CITY OF SIMI VALLEY
MEMORANDUM
October 6, 2025
TO: City Council
Board of Directors, Ventura County Waterworks District No. 8 Successor Agency to the Simi Valley Community Development Agency Board of Directors, Simi Valley Public Facilities Financing Authority Board of Trustees, Simi Valley Library
FROM: Department of Administrative Services
SUBJECT: DISCUSSION AND APPROVAL OF THE REVISED CITY OF SIMI VALLEY
STATEMENT OF INVESTMENT POLICY
STAFF RECOMMENDATION
It is recommended that the City Council/Board of Directors/Board of Trustees discuss and approve the City of Simi Valley’s revised Statement of Investment Policy (Exhibit 1).
BACKGROUND AND OVERVIEW
The City’s Statement of Investment Policy (Investment Policy) sets guidelines for the safe and prudent management of public funds. The current policy is available for public review in the Office of the City Clerk and on the City’s website at www.simivalley.org/departments/administrative-services/treasury . The Investment Policy
is updated periodically to reflect legislative changes, or to refine its language. In accordance with California Government Code Section 53646, the City Treasurer may render a statement of investment policy, which the City Council/Boards of Directors/Board of Trustees shall consider at a public meeting to ensure conformance with State standards and the City Council/Boards of Directors/Board of Trustees investment philosophy. The City Council/Boards of Directors/Board of Trustees (collectively “City”) last approved the Investment Policy on July 30, 2018 . This staff report formalizes the City’s review and approval of the revised 2025 Investment Policy.
The foundation of any successful investment program is a comprehensive policy that reflects the government’s investment philosophy and tolerance for risk. The Investment Policy provides guidelines for the management of the City’s cash and the investment o f its reserved funds. The Investment Policy affords the City various investment opportunities, as long as the investment is deemed prudent subject to the prudent investor standard (California Government Code Section 53600.3) and is allowable under the current laws of the State of California. However, the City has historically directed a very conservative approach to the City’s investment program and has restricted or prohibited certain investments that are otherwise allowed under the Government Code. The Investment Policy’s guidelines emphasize the importance of safety and liquidity as the primary objectives of the investment program. The return on the City’s investment portfolio is secondary to these primary objectives.
Per the Investment Policy requirements, the Administrative Services Department has submitted a Monthly Investment Report to the City Council since 1974 and has
AGENDA ITEM NO.
9A
2 maintained a written Investment Policy since 1980 that has been subject to periodic review and approval by the City Council since 1985. The Administrative Services Department’s ongoing review of the Investment Policy ensures consistency with the overall objectives of preservation of principal, liquidity, and return; its relevance to current law; financial and economic trends; and the goal of meeting the needs of the City, District, Agency, and Library.
The City eliminated the staff position of Treasury Officer and outsourced the investment advisory function in the FY2014-15 budget. In November 2014, the City entered into an agreement with Cutwater Investor Services Corp. for investment advisory services. In June 2017, a Request for Proposals (RFP) for investment advisory services was issued.
Nine firms submitted proposals. A review committee ultimately recommended retaining Cutwater for the provision of investment advisory services. Staff determined that Cutwater’s approach and overall presentation would provide the best fit for the City.
Cutwater effectively communicated their extensive background in fixed income portfolio management and their ability to stay abreast of current investment-related issues affecting California governmental agencies. In 2018, Cutwater Investment Services Corp. underwent an internal corporate reorganization and became Insight North America, LLC.
Effective October 10, 2022, the City extended its contract with Insight North America LLC. (Insight Investments) for five additional years to provide investment advice and manage the City’s investment portfolio with oversight by the Administrative Services Director/Deputy City Treasurer.
FINDINGS AND ALTERNATIVES
As part of the contractual statement of work, Insight Investments provides a review of the City’s Investment Policy and provides recommended amendments as appropriate. The proposed changes that are being brought forward include language revisions to provide a more readable and understandable document, and the items listed below:
o Removed “Simi Valley Industrial Development Authority” from the first paragraph. This was a joint agency with the Simi Valley Community Development Agency (CDA) and no longer exists with the dissolution of the CDA.
o Section 8.0 (5) – Changed required securities rating from “A+” to “A”. This was done to be consistent with the requirement under California Government Code Section 53601(k) and to broaden the potential corporate bond investment options for the City.
o Section 8.0 (15) - Added the California Asset Management Program (CAMP) to the list of approved investments as it had not been specifically listed.
o Chart on page 9 – Updated the LAIF Account Limits as per the State Code and added the note “per account”. The City has four LAIF accounts and the limit is per account. Added CAMP to the Chart.
o Section 14.1 MARKET YEILD (BENCHMARK) – Changed the Benchmark wording from “Bank of America Merrill Lynch 1- 3 Year Treasury Index” to “Intercontinental Exchange BofA 1-3 Year U.S. Treasury Index ”. This is only a language update to capture the renaming of this index provider. This 3 is the preferred index for the City. Using a Treasury Index as a benchmark is common practice among local governments due to a similar composition and risk profile to the CA State statute limitations.
H
istorically, the City has taken a conservative approach in its investment practices, typically investing in local agency pooled funds, treasury and agency bonds , and corporate securities. While not all investment types authorized by the Investment Policy will necessarily be utilized, having the authorization in place provides flexibility to exercise such investment options should it be deemed reasonable and advantageous to do so.
T
he following alternatives are available to the City Council/Boards of Directors/Board of Trustees:
1. A
pprove the City of Simi Valley’s proposed 2025 Statement of Investment Policy;
2. M
odify and approve the proposed 2025 Statement of Investment Policy;
3. N
ot approve any revisions to the City’s Statement of Investment Policy;
4. P
rovide staff with other direction.
S
taff recommends Alternative No. 1.
SUGGESTED CITY COUNCIL MOTION
I
move to approve the proposed 2025 Statement of Investment Policy.
SUMMARY
T
he City’s Statement of Investment Policy is regularly updated to reflect legislative changes and address any investment issues that might arise, and it is now presented to the City Council/Boards of Directors/Board of Trustees to ensure its continued conformance with their investment philosophy in accordance with State law. The recommended changes contained in the proposed 2025 Statement of Investment Policy are discussed above, and it is recommended that the City Council/Boards of Directors/Board of Trustees approve these revisions contained in the City of Simi Valley’s proposed 2025 Statement of Investment Policy.
___
_________________________________
Carolyn Johnson
Administrative Services Director
INDEX Page
E
xhibit 1 – Statement of Investment Policy (Redlined) ..................... 4 Insight Investment - Public
CITY OF SIMI VALLEY
STATEMENT OF INVESTMENT POLICY
JULY MonthOctober 20252018
1.0 MISSION STATEMENT
It is the policy of the City of Simi Valley, the Ventura County Waterworks District No. 8 the Successor Agency to the Simi Valley Community Development Agency, the Simi Valley Industrial Development Authority, the Simi Valley Public Facilities Financing Authority, and the Simi Valley Public Library (collectively referred to herein as “Simi Valley”) to manage public funds in a manner consistent with the following objectives: comply with all laws of the State of California pertaining to the investment of public funds; safeguard the principal of funds under its control; meet the daily cash flow requirements pledged to the payment or security of bonds or other indebtedness of; and achieve a market rate of return.
2.0 SCOPE
This investment policy applies to all investment activities and financial assets of Simi Valley. These funds are accounted for in the City’s Simi Valley’s audited Comprehensive Annual Financial Report, presented in conformity with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards, and include:
2.1 FUNDS I
NCLUDED IN THIS POLICY
2.1.1 Gener
al Fund
2.1.2 Spec
ial Revenue Funds
2.1.3 Debt
Service Funds
2.1.4 Capi
tal Projects Funds
2.1.5 Ent
erprise Funds
2.1.6 Int
ernal Service Funds
2.1.7 Tr
ust and Agency Funds
2.1.8 Any
new funds created by the City Council unless specifically exempted
2.2 FUNDS E
XCLUDED FROM THIS POLICY
2.2.1 Def
erred Compensation Funds
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2.2.2 Pension and OPEB Trust Funds: In general, bond proceeds and funds held by Trustees or Fiscal Agents are invested according to the bond documents applicable to each bond issue and are handled independently from the operating cash function because these funds have different investment horizons, objectives, or restrictions than operating cash.
3.0 PRUDENCE
Investments shall be made with care, skill, prudence, and diligence under the circumstances then prevailing, including, but not limited to, the general economic conditions and the Simi Valley’s anticipated needs of the City, which persons of prudence, discretion, and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived.
Simi Valley’s investment program shall be designed and managed with a degree of professionalism that is worthy of the public trust. Simi Valley recognizes that no investment is totally without risk and that the investment activities of Simi Valley are a matter of public record. Although the intent is to generally hold securities to maturity, Simi Valley recognizes that occasional measured losses may occur in a diversified portfolio and shall be considered within the context of the overall portfolio's return, provided that adequate diversification has been implemented and that the sale of a security is in the best long- term interest of Simi Valley. Sales of securities prior to maturity may be considered contemplated in order to improve the liquidity, maturity profile, diversification, or credit quality of the portfolio.
The stan
dard of prudence to be used by investment officials shall be the “prudent investor standard/prudent person rule” and shall be applied in the context of managing an overall portfolio. Investment officers acting in accordance with written procedures and the investment policy and exercising due diligence shall be relieved of personal responsibility for an individual security’s credit risk or market price changes, provided deviations from expectations are reported in a timely fashion and appropriate action is taken to control adverse developments.
4.0 OBJ
ECTIVES
In compliance with California Government Code Section 53600.5, the primary objectives, in priority order, of the City’sSimi Valley’s investment activities are:
4.1 SAFETY:
Safety of principal is the foremost objective of the investment program. Investments shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. To achieve attain this objective, Simi Valley will diversify its investments by allocating investing funds among a variety of securities offering independent returns and financial institutions.
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4.2 LIQUIDITY:
The investment portfolio will remain sufficiently liquid to enable Simi Valley to meet all operating requirements that might be reasonably anticipated.
4.3 RETURN O
N INVESTMENT:
The portfolio shall be managed with the objective of attaining a benchmark rate of return throughout budgetary and economic cycles, commensurate with Simi Valley’s investment risk constraints and cash flow considerations.
5.0 DELE
GATION OF AUTHORITY
Pursuant to Chapter 3 -3 of the City of Simi Valley ’s Municipal Code, the City Treasurer has been authorized to invest funds on behalf of Simi Valley in accordance with California Government Code Sections 53601 and 53635. Management responsibility for the investment program is hereby delegated to the Administrative Services Director/Deputy City Treasurer , who shall be responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate officials and t heir procedures. Prior toBefore investing, the cash flow requirements of Simi Valley will be considered, and only securities that will not adversely affect the liquidity of the investment portfolio will be purchased.
Unless otherwise specifically designated by the City Council, the only officials authorized to undertake investment transactions on behalf of Simi Valley are the City Manager/City Treasurer, Assistant City Manager, and the Administrative Services Director/Deputy City Treasurer. Further more, under the direction of the Deputy Director/Fiscal Services Division, Fiscal Services management staff members are authorized to approve investment transactions on behalf of Simi Valley.
Unless otherwise specifically designated by the City Council, the actual disbursement of funds for the placement of individual investments shall be initiated by an authorized officer and approved by a different authorized officer according to previously ap pointed and authorized entitlements for wire transfers for the electronic disbursement of funds.
Further, no person may engage in an investment transaction except as provided under the terms of the City’sSimi Valley’s Statement of Investment Policy.
As aut
horized by bond documents, the Trustee or Fiscal Agent is the authorized investment officer on behalf of Simi Valley for the investment of funds pledged to the payment or security of bonds or other indebtedness. Further, the Trustee or Fiscal Agent shall undertake the actual disbursement of funds for the placement of individual investments.
5.1 INVEST
MENT PROCEDURES:
The Department of Administrative Services shall establish a separate written investment procedures manual, known as the Treasury Services Operating Manual, for the operation of the investment program consistent with this policy. The procedures should include reference to: safekeeping, Securities Industry and Financial Markets Association (SIFMA) 6 Insight Investment - Public
repurchase agreements, wire transfer agreements, banking service contracts, cash flow forecasting, and collateral/depository agreements. Such procedures shall include explicit delegation of authority to persons responsible for investment transactions. No person may engage in an investment transaction except as provided under the terms of this policy and the procedures established by the Administrative Services Director/Deputy City Treasurer.
It is
expected that the Trustees and Fiscal Agents shall maintain a procedures manual consistent with the industry standard.
6.0 ETHICS AND CONFLICTS OF INTEREST
The City Treasurer, Deputy City Treasurer, and other employees involved in the investment process shall refrain from engaging in personal business activitiesy that could conflict with the proper execution of the investment program or which could impair their ability to make impartial investment decisions. The City Treasurer, Deputy City Treasurer, and investment officials shall disclose to the City Clerk any material financial interests in financial institutions that conduct business within their jurisdictions, and they shall further disclose any large personal financial/investment positions that could be related to the performance of the portfolio.
The Cit
y Treasurer, Deputy City Treasurer, and other investment officials are required to file annual disclosure statements (Statement of Economic Interests – California Form 700) as required by the Fair Political Practices Commission (FPPC). During the course of the year, if there is an event subject to disclosure that could impair the ability of the City Treasurer, Deputy City Treasurer, or other investment officials to make impartial decisions, the City Council will be notified in writing within ten (10) days of the event.
Trustee and Fiscal Agent investment officers shall refrain from personal business activity that could conflict with proper execution of the investment of funds pledged to the payment or security of bonds or other indebtedness, or which could impair their a bility to make impartial investment decisions. Trustee and Fiscal Agent investment officers shall disclose to the CitySimi Valley any material financial interest in financial institutions that conduct business within the jurisdiction, and they shall further disclose any large personal financial/ investment positions that could be related to the performance of the investment securities, particularly with respect to the timing of investment security purchases and sales.
7.0 AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS
The Administrative Services Director/Deputy City Treasurer will maintain a list of financial institutions authorized to provide investment services. In addition, a list will also be maintained of approved security broker/dealers, selected by credit worthinesscreditworthiness, who are authorized to provide investment services in the State of California. These shall include broker/dealers that qualify under Securities & Exchange Commission Rule 15C3 -1 (Uniform Net Capital Rule). No deposit shall be made except as established by California laws.
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The CitySimi Valley may engage the services of investment advisory firms to assist in the management of the portfolio, and investment advisors may utilize their own list of approved broker/dealers. Such broker/dealers will comply with the selection criteria above, and the list of approved firms shall be provided to the CitySimi Valley on an annual basis or upon request.
In the event that an external investment advisor is not used in the process of recommending a particular transaction in the City’sSimi Valley’s portfolio, any authorized broker/dealer from whom a competitive bid is obtained for the transaction will attest in writing that he/she has received a copy of and will abide by this policy and each authorized broker/dealer shall be required to submit and annually update a City Simi Valley approved Broker/Dealer Information Request form that includes the firm’s most recent financial statements.
8.0 AUTHORIZED AND SUITABLE INVESTMENTS
From a g
overning body perspective, special care must be taken to ensure that the list of authorized investment instruments includes only those allowed by law and those that local investment managers are trained and competent to handle. The investments set forth i n this section are authorized investments pursuant to Sections 53601 and 53635 of the California Government Code.
Simi
Valley has further restricted the eligible types of securities and transactions to include the following:
1. United S
tates Treasury bills, notes, bonds, or strips with a maturity not exceeding five years from the date of trade settlement.
2. Federal Instrumentality (government - sponsored enterprise) debentures, discount notes, callable and step- up securities, with a final maturity not exceeding five years from the date of trade settlement. Subordinated debt may not be purchased.
3. Supranat
ional securities issued or unconditionally guaranteed by the International Bank for Reconstruction and Development (IBRD), International Finance Corporation (IFC), and the Inter -American Development Bank (IADB). Authorized supranational securiti es must have a maximum maturity not exceeding five years from the date of trade settlement and shall be rated at least “AA” or its equivalent by a nationally recognized statistical rating organization (NRSRO) at the time of purchase.
Investments in supranational securities shall not exceed 30% of the portfolio.
4. Medium -Term Notes issued by corporations organized and operating within the United States or by depository institutions licensed by the United States or any state and operating within the United States with a final maturity not 8 Insight Investment - Public
exceeding five years from the date of trade settlement and rated at least “A” or the equivalent by a NRSRO at the time of purchase. No more than 5% of the portfolio shall be invested in any one issuer, and the aggregate investment in medium-term notes shall not exceed 30% of the portfolio.
5. State Obligations and Local Agency Issues: Municipal Bonds, registered treasury notes, or bonds of any of the 50 states , including bonds payable solely out of the revenues from a revenue- producing property owned, controlled, or operated by a state or by a department, board, agency, or authority of any of the 50 states.
Bonds, notes, warrants, or other evidences of indebtedness of any local agency within California including bonds payable solely out of the revenues from a revenue- producing property owned, controlled, or operated by the local agency, or by a department, board, agency, or authority of the local agency.
In addition, these securities must be rated at least “ AA+” or the equivalent by a NRSRO at the time of purchase with maturities not exceeding five years from the date of trade settlement. No more than 5% of the City’s Simi Valley’s total portfolio shall be invested in any one municipal issuer, and the aggregate investment in municipal bonds may not exceed 30% of the portfolio.
6. Prime Commercial Paper with a maturity not exceeding 270 days from the date of trade settlement with the highest ranking or of the highest letter and number rating as provided for by a NRSRO at the time of purchase. No more than 5% of the portfolio shall be invested in the commercial paper of any one issuer, and the aggregate investment in commercial paper shall not exceed 25% of the portfolio. The entity that issues the commercial paper shall meet all of the following conditions in either sub- paragraph A. or sub- paragraph B. below:
A. The enti
ty shall (1) be organized and operating in the United States as a general corporation, (2) have total assets in excess of $500 million and (3) have debt other than commercial paper, if any, that is rated at least “A” or the equivalent by a NRSRO at the time of purchase.
B. The enti
ty shall (1) be organized within the United States as a special purpose corporation, trust, or limited liability company, (2) have program-wide credit enhancements, including, but not limited to, over-collateralization, letters of credit or surety bond and (3) have commercial paper that is rated at least “A -1” or the equivalent by a NRSRO at the time of purchase.
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7. Eligible Banker’s Acceptances with a maturity not exceeding 180 days from the date of trade settlement, issued by a FDIC insured commercial bank with combined capital and surplus of at least $250 million, whose senior long-term debt is rated at least “A” or the equivalent by a NRSRO at the time of purchase. No more than 5% of the portfolio shall be invested in banker’s acceptances of any one issuer , and the aggregate investment in banker’s acceptances shall not exceed 30% of the portfolio.
8. Non-negotiable Certificates of Deposit with maturities not exceeding five years from the date of trade settlement in FDIC insured FDIC-insured state or nationally chartered banks or savings banks with a California branch office and that qualify as a depository of public funds in the State of California as defined in California Government Code Section 53630.5.
Certificates of Deposit in amounts exceeding Federal Deposit Insurance Corporation (FDIC) insurance coverage shall be secured in accordance with California Government Code Section 53651 – 5-3 2667. The aggregate amount invested in Certificates of Deposit shall not exceed 30% of the portfolio.
9. Negotiable Certificates of Deposit with maturities not exceeding five years from the date of trade settlement issued by a nationally or state- chartered bank, a savings association or a federal association (as defined by Section 5102 of the Financial Code), a state or federal credit union, or by a state- licensed branch of a foreign bank. Purchases of negotiable certificates of deposit may not exceed 30% of the portfolio, with no more than 5% held in any one issuer.
10. Placement Service Deposits and Certificates of Deposit: Deposits may be placed using a private sector entity that assists in the placement of deposits per section 53601.8 and 53635.8 of the California Government Code. No more than 5% of the portfolio may be invested through any one private sector entity that assists in the placement of such deposits , and the aggregate investment in Certificates of Deposit shall not exceed 30% of the portfolio.
11. State
of California’s Local Agency Investment Fund (LAIF), in accordance with California Government Code Section 16429.1.
12. County Treasurer’s Pooled Investment Fund: Deposits in the County pooled investment fund shall be limited to a maximum of $50,000,000. For ongoing due diligence, Simi Valley shall maintain on file a copy of the County pool’s current investment policy and its requirements for participation, including limitations on deposits or withdrawals. In addition, the file shall include a list of the most recent investment holdings of the investment pool and a copy of the annual audit for the pool.
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13. Repurchase Agreements with a final termination date not exceeding one year collateralized by U.S. Treasury obligations or Federal Instrumentality securities listed in items 1 and 2 above, with the maturity of the collateral not exceeding ten years. For the purpose of this section, the term collateral shall mean purchased securities under the terms of the City’s Simi Valley’s approved Master Repurchase Agreement. The purchased securities shall have a minimum market value, including accrued interest of 102% of the dollar value of the funds borrowed. Collateral shall be held in the City'sSimi Valley’s custodian bank and the market value of the collateral securities shall be marked- to-the- market daily.
Repurchase Agreements shall be entered into only with broker/dealers and who are recognized as Primary Dealers with the Federal Reserve Bank of New York or broker/dealers, which have a Primary Dealer within their holding company structure. Repurchase agreement counterparties shall execute a City Simi Valley approved Master Repurchase Agreement.
14. Money Market Mutual Funds registered under the Investment Company Act of 1940 that are “no-load” (meaning no commission or fee shall be charged on purchases or sales of shares), have a constant net asset value per share of $1.00, and invest only in the securities and obligations authorized in the applicable California statutes. The fund must be rated in the highest category by at least two NRSROs or retain an investment advisor registered with the SEC or exempt from registration and which has at least n ot less than five years of experience investing in money market instruments with assets under management in excess of $500 million. No more than 10% of the portfolio shall be invested in money market funds of any one issuer, and the aggregate investment in money market funds shall not exceed 20% of the portfolio.
15. California Asset Management Program (CAMP) , in accordance with California Government Code Section 53601(p).
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The foregoing list of authorized securities and transactions shall be strictly interpreted.
Any deviation from this list must be preapproved by the governing bodies of Simi Valley.
Summar
y of Authorized Investments
Investment Type
State Code Limits Simi Valley Portfolio Limits
Max.
Maturity
Authorized
Limit
Max.
Maturity
Authorized
Limit
Local Agency Bonds 5 Years 100% 5 Years 100%
U.S. Treasury Securities 5 Years 100% 5 Years 100%
CA State Registered Warrants 5 Years 100% 5 Years 100%
Notes and Bonds of other States 5 Years 100% 5 Years 100% Federal Instrumentality Securities 5 Years 100% 5 Years 100% Supranational Securities 5 Years 30% 5 Years 30%
Bankers’ Acceptances 180 Days 40% 180 Days 40%
Commercial Paper 270 Days 25% 270 Days 25%
Non- Negotiable CDs 5 Years None 5 Years 30%
Negotiable CD’s 5 Years 30% 5 Years 30%
Private Deposit Placements 5 Years 30% 5 Years 30%
Repurchase Agreements 1 Year 100% 1 Year 100%
Reverse Repurchase Agreements 92 Days 20% None None
Medium Term Notes 5 Years 30% 5 Years 30%
Money Market Mutual Funds N/A 20% N/A 20%
Collateralized Bank Deposits 5 Years 100% 5 Years 25%
Mortgage Pass-through Securities 5 Years 20% None None
LAIF (Per Account) N/A $5075
Million
N/A $50 75 Million
CAMP N/A None N/A None
County Pooled Local Government
Investment FundPools
N/A 100% N/A $50
Million100%
8.1 PROHI
BITED INVESTMENTS AND TRANSACTIONS:
Investment in the following is expressly prohibited pursuant to California Government Code Section 53601.6:
• Invers
e Floaters
• Range Notes
• Mortgage-Derived Interest-Only Strips
• Collateralized Mortgage Obligations
• Financial Futures
• Financial Option Contracts
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9.0 COLLATERALIZATION
Calif
ornia Government Code Sections 53651 through 53667 require depositories to post certain types and levels of collateral for public funds above the Federal Deposit Insurance Corporation (FDIC) insurance amounts. The collateral requirements apply to bank deposits, both active (checking and savings accounts) and inactive (non- negotiable time certificates of deposit).
Pursua
nt to California Government Code Section 53653, when in his or her discretion local conditions so warrant, the treasurer may waive security for the portion of any deposits as is insured pursuant to federal law, notwithstanding this article. For depos its equivalent to and not less than the maximum amount insured pursuant to federal law for which a treasurer has waived security under this section, a treasurer at his or her discretion may also waive security for the interest accrued on the deposits which, when added to the deposits, would cause the sum of the interest and deposits to exceed the maximum amount insured pursuant to federal law, provided that the interest is computed by the depository on the average daily balance of the deposits, paid monthly, and computed on a 360-day basis.
10.0 SAFEKEEPING AND CUSTODY
The Administrative Services Director/Deputy City Treasurer shall select a bank to provide safekeeping and custodial services for Simi Valleythe City , in accordance with the provisions of Section 53608 of the California Government Code. A Simi Valley City approved safekeeping or custodial agreement shall be executed with the custodian bank prior to utilizing that bank's safekeeping or custodial services. The custodian bank will be selected based on the basis of its ability to provide satisfactory safekeeping or custodial services, and the competitive pricing of such services.
The purchase and sale of securities and repurchase agreement transactions shall be settled on a delivery versus payment basis. All securities shall be perfected in the name of the Simi Valley City. Sufficient evidence to title shall be consistent with modern investment, banking, and commercial practices. All investment securities purchased by the Simi ValleyCity will be delivered by book entry and will be held by the Simi Valley’s City’s custodian bank or its Depository Trust Company (DTC) participant account.
11.0 DIVERSIFICATION, CREDITWORTHINESS AND LIQUIDITY STANDARDS The CitySimi Valley shall diversify its investments to avoid incurring unreasonable risks inherent in over - investing in specific instruments, individual financial institutions or maturities. Nevertheless, the asset allocation in the portfolio should be flexible depending upon the outlook for the economy, the securities markets, and the City’s Simi Valley’s anticipated cash flow needs. Every effort will be made to:
• Limit
investments to avoid over-concentration in securities from a specific issuer; • Limit
investments in securities that have higher credit risks; 13 Insight Investment - Public
• Invest in securities with varying maturities; and
Continuously invest a portion of the portfolio in readily available funds such as local government investment pools (LAIF, County, and other investment pools in compliance with California Government Code) or money market funds to ensure that appropriate liquidity is maintained in order to meet ongoing obligations.
Securi
ties that have been downgraded to a level that is below the minimum ratings described herein may be sold or held at Simi Valley’s discretion. The portfolio will be brought back into compliance with Investment Policy guidelines as soon as is practicable.
12.0 MAXIMUM MATURITIES
To the ex
tent possible, Simi Valley shall attempt to match investments with anticipated cash flow requirements. Unless matched to a specific cash flow and in accordance with California Government Code Section 53601, Simi Valley will not directly invest in securities maturing more than five (5) years from the settlement date and will invest in accordance with State and local statutes and ordinances. California Government Code Section 53601 provides that the maximum term of any investment authorized under thi s section, unless otherwise stated, is five (5) years. However, the legislative body may grant express authority to make investments either specifically or as a part of an investment program approved by the legislative body that exceeds this five (5) year maturity limit.
Such approval must be issued no less than three (3) months prior to the purchase of any security exceeding the five (5) year maturity limit.
13.0 INTERNAL CONTROL
The Administrative Services Director/Deputy City Treasurer shall be responsible for ensuring that all investment transactions comply with the City’sSimi Valley’s Statement of Investment Policy and for establishing internal controls that are designed to prevent losses due to fraud, negligence, and third-party misrepresentation.
Intern
al controls deemed most important shall include: avoidance of collusion; separation of duties and administrative controls; separating transaction authority from accounting and record keeping; custodial safekeeping; clear delegation of authority; mana gement approval and review of investment transactions; specific limitations regarding securities loss and remedial action; documentation of investment transactions and strategies; and monitoring of results.
As part of the City’s annual financial statement audit, the external auditor, serving as an independent reviewer, will examine Simi Valley’s investment activity, holdings, and compliance with this Statement of Investment Policy. The results of this audit are incorporated into the Annual Comprehensive Financial Report (ACFR), which includes the auditor’s signed opinion and is formally submitted to the City Council/Boards of Directors/Trustees relating thereto. The external auditor, serving as an independent reviewer, will review and Simi Valley’s investment activity, holdings, and compliance with 14 Insight Investment - Public
this Statement of Investment Policy on an annual basis and submit a report to the City Council/Boards of Directors/Trustees relating thereto. The external auditor shall maintain errors and omissions insurance coverage.
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14.0 PERFORMANCE STANDARDS
The inves
tment portfolio shall be designed with the objective of obtaining a rate of return throughout budgetary and economic cycles, commensurate with the investment risk constraints and cash flow needs.
14.1 MARKET YI
ELD (BENCHMARK):
The investment portfolio shall be designed to attain a market rate of return throughout budgetary and economic cycles, taking into account prevailing market conditions, risk constraints for eligible securities, and cash flow requirements. The performance of the City’sSimi Valley’s investments shall be compared to the Intercontinental Exchange, ICE BofA 1-3 Year U.S. Treasury Index. Bank of America Merrill Lynch 1 to 3 Year Treasury Index.
15.0 REPORTING
In accor
dance with amended Section 53646 of the California Government Code, the City Treasurer may annually render to the City Council a Statement of Investment Policy, which the City Council shall consider at a public meeting. The Administrative Services Director will review the Statement of Investment Policy on an ongoing basis and recommend updates to the City Council as appropriate.
Pursua
nt to Section 53607 and Section 53646 of the California Government Code, the Department of Administrative Services shall render a monthly report to the City Manager/City Treasurer and the City Council containing detailed information on all securities, investments, and monies of Simi Valley. The reports shall be provided to the City Council within 30 days following the end of the month, as applicable.
Pursua
nt to Section 3-3.106 of the City of Simi Valley Municipal Code, the City Treasurer shall make a monthly report to the Council of the investments and redemptions made.
Information in the Monthly Investment Report includes the following:
• A lis
ting of individual securities held at the end of the reporting period by authorized investment category;
• The typ
e of investment, name of the issuer, security or certificate number, purchase date, maturity date, par value, and cost of all funds invested subject to this policy;
• Averag
e life and final maturity of all investments listed;
• Percent
age yield on an annualized basis;
• Coupon, di
scount, or earnings rate;
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• The market value with the source of the market valuation for all securities held by Simi Valley, and under management of any outside party that is not also a local agency, the State of California LAIF, or other investment pool; • Percent
age of the portfolio represented by each investment category; • Benchm
ark comparison;
• A desc
ription of any investments, including loans and security lending programs that are under the management of contracted parties;
• A description of the compliance with the Statement of Investment Policy, or manner in which the portfolio is not in compliance; and
• A stat
ement denoting Simi Valley’s ability to meet its expenditure requirements for the next six months, or an ex planation as to why sufficient money shall, or may, not be available.
Additi
onally, Trustees and Fiscal Agents shall provide monthly report access to the Department of Administrative Services. The monthly report, or statement, shall be issued within 10 days after the end of the monthly reporting period and shall include a detailed summary of all transactions for the month. This monthly report, or statement, shall include the following information:
• Type of investment; Description of investment; Purchase date; Maturity date; Purchase cost; and Current market value.
This i
nformation will be incorporated into the quarterly report provided to the City Council.
Finally, at least quarterly, the Administrative Services Director/Deputy City Treasurer shall report to the City Manager/City Treasurer on economic conditions, the status of current investments, strategies for future investments, and other investment matters deemed relevant to the City’s Simi Valley’s investment program and shall report to the City Council as necessary.
16.0 INVESTMENT POLICY APPROVAL
Pursuant to California Government Code Section 53646(a)(2), the treasurer or chief fiscal officer of the local agency may annually render to the legislative body of that local agency and any oversight committee of that local agency a statement of investment policy, which the legislative body of the local agency shall consider at a public meeting. Any change in the policy shall also be considered by the legislative body of the local agency at a public meeting. The policy shall be reviewed on an ongoing basis by the Administrative Services Director/Deputy City Treasurer to ensure consistency with the overall objectives of preservation of principal, liquidity, and return, and its relevance to current law, financial and economic trends, and to meet the needs of Simi Valley. Any material modifications 17 Insight Investment - Public
made thereto must be approved by the City Council of the City of Simi Valley, the Agency Board, the Boards of Directors of the District and Authorities, and the Board of Trustees of th e Simi Valley Public Library. This Investment Policy was adopted on Month dateOctober 6, 2025 July 30, 2018 and it replaces any previous investment policy of Simi Valley.
17.0 INVESTMENT POLICY CREDIT
Credit for wording included in this Statement of Investment Policy is hereby given to the California Debt and Investment Advisory Commission (CDIAC), the Association of Public Treasurers of the United States and Canada (APT US&C), the California State Treasurer’s Local Agency Investment Fund (LAIF), and the California Municipal Treasurers Association (CMTA).
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