June 24, 2025
Finance Department
DATE: June 24, 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 due to this agenda item.
PREVIOUS COUNCIL
ACTION:
April 30, 2024
December 3, 2024
April 15, 2025
STATEMENT OF THE
ISSUE:
On April 15, 2025, the City Council adopted a revised
Investment Policy to submit for certification to the
California Municipal Treasurers Association (CMTA). City staff received the results from CMTA highlighting
Certification, and additional feedback was received to
incorporate in the Investment Policy.
RECOMMENDED ACTION:
RECEIVE Investment Policy Certification from the
California Municipal Treasurers Association (CMTA) and
ADOPT a Resolution updating the City of Richmond
Investment Policy incorporating additional CMTA
recommendations – 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, the 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, AGENDA
REPORT
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war, oppression, and apartheid. City staff have been directed to present Investment Policy modifications and recommendations for socially responsible investments to City Council for consideration.
Following the directions provided to City staff, research was conducted around Investment Policy revisions, which brought to light text within AB 2844. Passed in California in 2016, AB 2844 is a law related to public contracts and discrimination. It requires any entity bidding on state contracts worth $100,000 or more to certify that they comply with California’s anti-discrimination laws, including the Civil Rights Act and the Fair Employment and Housing Act.
The bill was initially introduced to counter boycotts against Israel, but its final version does not explicitly mention the Boycott, Divestment, and Sanctions (BDS) movement.
Instead, it broadly ensures that contractors do not engage in discriminatory practices against any sovereign nation or peoples recognized by the U.S. government.
On December 3, 2024, following further research, the 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 City staff took the following actions towards implementing the policy:
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 funds for the City of Richmond.
The following is a summary of responses received:
Response from CalTRUST:
“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
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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. 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:
“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 considered collateralized bank deposit accounts. We do not invest the City’s funds, only back the deposits with collateral per the public contract code.”
Portfolio Composition March 2025
As of the March 2025 Investment Report, presented to the City Council on May 6, 2025, the City has total Pooled Cash balance of $342 million. Out of the total, there is $17 million in the General Checking account, and the remaining $325 million in the investment accounts as follows:
Figure 1: City of Richmond Investment Composition as of March 2025
Investment Policy Certification Program
After the City Council adopted the revised Investment Policy in December 2024, City staff submitted the Policy to the California Municipal Treasurer’s Association for Certification. The investment 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.
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The benefits of having a City’s Investment Policy Certified by the California Municipal Treasurers Association are:
Trust, confidence and verification to one’s governing body that the policy has been reviewed and certified by a professional organization within California;
The policy has been reviewed by fellow CMTA members, many of which have earned the Certified California Municipal Treasurers (CCMT) designation;
To show transparency of one’s governing body to the public;
To demonstrate that due diligence was performed on a City’s Investment Policy;
California Government Code sections are included (cited) in policy
Assist to satisfy auditors when reviewing a city’s Investment Policy; and
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 with feedback and have the opportunity to resubmit their policy within 90 days for no additional fee.
The City of Richmond received the initial results of the investment policy submission on February 19, 2025, with a score of 80 out of 100. CMTA provided grading rubrics along with suggestions and examples to strengthen the current policy. City staff incorporated the suggestions into the investment policy provided by CMTA for City Council approval during the April 15, 2025, City Council meeting prior to resubmitting for certification.
On May 19, 2025, the City of Richmond received congratulations from the California Municipal Treasurers Association for successfully certifying its Investment Policy (Attachment 1). In addition to receiving Certification, CMTA provided scores and additional feedback to be implemented to reduce unintended restrictions with allowable investment instruments (Attachment 2). The City improved its score from 80 to 95.33 out of 100. The minor changes being proposed regarding the additional feedback are allowable under the California Government Code and align with the City Council’s approved restrictions (Attachment 3).
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NEXT STEPS:
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 – City of Richmond CMTA Investment Policy Certification Attachment 2 – Scores and Feedback CMTA Investment Policy Certification Attachment 3 – Updated Investment Policy
Attachment 4 – Resolution adopting Updated Investment Policy