April 15, 2025
Finance Department
DATE: April 15, 2025
TO: Mayor Martinez and Members of the City Council
FROM:
Andrea Miller, Director of Finance
Mubeen Qader, Deputy Director of Finance
Jerry Gurule, Accounting Manager
SUBJECT:
Investment Policy Update
FINANCIAL IMPACT: There is no fiscal impact to receive this update
PREVIOUS COUNCIL
ACTION:
April 30, 2024
December 3, 2024
STATEMENT OF THE
ISSUE:
On December 3, 2024, City Council adopted a revised
Investment Policy and provided direction to staff with and requested an update. This agenda item is to provide
status update on the City Council direction and ADOPT a revised Investment Policy incorporating feedback from
California Municipal Treasurer’s Association (CMTA)
provided feedback.
RECOMMENDED ACTION:
RECEIVE update on Investment Policy follow up action
items and ADOPT Revised Investment Policy
incorporating California Municipal Treasurer’s
Association CMTA edits – Finance Department (Andrea
Miller 510-620-6740/Mubeen Qader 510-412-2077/Jerry
Gurule 510-620-6591).
DISCUSSION:
At the special City Council meeting on April 30, 2024, City Council directed City staff to review and modify the City of Richmond’s Investment Policy to add additional restrictions eliminating the investment of City funds in industries that facilitate violence, war, oppression, and apartheid. City staff has been directed to present Investment Policy modifications and recommendations for socially responsible investments to City Council for consideration.
AGENDA
REPORT
April 15, 2025
After extensive research, City staff developed four new restrictions to address the City Council’s concerns around socially responsible investments while complying with the text included in AB 2844:
4. The City will not invest in companies that develop and manufacture commodities that facilitate violence, war, oppression, and apartheid.
5. The City will not invest in companies that develop and manufacture arms and weapons.
6. The City will not invest in companies that develop and manufacture commodities involved in border and mass surveillance industries.
7. The City will not invest in companies involved in mass incarceration and detention industries, nor those companies that use prison labor to manufacture products.
After the City Council adopted the revised Investment Policy in December 2024, the Director of Finance sent letters to the California State Treasurers’ Office Local Agency Investment Funds (LAIF), Mechanics Bank and CalTRUST requesting to incorporate the City’s revised Investment Policy while managing the City of Richmond portfolio (See Attachments 1,2, and 3).
The following are the summary responses and complete responses are attached to the agenda item:
Response from CalTRUST (Attachment 5)
“Since CalTRUST is not actively managing individual investments for the City, we are unable to certify compliance with your City’s specific investment policy; we can only certify compliance with the CalTRUST Investment Policy, which is in compliance with California Government Code. Since we are pooled investment funds, we are unable to place additional screens or restrictions on our investment funds for individual shareholders.”
Response from LAIF
“Thank you for your email. Currently the PMIA does not hold any of the names listed on your policy (Attachment 4). But, we are not prohibited from doing so, and could, depending on their credit and availability in the market, purchase commercial paper issued by any name on the PMIA list of approved investments: https://www.treasurer.ca.gov/pmia-laif/investments/cp.pdf”
Response from Mechanics Bank (Attachment 6)
“Please accept this letter as confirmation that Mechanics Bank will comply with the City’s updated investment policy restrictions dated December 2024. The accounts we have on file for the City are consider collateralized bank deposit accounts. We do not invest the City’s funds, only back the deposits with collateral per the public contract code.”
April 15, 2025
Portfolio Composition December 2024
As of the December 2024 Investment Report, presented to the City Council on February 18, 2025, the City has total Pooled Cash balance of $334 million, out of the total, there is $16 million in the General Checking account and the remaining $318 million in the investment accounts as following:
Figure 1: City of Richmond Investment Composition as of December 2024
Investment Policy Certification Program
After the City Council adopted the revised Investment Policy in December 2024, the City staff submitted the Policy to the California Municipal Treasurer’s Association for Certification. The policy certification program is developed by the California Municipal Treasurers Association (CMTA) with support from the California Debt and Investment Advisory Commission (CDIAC).
The CMTA Investment Policy Certification Program provides professional guidance and assistance in developing and/or improving investment policies that meet industry best practices for California’s public sector agencies and districts.
The benefits of having your Investment Policy Certified by the California Municipal Treasurers Association are:
Trust, confidence and verification to your Governing Body that your policy has been reviewed and certified by a professional organization within California Your policy has been reviewed by fellow CMTA members, many of which have earned the Certified California Municipal Treasurers (CCMT) designation. To show transparency of your Governing Body to the public To demonstrate that due diligence was performed on your Investment Policy California Government Code sections are included (cited) in policy Assist to satisfy auditors when reviewing your Investment Policy Eighteen areas of Investment Policies are addressed: Scope, Prudence, Objective, Delegation of Authority, Ethics and Conflicts of Interest, Authorized Financial Dealers and Institutions, Authorized and Suitable Investments, Review of Investment Portfolio, Investment Pools/Mutual Funds, Collateralization, Safekeeping and Custody, Diversification, Maximum Maturities, Internal Controls, Performance Standards, Reporting, Investment Policy Adoption and Glossary.
The policy is reviewed by three CMTA members to determine if the Agency/District’s policy has met investment policy standards and criteria set forth by CMTA and has a passing score of 85/100. The policies scoring less than 85 receive the three evaluations
April 15, 2025
with feedback and have the opportunity to re-submit their policy within 90 days for no additional fee.
The City of Richmond received the results of the investment policy submission on February 19, 2025, with a score of 80 out of 100 (Attachment 7). CMTA provided grading rubrics along with suggestions and examples to strengthen the current policy.
The City of Richmond has 90 days (until May 19) to re-submit the policy at no charge.
City staff have incorporated the suggestions into the investment policy provided by CMTA for City Council Approval prior to resubmitting for certification (Attachment 8 and 9).
NEXT STEPS:
City staff will continue to explore options to refine the investment strategy based on the revised Investment Policy and should there be any significant changes around investments City Council will be provided with an update.
DOCUMENTS ATTACHED:
Attachment 1: Director of Finance’s Letter to LAIF
Attachment 2: Director of Finance’s Letter to CalTRUST
Attachment 3: Director of Finance's Letter to Mechanics Bank Attachment 4: State of California Pooled money Investment Account Approved Commercial Paper
Attachment 5: Response Letter from CalTRUST
Attachment 6: Response Letter from Mechanics Bank
Attachment 7: CMTA Investment Policy Certification – Scores and Feedback Attachment 8: Investment Policy
Attachment 9: Investment Policy Resolution
Attachment 10: Presentation