TO:City Council
FROM:Investment Review Committee
DATE:December 5, 2023
SUBJECT: City Investment Review Committee Annual Report RECOMMENDATION:
1. Receive and file report.
2. Find that this action is not a project as defined under section 15378(b)(5) of the California Environmental Quality Act Guidelines.
FINANCIAL IMPACT:
No Additional Funding Requested. Minimal staff time to complete annual report is included in the Adopted FY 2023-24 General Fund Budget.
BACKGROUND:
The City invests and manages approximately $350 million in its investment portfolios. These funds include operating funds, bond project and reserve funds, and funds of the former redevelopment agency. The portfolios are invested in accordance with State Law and the City’s Investment Policy.
In 1997, City Council created a five-member advisory committee to periodically monitor the City Treasurer’s compliance with the Investment Policy. The City Investment Review Committee’s (Committee) policies and procedures are set forth in Resolution No. 2017-021. The establishment of the Committee is a practical way to provide oversight and to ensure the City Treasurer invests in a prudent and responsible manner.
The five Committee members must be residents of the City with applicable work experience, training, and background in finance and investments. The members are appointed by City Council to serve two-year staggered terms. The current members are:
City Investment Review Committee Annual Report
December 5, 2023
8 6
8 Original
Appointment
Current 2-Year
Term Expiration
Davin Carey 2021 2023
Anthony Gonzales 2021 2023
Sheila Moore 2022 2024
John Short 2007 2023
Cody Sorenson 2020 2024
The functions and duties of the Committee are:
1. Periodically monitor the City Treasurer’s compliance with the Investment Policy and its reporting provisions.
2. Provide a written statement of its findings to City Council on a quarterly basis.
3. Submit an annual report to City Council summarizing the work of the Committee and any recommendations for modification to the Investment Policy.
DISCUSSION/ANALYSIS:
The Committee last presented its annual report to City Council on December 6, 2022. The Committee held regularly scheduled meetings in February, May, August, and November of 2023. Written reports of the Committee’s findings, as well as meeting agendas and notes, were sent to City Council each quarter. The Committee finds that the investment portfolio is a mix of low-risk investments in compliance with the Investment Policy.
The terms of members Carey, Gonzales, and Short end on December 31, 2023. A 30-day application filing period for the three vacancies was opened on August 21, 2023. The application filing period was extended until October 5, 2023, to provide an opportunity for additional applications. Four applications were received. The reappointments of Carey, Gonzales, and Short were approved by City Council on November 14, 2023.
During the year, the Committee provided guidance on investment options in the current market environment. After dropping the federal funds policy rate to near zero in 2020, the Federal Reserve began increasing the target rate in 2022 to ease inflation. As of November 2023, the Federal Reserve target rate is 5.25 to
5.50. The Federal Reserve has maintained its higher-for-longer pathway for rates.
This outlook can change over time depending on the level of inflation, economic activity, and employment.
City Investment Review Committee Annual Report
December 5, 2023
8 6
8 The following table demonstrates the change in rates year over year:
Sep 2023 Sep 2022
City Portfolio 2.09% 1.36%
Local Agency Investment Fund 3.53% 1.51%
2-Year Treasury Note 5.04% 4.28%
5-Year Treasury Note 4.61% 4.09%
The portfolio is comprised of over 200 securities. Over the last year, the portfolio yield increased by 73 basis points to 2.09 percent from 1.36 percent. The book value of the City’s operating portfolio for the quarter ending September 30, 2023, was $347.5 million, approximately $16.8 million more than the $330.7 million balance in the previous September. It is expected that these funds will be used to fund capital improvement projects in the Adopted FY 2023-24 Capital Improvement Program Budget.
The Committee reviews the City’s Investment Policy (Policy) annually and recommends changes to City Council. This year, the Committee proposes no substantive changes to the Policy. Staff will present the Policy to City Council for its annual consideration as required by the Policy in January 2024.
COUNCIL GOAL COMPLIANCE:
Meets the following City Council goal:
C. Operate City government in a fiscally and managerially responsible and prudent manner to ensure that the City of Thousand Oaks remains one of California's most desirable places to live, work, visit, recreate, and raise a family.
PREPARED BY: Davin Carey, Investment Review Committee Chair Jane Adelmann, Debt and Investment Analyst
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