CITY OF SIGNAL HILL
STAFF REPORT
2175 Cherry Avenue • Signal
Hill, California 90755-3799
10/24/2023
AGENDA ITEM
TO:
HONORABLE MAYOR
AND MEMBERS OF THE CITY COUNCIL
HONORABLE CHAIR
AND MEMBERS OF THE CITY COUNCIL AS SUCCESSOR AGENCY
FROM: CARLO TOMAINO
CITY MANAGER
BY: SHARON DEL ROSARIO
ADMINISTRATIVE SERVICES OFFICER/FINANCE DIRECTOR
SUBJECT:
RESOLUTIONS AMENDING THE CITY’S INVESTMENT POLICY
Summary:
The City Council, also acting as the City Council as Successor Agency (Successor Agency), will consider amending the City’s Investment Policy to provide greater diversification of the City’s investment portfolio and update the policy to conform to recent legislative changes. To provide greater investment diversification, City Council will consider approving a resolution authorizing the City of Signal Hill to join with other public agencies as a Shareholder of the California Asset Management Trust, a joint powers authority (JPA), to invest in shares of the Trust also known as California Asset Management Program (CAMP). Shareholders may choose to join as an Investor or a Participant; both receive the same investment results, but only Participants are members of the JPA.
The City Council will also consider authorizing an update to the investment policy language due to recent legislative changes. In addition, the City Council as Successor Agency will consider amending a companion policy addressing Successor Agency funds.
Strategic Plan Goal(s):
Goal No. 1 Financial Stability: Ensure the City’s long-term financial stability and resilience.
Recommendations:
A. City Council to adopt a resolution, entitled:
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SIGNAL HILL, CALIFORNIA, CITY OF SIGNAL HILL Page 1 of 4 Printed on 10/20/2023
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AMENDING ITS INVESTMENT POLICY FOR PUBLIC FUNDS
B. Successor Agency to adopt a resolution, entitled:
A RESOLUTION OF THE CITY COUNCIL AS SUCCESSOR AGENCY OF THE CITY OF SIGNAL
HILL, CALIFORNIA, AMENDING ITS INVESTMENT POLICY FOR PUBLIC FUNDS C. Approve the authorization to allow the City of Signal Hill to join as a participating shareholder of the California Asset Management Trust, a joint powers authority, to invest in shares of the Trust also known as CAMP.
Fiscal Impact:
There is no fiscal impact associated with the proposed recommendations. Becoming a Shareholder of CAMP would allow the City of Signal Hill to access professional investment management services in a cost-efficient manner, with the goal of further diversifying its portfolio within the parameters of California Government Code while protecting principal, meeting liquidity needs, and enhancing investment earnings over time.
Background and Analysis:
The primary objective of the City’s Investment Policy is to provide a framework of approved securities in which the City can legally invest. The Investment Policy drives the cash, treasury, and investment management functions of the City, and serves as a guide for setting and achieving program objectives, defining rules, establishing benchmarks, and reducing exposure to risk. Staff would also note that rating agencies pay close attention to the City’s Investment Policy and portfolio in determining its credit rating, which is a key element when seeking financing options.
The Investment Policy is based on State of California Government Code Sections 53600 through 53609 and 53630 through 53686. These laws, as well as guidelines set forth by the Association of Public Treasurers of the United States and Canada, the California Municipal Treasurers Association (CMTA), and the Government Finance Officers Association (GFOA), have aided City staff in policy development. The State laws and established guidelines encompass a broad array of allowable investments and investment standards to suit the different needs of California's local agencies. State statutes also provide recommendations for strategic changes to position the portfolio to maximize yield while prioritizing safety and liquidity.
The current Investment Policy only authorizes investment in two joint investment pools, Local Agency Investment Fund (LAIF) and County Pooled Funds. Staff is recommending adding Joint Powers Authority Local Government Investment Pools that would include CAMP, allowing for an additional investment option to provide greater portfolio diversification opportunities while preserving the City’s conservative investment philosophy. CAMP was created in 1989 when two public agencies formed the California Asset Management Trust (Trust) with the objective of meeting local government investment needs at a reasonable cost (Attachment A). Initially, the Trust was formed to assist California public agencies with investing proceeds of tax-exempt bonds and complying with the arbitrage regulations. Responding to the needs of its Shareholders, the Trust was later modified to provide for the investment of operating funds and capital reserves. The Trust’s activities are directed by a Board of Trustees, all of whom are finance officials of California public agencies. As a result, the CITY OF SIGNAL HILL Page 2 of 4 Printed on 10/20/2023
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Trust is accountable solely to its public agency Shareholders.
The Trust’s Cash Reserve Portfolio (Pool) is a short-term portfolio which, in order of priority, seeks to preserve principal, provide daily liquidity and earn a positive return. The Pool is a long-established short-term investment alternative for California public agencies. In conjunction with the Pool, the Trust offers a variety of cash management tools to assist public agencies in effectively managing their cash. As of September 30, 2023, the Pool has over $13.9 billion in public agency assets under management.
Some of the key benefits of the Pool, as identified within the Program Guide, are as follows:
· Safety: Standard and Poor’s (S&P), one of the nationally-recognized rating agencies, reviews the assets of the Pool each week. For the Pool to maintain the S&P “AAA” rating, the Pool must meet certain credit rating standards and not exceed the average maturity allowed by S&P. In addition, a third-party custodian holds all cash and securities. · Daily liquidity: Shareholders may make withdrawals on any business day (same-day if CAMP is notified by 11:00 a.m. Pacific Time), and there is no limit on the number of transactions. · Competitive yields.
· Unlimited investments and withdrawals.
· Interest earned daily and credited monthly.
· Monthly statements.
CAMP is governed by a seven-member board of California public finance officials. CAMP’s Investment Advisor, PFM Asset Management LLC (PFMAM), provides day-to-day portfolio management and program administrative services. As with all money market funds, other local government investment pools, and LAIF (the State of California’s pooled investment fund), all expenses of the Trust are deducted from the Pool’s yield; there are no out-of-pocket expenses for funds invested in the Trust.
Staff amended the attached investment policy for City Council review, which includes the new investment option in CAMP and additional items listed below to conform with recent legislative changes and to align with the current State Government Code. o Commercial Paper section, paragraph 2, page 8 - updated to state “medium-term notes of any single issuer”, replacing “of any single corporate issue”. o LOCAL AGENCY INVESTMENT FUND (LAIF) section, paragraph 1, page 10 - updated to include the maximum investment amount to “$75 million”, replacing “$65 million”.
The Investment Policy applies to the City's Pooled Investment Portfolio, Bond Proceeds Portfolio, and the Special Districts Portfolio. These portfolios encompass all funds under the oversight of the City Treasurer or approved designee.
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As noted, the recommended changes would provide greater diversification of the City’s investment portfolio and update the policy to conform to recent legislative changes. If approved by City Council and Successor Agency, the new Investment Policies would take effect immediately.
Attachments:
A. CAMP Program Guide
B. City Council Resolution
C. Successor Agency Resolution
D. Exhibit A - Signal Hill Investment Policy
E. CAMP Investor Agreement
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