invested funds.
Re ect submitted,
ra/LD a1
Rm
City Manager
PREPARED BY:
Neil
é,“
Principal Administrative Analyst
APPROVED BY:
”W raw
Director of Finance
@fgirJ2
a
City Attor
NBzfsk
REF DISK 1 AGENDARP(NEIL)
115
CITY OF PASADENA
STATEMENT OF INVESTMENT POLICY
FOR 1989-90
PURPOSE
This Statement is intended to provide guidelines for the prudentinvestment of the City’s temporary idle cash, and outline the policies for maximizing the efficiency of the City's cash management system.
The ultimate goal is to enhance the economic status of the City while protecting its pooled cash.
OBJECTIVE
The city’s cash management system is designed to accurately monitor and forecast expenditures and revenues, thus enabling the City to invest funds to the fullest extent possible. The City attempts to earn the highest yield obtainable while keeping within the investment criteria established for the safety and liquidity of public funds.
POLICY
As a Charter City, Pasadena operates its temporary pooled idle cashinvestments under the prudent man rule (Civil Code Sect. 2261, et seq.)*. This affords the City a broad spectrum of investment opportunities as long as the investment is considered prudent and is allowable under current legislation of the State of California (Government Code Section 53600 et seq.).
The Government Code permits investments in the following instruments:
-
Securities of the U. S. Government or its agencies
-
Small Business Administration Loans
-
Certificates of Deposit (or Time Deposits) placed with
commercial banks and/or savings and loan companies
—
Negotiable Certificates of Deposit
-
Bankers Acceptance
-
Commercial Paper
—
Local Agency Investment Fund (State Pool) Demand Deposits —
Repurchase Agreements (Repos)
—
Passbook Savings Account Demand Deposits
—
Reverse Repurchase Agreements
Criteria for selecting investments and the order of priority are:
*The prudent man rule states, in essence, that "in investing propertyfor the benefit of another, a trustee shall exercise the judgment and care, under the circumstances then prevailing, which men of prudence,discretion and intelligence exercise in the management of their ownaffairs.." 116
1. Safety. The safety and risk associated with an
investment refers to the potential for loss of
principal, interest or both. Protection of the public
funds entrusted to the Treasurer is the paramountcriteria used to evaluate the investment instruments available.
2. Liquidity. This refers to the ability to convert an
investment to cash at any moment in time with minimal
risk of forfeiting a portion of principal or interest.
Liquidity is an essential investment requirement
especially in light of the City's need to be able to
meet emergency financing demands of the community at anytime.
3. Yield. Yield is the potential dollar earnings aninvestment can provide, and sometimes is described as the rate of return. As a general rule, yields tend to
mirror the inherent risk and liquidity characteristics
of the particular investment and thus can only be
evaluated after those investment criteria are satisfied.
TYPE OF INVESTMENTS
The City purchases Government and agency paper and repurchaseagreements which are the highest quality investments available in terms of safety and liquidity. Also, Certificates of Deposits that arefederally insured or collateralized with Government Securities arepurchased. Only Banker Acceptances eligible for purchase by theFederal Reserve System and direct issue commercial papers with Moody'sA-l ratings and Standard & Poor’s P-1 rating are purchased.
LENGTH OF MATURITIES
The City attempts to obtain the highest yield possible when selectinginvestments, providing that criteria for safety and liquidity are met.Ordinarily, because investments normally carry a positive yield curve,(i.e. longer term investments have higher rates than shortermaturities), the City attempts to stagger its maturities to meetanticipated cash needs in such a way that new investment money can beplaced in maturities that carry a higher rate than is available in theshort market of 30 days or under. Furthermore, maturities are selectedto anticipate cash needs of the City, thereby obviating the need forforced liquidation.
The Government Code stipulates that no investment shall be made insecurities with maturities in excess of five years without expressauthority from the City’s legislative body. The Board of Directors hasauthorized the City Treasurer to invest in securities with a maturity no longer than ten years as long as the total does not exceed 10% ofthe City’s portfolio. The City Treasurer shall review his total assetsmonthly to ensure compliance with the 10% limitation. 117
CITY CONSTRAINTS
The Treasurer manages the City’s investment portfolio with many state and self imposed constraints. He does not speculate, deal in futures or options, or buy stocks.
The City strives to maintain the level of investment of at least 100%of all funds through daily and projected cash flow determinations.
Idle cash management and investment transactions are the responsibility of the City Treasurer.
The basic premise underlying the City’s investment philosophy is, andwill continue to be, to insure that money is always available whenneeded.
The City Treasurer shall review the invested assets of all City fundsto ensure that no such assets are invested in any company or financialinstitution which appears on the South Africa portion of The UnifiedList of United states Companies with Investments or Loans in SouthAfrica and Namibia. 118
10. CITY OF PASADENA
INVESTMENT STRATEGY
When making an investment decision, the purchase of an investmentis made with the intent of holding that investment to maturity.
Cash flow projections are fully utilized to balance the liquidityneeds at all times.
Daily economic forecasts are obtained from financial experts inthe field through bankers, brokers and periodicals.
Close rapport is maintained with all departments having asignificant impact on cash flow.
Active bank balances are kept at lowest possible balance withoutjeopardizing good bank relationships.
The City’s portfolio is tested so that, at no time, legal limitsof types of investments are exceeded. They are:
a. Purchase of Bankers Acceptances may not exceed 40% ofthe Portfolio based on the date of purchase, nor belonger than 270 days, and must be discountable by theFederal Reserve. b. Negotiable CD’s are limited to 30% of the portfolio onthe date of purchase. If a savings and loan negotiableCD is bought, only the top five associations in the U.S.are accepted. c. Purchases of Commercial Paper must be A—l, P-l ratedfrom U.S. corporations with assets greater than$500,000,000. They must not represent more than 10% ofthe corporations' outstanding commercial paper and notexceed 30% of the City’s portfolio at the date ofpurchase.
Depending on market conditions, time deposits are maintained incommercial banks and savings and loans.
Sufficient funds are maintained in overnight repurchase agreementsto meet current cash flow needs.
The investment plan and strategy are kept flexible to enable theTreasurer to invest in securities paying the highest yield at that Monthly review of invested assets ensuring no greater than 10%have a maturity date in excess of five years. 119
'
0%(ya/WWW»
ONE HUNDRED NORTH GARFIELD AVENUE
PASADENA, CALIFORNIA SIIOQ
BOARD OF DIRECI’ORS
September 19, 1988
To: Board Members {)
FROM: Director Paparian
KLA‘
'
SUBJECT: South African Investment Policy
As you probably know, I have raised the issue of
the City’s South African investment policy with the
Pasadena Fire and Police Retirement Board.
The matter will be discussed on the Retirement
Board’s agenda on Tuesday, September 20. The attached
letter from William B. Simmons, First Vice President,
Lehman Management Co. Inc., to David M. Davis, Vice
Chairman, Retirement Board of the City of Pasadena Fire and Police, will give you further background.
Please let me know if you have any questions or
concerns.
Nbeting of October 3, 1988
Item VI
-
A
-
2 120
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era-waaw
September 12, 1988
Mr. David M. Davis
Vice Chairman
Retirement Board of The
City of Pasadena Fire and Police
c/o Loomis Sayles & Company
155 N. Lake Avenue, Suite 1030
Pasadena, Ca. 91101
Dear Dave,
We would like to respond to your question raised at the August 16th meeting regarding the potential impact of a South African divestment policy on the City of Pasadena Fire and Police Retirement Plan. We do not have a current list from the American Committee on Africa of "Companies Doing Business with South Africa", as none of our clients use this list as a guideline. We have requested a copy of a current list and expect to receive it in the latter part of September. However, we do have a list of U.S. Companies with Direct Investment in South Africa provided by Prudential—Bache which 3 of our clients use. This list is compiled using source materials from the Investor Responsibility Research Center Inc., The American Committee on Africa, The Washington Post, The New York Times, The Wall Street Journal, The Washington Office on Africa, and contact with individual companies (see Exhibit 1).
If we were to avoid owning any stocks that appear on this list, we would have to divest 14 of the 64 issues of common stock currently held in your portfolio.
This represents 22% of our current holdings and we believe it would be difficult to find attractive substitutes for many of these issues. In addition, complying with this list would remove 49 potential investment candidates from our universe of 500 stocks. This represents 10% of our universe but more importantly, these 49 companies tend to be some of the largest, most liquid stocks, ones we frequently consider as investments.
It is difficult to accurately quantify the economic cost of divesting the 14 stocks currently in our portfolio (commission costs + transaction costs) and the opportunity cost of not owning these issues or the other 35 potentially restricted companies. However, a measure of the opportunity cost can be derived from the table of South Africa Free Index from Pensions and Investment Age (see Exhibit H).
121
This exhibit indicates that for the year 1987, the S&P returned 5.05%, and the portfolio following total divestment had a return of 2.61, while your equity return was 9%. A policy of total divestment would have cost your portfolio
2.44% last year vs. the S&P and 6.39% vs your actual return. If you had followed this policy in 1987 it would have cost your plan approximately$8§l,§lQ.79 (6.39% of the 12/31/87 market value of $13,483,737).
Currently, 3 of our 46 clients follow the quidelines of investing only in those companies doing business in South Africa who are Signatories of the Statement of Principles for South Africa (formerly the Sullivan Principles) categories I and 11. Category I is Signatory companies making good progress with regard to the Principles and category 11 is Signatory companies making progress (see Exhibit 3). Following these guidelines only 7 companies in our universe of 500 stocks would be restricted and no stocks would have to be divested from our current holdings.
Please call me if you have any questions related to this letter (212 668—5447).
Sincerely,
,
mam...
William B. Simmons
First Vice President
cc: F. X. Cloran, SEI—Los Angeles
WBS:1g
Enclosures
122
EKEEQELL
Prudential-Bache CapitalFundingQ!)
This is the latest list of U.S. companies with directinvestment in South Africa. This list was compiled using source materials from the Investor Responsibility ResearchCenter Inc., the American Committee on Africa, theWashington Post, the New York Times, The Wall StreetJournal, the Washington Office on Africa, and contact withindividual companies.
This list is provided as a courtesy to clients of Prudential-Bache Securities by Prudential-Sacha Washington Research.
For further information call Suzanne Harvey at (703)276-0055 or (800)227-1067.
U.S. COMPANIES WITH DIRECT INVESTMENT IN SOUTH AFRICA
By Parent Company
August 1988
Abbott Laboratories
Air Express International
Albany International Corp.
Allis-Chalmers Corp.
AM International
Amerford International Corp.
American Brands Inc.
American Cyanamid co.
American Home Products Corp.
Amsted Industries
Applied Industrial Materials Corp.
Arvin Industries, Inc.
Avery Inc.
Avery International Corp.
Baker Hughes Inc.
Bandag Inc.
Banner Industries Inc.
Becor Western Inc.
Berkshire Hathaway Inc.
Borden Inc.
Bristol-Myers Co.
Buckman Laboratories Inc.
Buttorick Co. Inc.
Cargill Inc.
Carl Fischer Inc.
cascade Corp.
caterpillar Inc.
CBI Industries Inc.
Champion Spark Plug Co.
Chevron Corp.
1911 North Fort Myer Drive, Suite 905. Arlington, VA 22209. Tel 703-276-0055 123
Colgate-Palmolive Co.
Control Data Corp.
Cooper Alloy Corp.
Coulter Electronics Inc.
Crown Cork and Seal Co. Inc.
Darmex Industrial Corp.
Deere & Co.
Donaldson Co. Inc.
Dresser Industries Inc.
Dun & Bradstreet Corp.
Duriron Co.
D’Arcy Hasius Benton & Bowles Inc.
Echlin Co.
Eli Lilly And Co.
Erica Products Inc.
Erie: Magnetics
Estee Lauder Inc.
Evapco
Federal-Mogul Corp.
Ferro Corp.
Foote Cone & Balding Communications Inc.
Franklin Electric Co. Inc.
Fruehaut Corp.
Gillette Co.
Goodyear Tire 5 Rubber Co.
Grey Advertising Inc.
Harnischteger Corp.
Harper Group
Harsco Corp.
Heinemann Electric Co.
Hewlett-Packard Co.
Hydro-Air Engineering Inc.
H.H. Robertson Co.
Ingersoll-Rand Co.
International Flavors & Fragrances Inc.Interpublic Group of Companies Inc.
Johnson 8 Johnson Co.
Joy Manufacturing Co.
Kellogg Co.
Kendavis Industries International Inc.Kimberly-Clark Corp.
Lawter International
Leco Corp.
Loctite Corp.
Louis A. Allen Associates Ltd.
Lubrizol Corp.
Lykes Bros. steamship Co. Inc.
Lin Radiator Co.
HacAndrews & Forbes Group Inc.
HacDermid Inc.
124
McNally Pittsburg Inc.
Medtronic Inc.
Mentholatum Co. Inc.
Metallurg Inc.
MGM/DA Entertainment Co.
Minnesota Mining and Manufacturing Co.Mobil Corp.
Molex Inc.
Monsanto Co.
Nalco Chemical Co.
National-standard Co.
NCR Corp.
Ogilvy Group
Olin Corporation
Owens-Illinois Inc.
Parker Hannitin Corp.
Pfizer Inc.
Phelps Dodge Corp.
Precision Valve Corp.
Preformed Line Products Co.
Premark International Inc.
Quaker Chemical Corp.
Raychem Corporation
Raytheon Co.
Reader’s Digest Association Inc.
Redken Laboratories Inc.
Riklis Family Corp./World Wide Computer Partnership L.P.RJR Nabisco Robbins Co.
Schering-Plough Corp.
Schlumberger Ltd.
Smithxline Beckman Corp.Squibb Corp.
Strategic Mineral Corp.
s.C. Johnson a Son Inc.
Tenneco Inc.
Texaco Inc.
Timken Co.
Tokheim Corp.
Trade 5 Industry Corp. (U.S.A.) Inc.Trinova Corp.
Twin Disk Inc.
Union Camp Corp.
Union Carbide Corp.
Unisys Corp.
United Technologies Corp.Upjohn Co.
use Corp.
USX Corporation
Warner-Lambert Co.
125
Wean United Inc.
Wesray Capital
Wilbur-Ellis Co.
Wynn's International Inc.
Young and Rubicam Inc.
* Additions
DELETIONS :
Corning Glass Works
Dow Chemical Co.
Eastman Kodak Co.
Flow Industries
Revlon Group Inc.
Steiner Corporation
126
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D. ALPHABETICAL LIST The following list indicates the ntin' received by each current Simatory.
OF CURRENT than one rating category is listed for Signaton’eswhose South African companiesSIGNATORIES were evaluated separately and received different category ratinp. (See Appendix A-4 for Signatoryclassications.)
’
\ ‘L For most U.S. subsidiaries. the publicly held parent company in the United States/ / is the ofcial Signatory. However. in some cases. the Signatory is the subsidiary/ I/ ‘
itself. In such instances. the ultimate publicly held U.S. corporation is shown in '
brackets in the alphabetical listing. followed by a reference to the one or more companies that are the Signatories.
ns = non-signatory
new a simatory for less than full scal year v
SIGNATORY REPORT CATEGORIES
_
Abbott Laboratories
Allis-Chalmers Corporation
American Cyanamid Company
American Home Products Corporation
(Amsted Industries. Inc.)
See Baltimore Aircoil Company
Avery International. Inc.
Baker Hughes. Inc.
Baltimore Aircoil Company
Bandag.Incorporated
Bausch at Lomb. Inc.
Borden. Inc.
Bristol-Myers Company
Butterick Company. Inc.
Caltex Petroleum Corporation
Carlton Paper Corporation Limited
Caterpillar Tractor Co.
Champion Spark Plug Company
Colgate-Palmolive Company
Combustion Engineering. Inc.
Control Data Corporation
(CorningGlass Works)
See Dow Corning Corporation
Crown Cork .1 Seal Company Inc.
Deere a Company
Donaldson Company. Inc.
(The Dow Chemical Company)
See Dow Corning Corporation
Dow Corning Corporation
Dresser Industries. Inc.
El. du Pont de Nemours a Company
Ernhan Corporation
FMC Corporation
Federal-MogulCorporation
'Shorr-femr reporter
30 EXHIBIT III
More
9th 10th \III
\e
[IA I [IA
ns new [IIA'
I. [[3 [1A. [[3 I
I. [IA I I
new new I
ns [IA [[A
[1A, new [IA I
ns new [IA
new I I
I I I
[IA I I
[IA [IA [IA
[IA [IA I
new new I
[IA [IA [IA
new [IA [IA
I. [IA I I
new [IA I
I [ [
new [IIA [IA
[IA [IA I
[IIA [IIA [IIA
[13 [[3 [[8
[IA [IA [IA
[IA I I
new new [[IA
I I ' I
[IA [IIA [IA
128
Ferro Corporation
Ford Motor Company
Franklin Electric Co.. Inc.
The Gillette Company
C oodyear Tire & Rubber Co.
Grey AdvertisingInc.
Grolicr International. Inc.
HarnischfegerCorporation
Hewlett-PackardCo.
[ngersoII-RandCompany
Intergaph Corporation
[ntemational CorrespondenceSchools. Inc.[ntemational Flavors & Fragrances. Inc.The Interpublic Group of Companies.Inc.Johnson & Johnson S.C. Johnson & Son. Inc.
Joy ManufacturingCompanyKelloggCompany
Kennametal Inc.
Kimberly-ClarkCorp.
See Carlton Paper Corporation LimitedLarge Scale Systems (Pty) Ltd. '
Estec Lauder. Inc.
Leco Corporation
Eli Lilly and Company
Loctite Corporation
Masonite Corporation
viedtronic. Inc.
vierck & Co.. Inc.
Minnesota Mining & ManufacturingCompanyvtobil Oil Corporation violex International. Inc.
vfonsanto Co.
ICR Corp.
[alco Chemical Company
he Ogilvy Group. Inc.
llin Corporation
rtis Elevator Co.
arker-I-Iannin Corp.
epsico. Inc.
izer. Inc.
telps DodgeCorporation
emark International.Inc.
JR Nabisco. Inc.
aytheon Co.
:ader’s Digest Association. Inc.:vlon. Inc.
:xnord Inc.
1e Robbin: Company
.I-I. Robertson
\
heft-[ban moonst-
meotomlxrmJno.
[IIA
new
[IA
I. new
[IA
as
new
new
I
new
new
new
ns
[IIA. IIIB
I. [IA
us
[[A
[
ns
ns
ns
new
I. [IA
new
[IA
new
[IA
ns
I. [IIA
[IA
[IIA
new
I. [[3, e
[IA
n:
e
I
[IIA
I, [IA
[[3, [IIA
[IA
new
[IA
ns
ns
[IIA
[IA
[IA
[IA
[IIA
new
new
new
[IA
[IIA
IIB
[IIA
new
[IA
I. [IA
new
[IIA
new
new
new
I [A
[IA
new
[IA
new
[IA
[IA
[IIA '
[IA
new
[IA
I.
I. [IA
[[3, [IIA
[IA
[IA
[IA
new
new
JI
129
Schering-PloughCorp.
SigmaformCorporation
SmithKline Beckman Corporation
Squibb Corporation
(Standard Oil Companyof California)
See Caltex Petroleum Corporation
The Standard Oil Co. (Ohio)
Sterling Drug Inc.
Strategic Minerals Corporation
Tenneco Inc.
(Texaco Incorporated)
See Caltex Petroleum Corporation
Tokheim Corporation
Trinova Corporation
(USG Corporation)
See Masonite Corporation
USX Corporation
Union Camp Corp.
Union Carbide Corporation
Unisys Corporation
(United TechnologiesCorporation)
See Otis Elevator Co.
The Upjohn Company
Wamer-Lambert Company
32 [[A
ns
I, [IA
[IA
[IA
[IA
[IIA
new
[IS
ns
[1!
I. IIA. [[3
I, [
[IA
IIA. [[3
[IA
new
I
.
[IA
[IA
[IA
ns
IIA. new
[IA
ns
new
new
I. [IA
I. [IA
[IA
[IA
[IA
[IA
[IA
[IA
new
new
new
[IA
[IA
130
34 52
13 [8
13 54
Signatory Company Distribution
Category I Making Good Progress
Category [IA Making Progress, Based on Full Reporting
Category IIB Making Progress, Based on Short-Form Reporting Category [IIA Needs to Become More Active
-
Passed All Basic
Requirements But Received Low Point Rating (includes two short forms)
Signatories shown in two categories above
Endorsers
New Signatories since 6/30/85 excluding two who reported above Non-Reporting Minority Owners with no other South African holdings 31 ...
”7...“..-
_._____.——~.———-_....
.
.a
.
131
Fire & Police Retirement System
-
Portfolio Analysis
Exposure to Companies with Investments and/or Operations In South Africa or Namibia**
Company Name
Gen. Motors Accept. Corp.
Control Data Corp.
Eastman Kodak Co.
Proctor & Gamble (1)
MCA Inc.
Abbott Laboratories
Johnson & Johnson
Pfizer Inc.
Smithkline-Beckman Corp.
Squibb Corp.
Corning Glass Works
IBM Corp.
3M Corp.
Unisys Corp.
Raytheon Corp.
Dow Chemical
Mobil Corp.
Texaco Inc.
[TI Corp.
United Technologies Inc.
ETE Corp.
Citicorp (2)
J.P. Morgan & Co. (3)
American Int'l Group Inc.
TOTAL EXPOSURE:
Security
Type
comnercial paper
conv. bonds
stock
stock
stock
stock
stock
stock
stock
stock
stock
stock
stock
stock
stock
stock
stock
stock
stock
stock
stock
stock
stock
stock
Total
Cost
1,627,291.00
150,000.00
279,461.00
367,113.00
119,962.00
233,066.00
190,033.00
322,935.00
120,562.00
56,933.00
56,870.00
902,049.00
100,709.00
196,550.00
192,961.00
191,952.00
126,050.00
304,900.00
321,903.00
173,611.00
340,998.00
177,505.00
259,672.00
556,277.00
7,466,163.00
Estimated
Market Value
As of 6/30/88
1,645,226.00
169,500.00
294,125.00
356,500.00
110,300.00
220,500.00
222,250.00
273,612.00
90,175.00
63,375.00
57,750.00
891,625.00
217,000.00
210,075.00
191,400.00
210,100.00
126,150.00
300,000.00
356,212.00
169,400.00
399,075.00
206,462.00
272,125.00
535,900.00
7,621,637.00
*‘Source: "The Unified List of United States Companies with Investments or Loans in South Africa and Namibia", June 1985 (updated June 1986).
This list is used by the city of Pasadena to ensure compliance with the 1986 amendnent to the City's Investment Policy.
(1) P & G claims it has no exposure in S. A. however it acquired Richardson- Vicks in 1986 which has substantial operations there.
whether P & G has fully divested its own S.A. operations.
It is also not clear
(2) As of June 1985 Citicorp had participated in loans totalling$2.623 billion with $1.594 billion still outstanding on their own books.
The bank has a policy of not lending to the S.A. govt. but may still lend toS.A. subsidiaries of U.S. and foreign connenies. advisable before liquidating stock.
(3) J.P. Morgan also has a policy of not lending to the S.A. govt. but still Percentage
of Portfolio
(Market Value)
4.92%
0.51%
0.88%
1.07%
0.35%
0.66%
0.66%
0.82%
0.29%
0.19%
0.17%
2.66%
0.65%
0.65%
0.57%
0.65%
0.38%
0.90%
1.06%
0.51%
1.19%
0.62%
0.81%
1.60%
22.78%
An update on their policy is
lends to S.A. subsidiaries of U.S. and foreign companies. As of June 1985 loanparticipations stood at $963.9 milli $541.7 million. As with Citibank it 1
before liquidating stock.
on with total outstandings of
s advisable to get an update on their policy
132
.11:
e
a-..-
»
Douglas B. Misch. Che man Ru Ir stment Policy
Pasadena Fire 0 Police Retirement Board
At our meeting August 19, the Retirement Board received your August l8. L935 memorandum regarding a South Africa investment policy for the System. and the matter was taken under advisement to be discussed with representatives of our investment manager, Lehman Management Company, at our next meeting with them.
Arrangements for the meeting are currently in process, and it appears :hat the date will be in early December.
Hal/KW.”/////
B. Misch
cc: Director of Finance
133
MEMORANDUM
-
CITY OF PASADENA
Douglas B. Misch, Chairman
TO: Pasadena Fire & Police Retirement Board DATE: August 18. 1985 FROM: Donald F. McIntyre, City Manager RE; South Africa Investment Policy
The City's Board of Directors has requested that tne City review its current portfolio with a view towards identifying investments in companies which operate or do business in South Africa. This review includes both investments made by the City Treasurer on behalf of the City and investments made by Lehman Brothers Management Conpany on behalf of the Fire and Police Retirement System
The review of the City Treasurer's portfolio has been completed. We would now like to request that the Fire and Police Retirement Board initiate aninquiry with Lehman Brothers Management Conpany as to whether the companyhas any stated policy on South Africa-related investments. It would also be beneficial to assess what options are available to the Fire and Police Retirement System, with the Carpany, should the FPPS decide to divest at some point in time.
Let me emphasize that it is in the best interests of both the retirees and the City to maintain a high rate of return on the invested funds. TheCity Board is only interested in obtaining information and being made aware of the available alternatives, in an effort to be responsive to the cormunity. Any action or reconmendation regarding divestiture would be a matter for the Fire and Police Retirement Board's further consideration, The City appreciates your assistance in meeting the needs of the Board.
Respectfully submitted,
1 / /[W/;/e{é
Donald F. HcIntyr
City Manager
KLC: jo
Prepared by:
W
—
Ka en L. Curtis
Principal Administrative Analyst
Concurrence:
Director of Finance
134
TO:
FRfDM:
Jl’ll/CJ' H-c. t ' a“?
MEMORANDUM -Cmr OF PASnDENA
Ted Palast, City Treasurer DATE:
September23, 1986
Director of Finance F25; AMENDMENT TO 1985—86
STATEMENT OF INVESTMENT
POLICY
As per the Board of Director's action at their meeting of September 22, 1986, please make the following amendment to your 1985—86 Statement of Investment Policy:
The City Treasurer shall review the invested assets of all City funds to ensure that no such assets are invested in any company or financial institution which appears on the South Africa por— tion of The Unified List of United States Companies with Invest— ments or Loans in South Africa and Namibia as published by the Africa Fund and the American Committee on Africa, hereinafter the "Unified List", except as prOVided herein. Any assets now invested in any such companies or financial institutions shall be divested within a reasonable period of time as determined by the City Treasurer, provided such divestment shall not force the City to incur a financial loss. Should any company or financial institution wish to appeal its inclusion on the Unified List. it may appeal to the Mayor who shall have the authority to make additions to or deletions from the Unified List. Any additions to or deletions from the Unified List shall be reported promptly to the Board of Directors.
The Unified List and June update referenced in the Board of Director's amendment is enclosed. The amendment covers only direct investments of the City; there is no obligation to assess the investment policies of financial institutions or firms which do not appear on the Unified List.
I have asked Karen Curtis to assist you in your review of our portfolio.
She is familiar with the Unified List and may be helpful in interpreting the entries. Should you have any further questions, please Contact me. ::§:(3f1112d1ey2E
MJB:fsk
cc: Karen Curtis
135
n
vaW
MEMORANDUM—CITY OF PASADE‘NA—1:‘FIRE 8: POLICE RETIREMENT SYSTEM To:
From:
Donald F. McIntyre;City Manager ’ |
Dan: 9-29-88
Douglas B. Misch, Chairman, Pasadena Re: South Africa Investment PolicyFire & Police Retirement Board The Pasadena Fire & Police Retirement Board discussed the City's policy onSouth African divestiture at its regular meeting in December 1986 with itsinvestment advisor Lehman Management Company and its performance measurementadvisor SEI Funds Evaluation Services.
As adoption of the City's divestiture policy would have severely impacted thereturn on invested funds as well as potential future earnings, the RetirementBoard decided not to consider adoption of the City policy.
At the request of Director Paparian, the Retirement Board re—examined theSouth African divestiture policy on September 20, l988. The Board reviewedthe issues as well as correspondence (copy attached) from Lehman ManagementCompany and, with Mr. Paparian dissenting, concluded that the decision madein l986 not to divest because of the serious adverse financial impact on thefund was the proper one.
Director Paparian requested that this decision be formally reported to theCity Board of Directors and you by memorandum.
Respectfully submitted,
ask/y
Dougla
.
Misch
Chairman of the
Retirement Board
136
CLAIMS
SFZOl-l
914
AYES: Directors Bogaard, Cole, Hughston, 'I‘hanson,Crowley DUES: None
ABSENT: Directors Glickman, Heckman
On order of the Chairman, the following Claims againstthe City of Pasadena were filed:
4117 Yvonne K. Moran Goldson Unknwn4118 Fal'mi Hammad $1,000,000.00 4119 Ruth & Jose Gallardo 1,800.00
RECOMMENDATIONS FROM OFFICERS
AND DEPARTMENTS
Revenue & Taxation, apprvd
amend City Treasurer Stmt
of Investment Policy re
So Africa, SF204-2
The Chairman announced that now was the time for the
report regarding the Proposed Policy on South AfricanInvestments.
Director Cole urged the Board to approve any exanptionsfrom the policy rather than the rectnmended policy ofhaving staff make the exemptions.
Director Thomson suggested the Mayor be responsible forreviewing exanptions provided the Mayor would keep theBoard apprised of such exenptions.
Motion by Director Cole, second by Director Bogaard, toapprove the following amendment to the City Treasurer'sStatanent of Investment Policy for 1985-1986:
The City Treasurer shall review the invested assets ofall City funds to ensure that no such assets are investedin any canpany or financial institution which appears onthe South Africa portion of The Unified List of UnitedStates %nies with Investments or Loans in South ties a is as pu is y t e A rica Fun an theAmerican Camuttee on Africa, hereinafter the "UnifiedList", except as provided herein. Any assets nowinvested in any such companies or financial institutionsshall be divested within a reasonable period of time asdetermined by the City Treasurer, provided suchdivestment shall not force the City to incur a financialloss. Should any cmpany or financial institution wish to appeal its inclusion on the Unified List, it mayappeal to the Mayor who shall have the authority to makeadditions to or deletions frcm the Unified List. Anyadditions to or deletions Eran the Unified List shall bereported to the Board of Directors at its next scheduledregular meeting. Any appeal made to the Mayor will bereported prunptly to the Board of Directors.
AYES: Directors Bogaard, Cole, Hughston, ’Ihmison,Crwley NOES: None
ABSENT: Directors Glickman, Heckman
Director Cole encouraged the City's representative on theFire and Police Retirenent Board (Director Thomson) torecamiend a consistent investment policy for its Board.
RECOMMENDATIONS FROM OFFICERS
AND DEPARTMENTS
Water & Power Admin, rvwd
rpt re concept proposal
to privatize utility
The Chairman announced that now was the time and placefor the report regarding the concept proposal regardingWater and Power. -
7 ~ 9/22/86
137
Agenda Report
TO: BOARD OF DIRECTORS Date: May 11, 1990
FROM: CITY MANAGER
SUBJECT: DIVESTITURE OF FIRE AND POLICE RETIREMENT SYSTEM'S INVESTMENT IN SOUTH AFRICA (TAKEN T0 FINANCE COMMITTEE APRIL 20, 1990) RECOMMENDATION:
There is no recommendation. This item is for informational purposes only.
BACKGROUND:
At its regular meeting of October 24, 1988, the Board of Directors called for a Special Joint Meeting of the Fire and Police Retirement System (FPRS) Board and the Board of Directors to discuss the divestiture of investments in South Africa held by the Fire and Police Retirement System.
At that Special Joint Meeting on October 31, 1988 between FPRS and the Board of Directors, the FPRS agreed to comply fully with the California State Law and the City Charter. The PERS divestiture plan which is mandated to comply with the California State Law, calls for the reduction of existing investments in companies doing business in South Africa by 1/3 annually beginning January 1, 1988 with some exemptions. It also prohibits any existing investments in companies doing business in South Africa as of January 1, 1987 from being renewed. The result will be full divestiture by January 1, 1991.
The Board of Directors also requested that staff prepare ongoing updated financial analysis of the FPRS’s financial involvement with companies doing business with South Africa.
Lehman Management Company has managed the FPRS’ portfolio since March 1984 and has been divesting investments with ties to South Africa in this portfolio since January 1987. This agenda report is an update to inform the Board as to the progress Lehman Management Company has achieved in regard to the divestiture of investments in South Africa for the Fire and Police Retirement System. The following table summarizes FPRS’ portfolio exposure by estimated market value and percentage of portfolio on a market value basis:
MEETING OF
5/22/90
AGENDA ITEM NO. X
‘
B
Attachment G
138
Asa
Est. Market Value % of Portfolio
of Investments Having Ties to
A§_Q£ Related To South Africa South Africa
January 1, 1987 $6,206,762.50 19.50%
January 1, 1988 $2,591,275.00 7.88%
September 30, 1988 $3,518,225.00 9.98%
April 30, 1989 $2,822,750.00 7.90%
July 31, 1989 $2,532,762.00 6.50%
February 28, 1990 $1,645,587.00 5.10%
A detailed list of the portfolio composition is attached as Exhibit I. Staff has included certain data from 1987 to provide historical trend information.
The portfolio has "divested“ itself of $4,561,175.50 or 73% of its South African exposure on a market value basis between January 1, 1988 and February 28, 1990. This rate of divestiture is slightly ahead of schedule. Assuming the portfolio had 36 months to divest (1/88
—
1/91) and 26 months or 72% of the months have past, a 73% divestiture figure makes the divestiture plan on schedule. The remaining $1,645,587.00 must be fully divested by January 1, 1991 to be in compliance with the law.
At the April 20, 1990 Finance Committee Meeting, there were two issues that the committee felt needed to be addressed.
1. The posture of the Investor Responsibility Research Center (I.R.R.C) toward Namibia.
2. The possibility of early divestiture of investments in South Africa prior to January 1, 1991.
Staff has spoken with I.R.R.C., who Lehman Management Co. looks to in regard to acceptable companies for investments. I.R.R.C. and the United States Government no longer hold sanctions against Namibia. Namibia is an Independent Country as of March 29, 1990 with multiple political parties and a mixed (black and white) economy.
Lehman Management Company was given the task of having the FPRS portfolio fully divested of investment in South Africa by January 1, 1991 and have assured staff that this timetable will be strictly adhered to.
139
ElQAL_L!2A§!i
As market conditions become advantageous, Lehman Management Co. sells the portions of the portfolio that have ties to South Africa. Our instructions to Lehman Management Co. have been to sell only when there will be a gain on the transaction. As a result of the divestiture, there will not be a negative fiscal impact.
Respectfully submitted,
Prepared by:
Neil Barr
Principal Administrative Analyst
Reviewed by:
Mr W d49%go2w4«a
Mary Jgradley L/ victor J. Kaleta
Direct r of Finance City Attorney
DISK REF: FPRSZ(tc)
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142
Introduced by Councilmember Holden
ORDINANCE NO. 6564
AN ORDINANCE OF THE CITY OF PASADENA REPEALING CHAPTER 4.11 OF THE PASADENA MUNICIPAL CODE, "SOUTH AFRICA PURCHASING POLICY ORDINANCE."
WHEREAS, the repressive and racist policy of apartheid in the Republic of South Africa has been condemned internationally by individuals, groups and governments of conscience and good will;
WHEREAS, in the effort to isolate and to dismantle the
apartheid system in the Republic of South Africa, there has been a concerted international effort by governments, businesses and groups to divest themselves of economic interests in the Republic of South Africa and to refuse to do business of any kind with companies engaged in business in the Republic of South Africa; WHEREAS, over the past seven years, the City of Pasadena has recognized its collective responsibility as a community to express its repugnance of and moral outrage against the racist apartheid system in South Africa and to take action to bring about the end of apartheid;
WHEREAS, the City of Pasadena has, thus, consistently
participated in this international economic struggle against apartheid, first as a part of its investment strategy, then by resolution as a part of its purchasing policy, then as a part of its overall Affirmative Action in Contracting Ordinance and finally as a complex South Africa Purchasing Policy Ordinance; Attachment H
143
WHEREAS, given recent political developments in the Republic of South Africa to dismantle apartheid and move to majority rule, and in response to the request of Nelson Mandela of the African National Congress, it is appropriate to join with other progressive governments, businesses and groups to lift the economic sanctions and to repeal Pasadena’s South Africa Purchasing Policy Ordinance and to not enact another such Ordinance as long as progress is being made in the dismantling of apartheid, and
WHEREAS, the City of Pasadena stands ready to assist the people of the Republic of South Africa in progress towards the establishment of fundamental human rights including the right to participate in the political process, basic human and civil rights to employment, education, freedom of speech, press and assembly, but also stands ready to reimpose sanctions should meaningful progress not take place;
NOW, THEREFORE, The People of the City of Pasadena ordain as follows:
SECTION 1. Chapter 4.11 of the Pasadena Municipal Code, "South Africa Purchasing Policy Ordinance," is hereby repealed.
SECTION 2. The City Clerk shall certify the adoption of this ordinance and shall cause this ordinance to be published in full text.
144
SECTION 3. This ordinance shall take effect upon its
publication.
Signed and approved this 16thday of November
,
1993.
/M%
Rick/Cole
Mayor of the City of Pasadena
I HEREBY CERTIFY that the foregoing ordinance was
adopted by the City Council of the City of Pasadena at its regular meeting held November 16
r
1993; bY the
following vote:
Ayes: Councilmembers Crowfoot, Holden, Paparian, Richard, Nack, Cole
Noes: None
Absent: Councilmember Thomson
Published: November 18, 1993
Pasadena Star News
ayeKX/W/
Maria M. Stewafti
City Clerk
APPROVED AS TO FORM:
(A2?;?/’)zé%?252fi
Victor J. Kaleta
City Attorney
145
Ordi Home V10 @5494
25V”:“\g
-
V0
..
7,:gag Ordinance Fact Sheet
0 53’
TO: CITY COUNCIL DATE: October 28, 1993
FROM: CITY MANAGER
SUBJECT: AN ORDINANCE OF THE CITY OF PASADENA REPEALING CHAPTER
4.11 OF THE PASADENA MUNICIPAL CODE, "SOUTH AFRICA
PURCHASING POLICY ORDINANCE."
TITLE OF PROPOSED ORDINANCE:
AN ORDINANCE OF THE CITY OF PASADENA REPEALING CHAPTER 4.11 OF THE PASADENA MUNICIPAL CODE, "SOUTH AFRICA PURCHASING POLICY ORDINANCE."
PURPOSE OF ORDINANCE:
Over the past seven years, the City of Pasadena has recognized its collective responsibility as a community to express its repugnance of and moral outrage against the racist apartheid system in South Africa and to take action to bring about the end of apartheid. Apartheid is a form of institutionalized racism which denies the majority of South Africa’s population
fundamental human rights including the right to participate in the political process and which limits basic human and civil rights to employment, education, freedom of speech, press and assembly.
Pasadena’s approach to combat apartheid has become progressively broader and more complex in response to the international call for an increased sanctions. Pasadena Municipal Code Chapter 4.11 has been disseminated as a model ordinance in the subject area.
The ordinance has been diligently enforced and imposed upon virtually every transaction in the City. Language enforcing the South African Purchasing Policy is incorporated into the boilerplate of all of the standard City contracting documents, purchase orders and specifications.
MEETING OF M
AGENDA ITEM NO. 15-_A-1_
146
City Council Page 2 October 28, 1993
On September 22, 1986, the City Council adopted an amendment to the City Treasurer’s Statement of Investment Policy directing the review of invested City assets to ensure that they were not invested in any company or financial institution which appeared on the South Africa portion of the Unified List of United States Companies with Investments or Loans in South Africa or Namibia.
On November 17, 1988, the City Council adopted a resolution establishing the following policy:
"It is a policy of the Board of Directors to build upon its program of divestiture of City assets from companies and financial institutions which appear on the South Africa portion of the Unified List of United States Companies with Investments or Loans in South Africa or Namibia; by
prohibiting the awarding of City contracts for services or from purchasing any commodity from any company which appears on the list developed through the "Investor Responsibility Research Center (IRRC)" in Washington, D.C.."
On June 7, 1989, the City adopted Section 4.08.190, regarding purchase of goods and services from companies in or doing business with the Republic of South Africa and Namibia.
On September 28, 1989, the City adopted Chapter 4.11 of the Pasadena Municipal Code, the South Africa Purchasing Policy Ordinance. On June 4, 1992, the City deleted reference to "Namibia" from the Ordinance after that nation achieved independence.
As the yoke of apartheid is being lifted in South Africa, and in response to requests by Nelson Mandela of the African National Congress, the City of Pasadena is now prepared to lift economic sanctions, and intends to do so as long as progress is made in the dismantling of apartheid. Should progress not continue, the City stands ready to join again as part of the international community to reimpose these sanctions.
REASON WHY LEGISLATION IS NEEDED:
A chapter of the Pasadena Municipal Code can only be repealed by ordinance.
PROGRAMS, DEPARTMENTS OR GROUPS AFFECTED:
This ordinance will affect the Department of Finance which administers the Ordinance and all departments with a purchasing function of any kind.
147
City Council Page 3 October 28, 1993
FISCAL IMPLICATIONS:
The ability to choose from a wider variety of vendors should result in cost savings to the City. In addition, there will be a substantial saving of time and cost in not enforcing the Ordinance.
POLICY CHANGES:
In response to the recent progress in the dismantling of apartheid, the City of Pasadena’s repeal of sanctions against the Republic of South Africa is consistent with its overall goal to see apartheid lifted and majority rule prevail in South Africa.
Such an end requires the nurturing of the South African economy.
Resp 11y su mit d,
é/Philip A. Haw y
City Manag
Prepared by:
/222;ZZ§iL,;)déLéigf
Victor J. Kaleta
City Attorney
148
PROOF OF PUBLICATION
(2015.5 C.C.P.)
STATE OF CALIFORNIA
County of Los Angeles,
I am a citizen of the United States and a resident of the County aforesaid. I am over the age of eighteen years, and not a party to or interested in the above-entitled matter.
I am the principal clerk of the printer of the Star-News, a newspaper of general circulation, printed and published daily in the City of Pasadena, County of Los Angeles, and which newspaper has been adjudged a newspaper of gener- al circulation by the Superior Court of the County of Los Angeles, State of California, under the date of June 22, 1927, Case Number 225647; that the notice, of which the annexed is a printed copy (set in type not smaller than nonpareil), has been published in each regular and entire issue of said newspaper and not in any supplement thereof on the following dates, to-wit:
..............................................
.ltl.o_i/........l.8..
............
199.3
.........
.............................
all in the year
I certify or declare under penalty of perjury that the fore- going is true and correct.
Dated at Pasadena, California, this
.......
1.8.t.h
...............
day
of
..................
_
...........
N.ovember.
..........
,19.,9.3
..................
Signature
S
PROOF OF PUBLICA’ "93‘
This spaceis for the CountyClerk’sFilingStamp
Proof of Publication of
“Slit 9f-R§§§qgn§
....................................................... 0rd. 6564
Introduced by Councilmember Holden
ORDINANCE NO. 6564
AN ORDINANCE OF THE CITY OF
PASADENA REPEALING CHAPTER 4.” OF
THE PASADENA MUNICIPAL CODE,
‘SOUTH AFRICA PURCHASING POLICY
ORDINANCE!
WHEREAS, the repressive and racist policy of
apartheid in the Republic of South Africa has been
condemned internationally by individuals. groups and
governments of conscience and good will;
WHEREAS, in the effort to isolate and to dismantle
the apartheid system int he Republic of South Africa,
[there has been a concerted international effort by
i governments, businesses and groups to divest
-
themselves of economic interests in the Republic oi
South Africa and to refuse to do business of any kind
with companies engagEd in business in the Republic of
South Africa;
.
WHEREAS. over the past seven years, the City of
' Pasadena has recognized its collective responsibility as a community to express its repugnance of and
moral outrage against the racist apartheid system in
South Africa and to take action to bring about the end of apartheid;
WHEREAS. the City of Pasadena has, thus,
consistently participated in this international economic struggle against apartheid, first as a part oi Its
investmenbt strategy, then by resolution as a portal its purchasing policy, then as a part of its overall
Afrmative Action in Contracting Ordinance and
finally as a complex South Africa Purchasing Policy
Ordinance;
WHEREAS, given recent political developments in
the Republic of South Africa to dismantle apartheid
and move to maiority rule, and in response to the
request of Nelson Mandela oi the African National
Congress, it is appropriate to ioin with other
progressive governments. businesses and groups to
lift the economic sanctions and to repeal Pasadena’s
South African Purchasing Policy Ordinance and to not
enact another such Ordinance as long as progress is
being made‘ in the dismantling of apartheid, and
WHEREAS, the City of Pasadena stands ready to
assist the people of the Republic of South Africa in
progress towards the establishment of fundamental
human rights including the right to participate inthe
political process, basic human and civil rights to
employment, educations, freedom of speeCh, press
and assembly, but also stands ready to reimpose
sanctions should meaningful progress not take place:
l
i NOW, THEREFORE, The People of the City of
’Pasadena ordain as follows:
.
SECTION 1. Chapter 4.11 of the Pasadena
Municipal Code, ‘South Africa Purchasing Policy
Ordinance.’ is hereby repealed.
SECTION 2. The th Clerk shall certify the
adoption of this ordinance and shall cause this
ordinance to be published in full text.
SECTION 3. This ordinance shall take effect upon
its publication.
igned and approved this 16th day of November,
‘
Rick Cole
'
Mayor of the City of Pasadena
I HEREBY CERTIFY that the foregoing ordinance
was adopted by the City Council of the City of
Pasadena at its regular meeting held November 16,
1993, by the following vote:
Ayes: Councilmembers Crowfoot, Holden, Paparian,
Richard, Nack, Cole
Noes: None
Absent: Councilmember Thomson
Abstain: None
Maria M. Stewart
City Clerk
Publish: November l8, I993
.PasadenaStar-News
_
PPN66?___
_
“It I
149
Attachment I
Resolution of the City of Pasadena to Divest from Entities Involved in Genocide
Whereas, the City of Pasadena has a proud history of championing human rights and the dignity of all people, and
Whereas, the City has an investment policy[1] that sets forth the consideration of human rights and social responsibility as investment criteria alongside traditional financial measures, and
Whereas, the City is committed to supporting human rights and the dignity of all individuals, both locally and globally, and
Whereas, in 1988, the Pasadena City Council passed a resolution calling for divestment from companies doing business with apartheid-era South Africa, and
Whereas, on December 22, 2022, the Pasadena City Council issued a declaration condemning the unprovoked attacks on Artsakh and its people by the Azerbaijani military, and
Whereas, on March 18, 2024, the Pasadena City Council unanimously passed a resolution calling for a ceasefire, the release of hostages, and expedited humanitarian aid in Gaza, and
Whereas, the United Nations has named the military and starvation campaigns carried out by Israel in Gaza a genocide, and has called for the halt to ethnic cleansing,[2] and
Whereas, Israel's policy of killing and starving Gazans and blocking humanitarian aid also jeopardizes the lives of the remaining Israeli hostages, and
150
Attachment I
Whereas, other cities across the United States are taking affirmative measures to ensure that their investment policies and guidelines support human rights, and to divest from companies profiting from the atrocities taking place in Gaza; and
Whereas, Pasadena residents have expressed strong public support for ending the genocide, ethnic cleansing, and enforced starvation taking place in Gaza and the West Bank, and
Whereas, Pasadena prides itself on being a leading city with a steadfast commitment to human rights and building safe communities for all,
WE HEREBY RESOLVE THAT:
a. The Pasadena City Council reaffirms its commitment to human rights and the dignity of all people, locally and globally.
b. The Pasadena City Council will implement investment policies that align with these commitments to human rights, supporting ethical investment, and divesting from companies that profit from the violation of human rights. i.For the purpose of this resolution, an “investment” shall be construed as (1) possession of the stock, or debt (in the form of “corporate bonds” , “commercial paper” , or any similar instrument) of a company; (2) possession of the debt of a sovereign entity; and/or (3) the purchase of materials, goods, or services from a company or its subsidiaries. ii.For the purposes of this resolution, a company shall be considered involved in genocide if they appear in the American Friends Service Committee (AFSC) publication “DIVESTING FOR PALESTINIAN RIGHTS”[3] or any other publication the City deems appropriate.
1. If a company that previously appeared on any publication that denoted involvement in genocide, but no longer is, that company shall be determined to no longer be involved in genocide.
c. The city shall take the following concrete actions:
i.The city shall audit all accounts under its control to find investments in genocide, and divest from any companies or sovereign entities involved in genocide. ii.The city shall offer genocide-free options to employees in their 457(b) accounts. 151
Attachment I
iii.The city shall avoid purchasing from companies found to be involved in genocide. iv.The city shall periodically reevaluate its investments and holdings to remain in compliance with its ethical investment policy and the findings of the AFSC. d. In alignment with these values, the Pasadena City Council calls on the Pasadena Fire and Police Retirement System to divest its holdings from and prohibit future investment of its holdings in companies profiting from, or sovereign entities engaging in, the atrocities taking place in Gaza. These companies include, but are not limited to, Boeing, Chevron, and Caterpillar. For the purposes of this resolution, any investment vehicle that itself invests directly or indirectly in these companies should be treated as though it were the companies themselves.
e. The Pasadena City Council supports the pursuit of a world where all people live with safety, self-determination, and freedom from oppression.
Citations:
[1]
https://ww2.cityofpasadena.net/2024%20Agendas/Jul_08_24/AR%206%20ATTACHMENT% 20A.pdf
[2]
https://www.un.org/unispal/document/letter-from-the-state-of-palestine-23apr25/
[3] https://afsc.org/sites/default/files/2024-10/dive
stment-list-for-palestinian-rights-
october-2024.pdf
152
CORRESPONDENCE
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INFORMATION ITEMS
9. PAST AGENDAS FOR CITY BOARDS AND COMMISSIONS
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