DATE:June 27, 2024
TO:Mayor and Members of the City Council
President and Members of the Board of Directors
FROM:John R. Gillison, City Manager
INITIATED BY: Noah Daniels, Finance Director
SUBJECT: Consideration to Approve and Adopt Revised Statements of Investment Policy for the City of Rancho Cucamonga and the Rancho Cucamonga Fire Protection District. (CITY/FIRE)
RECOMMENDATION:
Staff recommends that the City Council and Board of Directors approve and adopt the attached Statements of Investment Policy for the City of Rancho Cucamonga (City) and the Rancho Cucamonga Fire Protection District (Fire District).
BACKGROUND:
California Government Code Section 53646(a)(2) requires that the City and Fire District Treasurer or Chief Fiscal Officer annually renders to the City Council and Board of Directors a Statement of Investment Policy, which shall be considered at a public meeting. Further, the City Council and Fire Board shall also consider any modifications to the investment policy at a public meeting.
On August 5, 2020, the City entered into a professional services agreement with PFM Asset Management LLC (“PFM”) for professional investment advisory services. As part of their contract, PFM annually reviews the City’s and Fire District’s investment policies for potential revisions to ensure the City’s and District’s compliance with the Government Code and to ensure that the policy accommodates the investment strategies agreed to by the City and Fire District and PFM.
On June 22, 2023, the City Council and Fire Board approved and adopted the City’s and Fire District’s 2023 Statements of Investment Policy.
ANALYSIS:
PFM recently completed its review of the City of Rancho Cucamonga and the Rancho Cucamonga Fire Protection District’s Investment Policies (the “Policies”). As written, the Policies are in compliance with the California Government Code (the “Code”) statutes regulating the investment of public funds. However, two minor changes to the Policies are suggested to clarify aspects of the Policies:
First, language on asset-backed securities was updated in Senate Bill 882, which took effect January 1, 2024, to make clear that Agency Mortgage-Backed securities are not included under the Code’s requirements for privately issued mortgage- and asset-backed securities. PFM recommends changing the Policies to align with the current Code language but doesn’t otherwise change the type or quality of investments that the City or Fire District would purchase.
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Second, to avoid uncertainty on how to determine a security’s term to maturity at purchase, PFM recommends that the Policies explicitly state that a security’s term to maturity at purchase is measured from the settlement date. This incorporates a Code revision made as part of Senate Bill 1489, which took effect January 1, 2023, which made explicit that an investment’s remaining maturity is to be measured from the settlement date of the purchase to its final maturity.
FISCAL IMPACT:
There is no fiscal impact as a result of the recommended action.
COUNCIL MISSION / VISION / GOAL(S) ADDRESSED:
The Policies support the City Council and Fire Board’s fiduciary roles as custodians of the public’s resources by providing guidelines for the prudent investment of the City’s and Fire District’s idle cash and outlining policies essential to creating an equitable, sustainable, and vibrant city, rich in opportunity for all to thrive by building on our foundation and success as a world-class community.
ATTACHMENTS:
Attachment 1 – Statement of Investment Policy 2024-City Attachment 2 – Statement of Investment Policy 2024-Fire