CITY COUNCIL STAFF REPORT
Meeting Date: April 21, 2025
TO: THE HONORABLE MAYOR AND CITY COUNCILMEMBERS
TITLE: ADOPT RESOLUTION NO. _____-25 APPROVING THE CITY OF PLEASANT HILL INVESTMENT POLICY EFFECTIVE JULY 1,
2025 AND DELEGATING INVESTMENT AUTHORITY TO THE
CHIEF FINANCIAL OFFICER SERVING AS CITY TREASURER
SYNOPSIS
California state law requires the City to render a statement of Investment Policy annually to the City Council at a public meeting and the City Council to annually delegate investment authority to the City Treasurer. The Budget Committee reviewed the investment policy at its meeting on March 27, 2025, and recommended approval to City Council. The City Treasurer duties were assigned to the Chief Financial Officer (CFO) by the City Manager last December. Staff recommends the Council adopt the proposed resolution approving the City of Pleasant Hill Investment Policy effective July 1, 2025, and delegating the investment authority to the CFO serving as City Treasurer.
DISCUSSION
Background
Government Code 53607 et seq. requires the City Treasurer to “render” annually to the legislative body of the local agency at a public meeting a statement of investment policy. The investment policy is intended to be a guide with specific controls for safety, liquidity, and yields. The City Manager has assigned the duties of the City Treasurer to the Chief Financial Officer.
Analysis
The City’s Investment Portfolio is managed by Chandler Asset Management (Chandler). Kara Hooks from Chandler will discuss the investment performance of the portfolio and share some insights about the markets and current trends. As of February 28, 2025, the City’s portfolio has a one-year total rate of return of 5.43% compared to the benchmark ICE BofA 1-3 Year US Treasury Index of 5.28%. The balance in the portfolio was $8,075,388.
City staff in the Finance Division consulted with the City’s professional investment advisor, Kara Hooks of Chandler Asset Management, and reviewed the City’s investment policy to confirm that it: (1) remains in compliance with California Government Code, and (2) continues to provide strong safeguards for the City’s investment program. While the City’s investment policy continues to be robust, it is recommended that the City incorporate updates to the California Government Code and add additional protections recognized as industry best practices. The following are the proposed changes in the attached Investment Policy:
• Updating the position responsible for City investment to reflect the “Chief Financial Officer,” who serves as the City Treasurer.
• Authorized Investments: Included Shares of Beneficial Interest Issued by a Joint Powers Authority as an authorized investment.
• Glossary: It is recommended the City only incorporate terminology used throughout the investment policy.
On March 27, 2025, the Budget Committee reviewed the policy updates and requested additional information on the addition of “Shares of Beneficial Interest Issued by a Joint Powers Authority (JPA) as an authorized investment.” As background, the City currently has approximately $26 million in the Local Agency Investment Fund (LAIF), which serves as a savings account for public agencies under Government Code Section 16429.1. LAIF is managed by the State Treasurer’s Office and has approximately 2,335 public agencies and $22.3 billion as of February 2025. LAIF’s interest payments are allocated quarterly and was 4.62% in the 4th quarter of 2024, and the weighted average maturity of investments is around 257 days. LAIF provides public agencies with safety, liquidity (funds can be withdrawn the next business day), and a return rate higher than commercial banks.
Public agencies were looking for options other than LAIF, which provided similar key features regarding safety, liquidity and return. The alternative option was shares of beneficial interested issued by a JPA, which requires the funds be managed by a professional money manger. The requirements for the investment advisor include:
1. The adviser is registered or exempt from registration with the Securities and Exchange Commission.
2. The adviser has not less than five years of experience investing in the securities and obligations authorized in Section 53601 subdivisions (a) to (q), inclusive.
3. The adviser has assets under management in excess of five hundred million dollars ($500,000,000).
Chandler provided examples of these JPA’s whose Boards consist of municipal finance directors and treasurers, and each is managed by a professional money manager. Assuming the City Council were to approve the policy update, the City would only be serving as an investor into the fund.
The City would not be a member of the JPA and essentially would be only buying shares of a money market fund. The following are examples of these kind of JPAs and a brief background on each one in alphabetical order:
a. California Asset Management Program (CAMP) is managed by PFM investment advisors and has approximately $18.6 billion in assets. The weighted average maturity is approximately 36 days and the investment return for December 2024 was 4.73%. b. California Class is managed by Public Trust and has approximately $1.2 billion in assets.
The weighted average maturity is approximately 30 days and the investment return for December 31, 2024 was 4.64%.
c. California Trust is managed by State Street Global Advisors and has approximately $2.3 billion in assets. The weighted average maturity is approximately 36 days and the investment return for December 31, 2024 was 4.69%.
FISCAL IMPACT
No fiscal impact.
PUBLIC CONTACT
Public Contact was made through posting of the City Council agenda on the City’s official notice bulletin board, at the Pleasant Hill Senior Center, and at the Pleasant Hill Police Department. The agenda and staff report are posted on the City’s web page.
RECOMMENDED CITY COUNCIL ACTION
Adopt the proposed resolution approving the City of Pleasant Hill Investment Policy effective July 1, 2025, and delegate the investment authority to the Chief Financial Officer serving as the City Treasurer.
ATTACHMENT(S)
Proposed Resolution
City of Pleasant Hill Investment Policy - Redlined
City of Pleasant Hill Investment Policy - Clean
Prepared by: Erick Cheung, Chief Financial Officer
Approved by: Ethan Bindernagel, City Manager