ANNUAL INVESTMENT POLICY REVIEW
FISCALYEAR 2023-2024
Public Safety, Finance and
Strategic Support Committee
RICK BRUNEAU, DIRECTOR OF FINANCE
LUZ COFRESÍ-HOWE, ASSISTANT DIRECTOR OF FINANCE
QIANYU SUN, DEPUTY DIRECTOR OF FINANCE – DEBT & TREASURY MANAGEMENT COMMITTEE AGENDA: FEBRUARY 15, 2024
ITEM: (d)3
FILE: CC 24-285
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 POLICY REVIEW REQUIREMENTS
• The Policy requires 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; and
▪ Obtain 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.
3 PROPOSED REVISIONS
• Consolidate current policy Sections 9.17 and 9.18 into a revised Section 9.17: Collateralized Securities with a portfolio concentration limit of 20%, which conforms with California Government State Code, Section 53601(o)
▪ Section 9.17.1: Collateralized Securities Underwritten and Issued by Governmental Agencies with a 15% maximum portfolio exposure
▪ Section 9.17.2: Collateralized Securities Underwritten and Issued by Private Entities with a 5% maximum portfolio exposure
4 AUTHORIZED INVESTMENT TYPE POLICY LIMIT %
Section 9.17: Mortgage-Backed Securities
(MBS) and Collateralized Mortgage
Obligations (CMO) 10%
Section 9.18: Asset-Backed Securities (ABS) 5%
Current Proposed
AUTHORIZED INVESTMENT TYPE POLICY LIMIT %
Section 9.17.1: Collateralized Securities
Underwritten & Issued by Governmental
Agencies 15%
Section 9.17.2: Collateralized Securities
Underwritten & Issued by Private Entities 5%
POLICY REVISION RATIONALE
• Recognition of Collateralized Securities as a grouping broadens the scope of Authorized Investments
• Sub-dividing Collateralized Securities by issuer, i.e. governmental agencies and private entities, improves portfolio risk management • Alignment with the City’s investment objectives of safety and liquidity • Conforms to the California Government State Code, Section 53601(o)
5 RECOMMENDATION
1) Approve the City of San José Investment Policy, as amended. 2) Refer the City of San José Investment Policy as well as the appropriate resolution to the full City Council for consideration at the March 12, 2024 City Council Meeting.
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