ANNUAL INVESTMENT POLICY REVIEW
FISCAL YEAR 2022-2023
JULIA H. COOPER, DIRECTOR OF FINANCE
LUZ COFRESÍ-HOWE, ASSISTANT DIRECTOR OF FINANCE
QIANYU SUN, DEPUTY DIRECTOR OF FINANCE – DEBT & TREASURY MANAGEMENT COUNCIL AGENDA: MARCH 14, 2023
ITEM: 3.3
FILE: 23-361
INVESTMENT POLICY
(COUNCIL POLICY 1-12)
• The City’s Investment Policy conforms with California Government Code section 53601
• Manage investments to meet the City’s Investment Policy objectives:
Safety
Liquidity
Yield
• Investment Strategy:
Maintain a diversified portfolio of conservative and highly-rated fixed income securities Match cash flow needs with maturing securities
Buy-and-hold trading strategy
2 3
AUTHORIZED INVESTMENTS
AUTHORIZED INVESTMENT TYPE POLICY LIMIT %
U.S. Treasuries & Government Agencies None
Local Agency Investment Fund None
Investment Agreements None
Supranationals 20%
Bankers Acceptances 20%
Time Deposits 15%
Commercial Paper 20%
Negotiable CDs 20%
Repurchase Agreements 20%
Corporate Notes 30%
Joint Powers Authority Pool 20%
Money Market Funds 20%
Reverse Repurchase Agreements 20%
Municipal Bonds 30%
Mortgage-Backed Securities 10%
Asset-Backed Securities 5%
POLICY REVIEW REQUIREMENTS
• The Policy requires that the Finance Department:
Perform an annual review of the Policy;
Submit any proposed changes to the Public Safety, Finance, and Strategic Support Committee for its review subsequent consideration; and Approval by the entire City Council.
• A redlined version of the City of San José Investment Policy, Policy Number 1-12, is included as Exhibit A.
4 PROPOSED POLICY REVISIONS
• Reduce the single issuer/institution exposure in the portfolio from 10% to 5%
Apply to combined credit exposure from a single issuer in Banker’s Acceptances, Commercial Paper, Negotiable CDs and Corporate Notes Enhance diversification of the City’s portfolio
Lower the potential loss from a single issuer related corporate event Align with the City’s investment objectives of safety and liquidity 5 RECOMMENDA TION
As recommended by the Public Safety, Finance and Strategic Support Committee on February 16, 2023:
(a) Accept the annual review of the City of San José Investment Policy, as amended.
(b) Adopt a resolution amending Council Policy 1-12, City of San José Investment Policy to reduce the combined issuer/institution limits from 10% to 5%, reflect the updated version of the Federal Reserve Bank’s Primary Dealer List, and various technical clean-ups. 6