City Council Staff Report Page 1 of 3 May 26, 2026
Staff Report
Agenda Item No. 6.4
DATE: May 26, 2026
TO: Honorable Mayor and Members of the City Council
FROM: Joan Malloy, City Manager
SUBJECT: Receive the Quarterly Investment Report as of April 30, 2026
EXECUTIVE SUMMARY
Staff recommends that the City Council receive the Quarterly Investment Report presentation as of April 30, 2026.
STRATEGIC PLAN ALIGNMENT
This staff report aligns with Goal A: Financial Stability and Sustainability.
BACKGROUND
The City’s Cash Investment Portfolio assets are governed by the California Government Code (“CA Code”) as found in the California Local Agency Investment Guidelines. As a fundamental principle, CA Code Section 53600.3 states that a City is the ultimate Fiduciary on all public funds subject to the prudent investor standard. Further, CA Code Section 53601 specifies the allowable investments that a City may purchase to achieve the ultimate goals of safety, liquidity, and yield. While risk is inherent throughout the investment process, the CA Code is meant to provide a structural framework within which City officials may construct their Cash Investment Portfolios.
In May 2025, after a review of the overall Cash Investment Portfolio allocation and fees, it was determined that increased yields and fee savings can be achieved by adopting Shuster Advisory Group’s (“Shuster”) recommendation to reallocate the Cash Investment Portfolio, without sacrificing the ultimate goals of safety and liquidity. Shuster is the same firm that took over fiduciary responsibilities of the employee’s 457(b) deferred compensation plan and 401(a) plan in 2022, and the Section 115 Trust program in 2024.
As a fiduciary for the City, Shuster has evaluated the City’s Cash Investment Portfolio to identify opportunities for reallocation between General Cash, LAIF, CLASS, and its Fixed Income investments. As of April 30, 2026, the City’s Cash Investment Portfolio totaled $89,898,998, with approximately $8.8 million in General Cash, $10 million in LAIF, $45.1k in CLASS, and $71.1 million in Fixed Income investments.
Agenda Item No. 6.4
City Council Staff Report Page 2 of 3 May 26, 2026
DISCUSSION
The City’s Investment Portfolio complies with CA Code Section 53601, and there is sufficient cash flow from liquid and maturing securities, bank deposits, and investment income to meet the City’s expenditure requirements.
Description of Investment Type:
• US Treasury Instruments – These include United States Treasury notes, bonds, bills, or certificates of indebtedness, or those for which the faith and credit of the United States are pledged for the payment of principal and interest. There is no limit on the percentage of the City's portfolio that may be invested in this category (no cap). The current market value is $16.7 million (18.58%).
• State Local Agency Investment Fund (LAIF) – State program created by statute that offers local agencies the opportunity to participate in a major portfolio using the investment expertise of the State Treasurer’s office. The City policy states that the maximum investment amount permitted by California state law for LAIF accounts is $75 million. The current market value is $10 millon (11.12%). • California Cooperative Liquid Assets Securities System (CLASS) – Joint exercise of powers entity authorized under CA Code Section 6509.7. California CLASS is a pooled investment option created through a joint exercise of powers agreement among California public agencies. California CLASS provides California public agencies with a convenient method for investing in high-quality, short- to medium-term securities carefully selected to optimize interest earnings while prioritizing safety and liquidity. There is no maximum amount (cap) in the City policy for investing in CLASS accounts. The current market value is $45,000 (0.05%).
• Asset-Backed securities & Collateralized Mortgage Obligations (CMOs) – These include a mortgage passthrough security, collateralized mortgage obligation, mortgage- backed or other pay-through bond, equipment lease-backed certificate, consumer receivable passthrough certificate, or consumer receivable-backed bond with a maximum remaining maturity of five years or less as measured by WeightedAverage Life (WAL). City limit is 20% of portfolio ($89.9 million x 20% = $18 million).
The current market value is $5.9 million (6.59%).
• Federal Agency Securities – These include the purchase of debt securities issued by either a U.S. federal agency (such as Federal Housing Administration (FHA), Small Business Administration (SBA), Government National Mortgage Association (GNMA) – “Ginnie Mae,” or a government-sponsored enterprise (GSE) such as Fannie Mae, Freddie Mac, or the Federal Home Loan Bank (FHLB). There is no maximum amount (cap) in the City policy for investing in federal agency issues coupons. The current market value is $19.4 million (21.63%).
• City Cash – Liquid cash held in the City’s operating checking account with Fremont Bank. City policy has no maximum. The current market value is $8.8 million (9.76%). • Schwab Cash – Liquid cash received from investment maturities or interest within the Bond Portfolio. There is no maximum amount in the City policy. The current market value is $29,100 (0.03%).
• Certificates of Deposit – Negotiable certificates of deposit offered by nationally or state-chartered banks and credit unions offering a fixed interest rate for a specific Agenda Item No. 6.4
City Council Staff Report Page 3 of 3 May 26, 2026
period of time (guaranteed interest rate). The City policy states that the maximum investment amount is 30% of the City’s portfolio ($89.9 million x 30% = $27 million).
The current market value is $7 million (7.75%).
• Municipal Bonds – Registered state warrants or treasury notes or bonds of the State of California, or local agencies within this state, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the state or by a department, board, agency, or authority of the state. Registered treasury notes or bonds of any of the other 49 states, in addition to California, 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 other 49 states, in addition to California. The City policy states that the maximum investment amount is 30% of the City’s portfolio ($89.9 million x 30% = $27 million). The current market value is $0 (0%).
• Corporate or Medium-Term Notes – These include corporate and depository institution debt securities with a maximum remaining maturity of five years or less, 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. The City policy states that the maximum investment amount is 30% of the City’s portfolio ($319.5 million x 30% = $95.9 million). The current market value is $22 million (24.48%).
FISCAL IMPACT
There is no fiscal impact.
RECOMMENDATION
Staff recommends that the City Council receive the Quarterly Investment Report presentation as of April 30, 2026.
Prepared by: Chu Thai, Finance Director
Submitted by: Chu Thai, Finance Director
Attachments
1. Quarterly Investment Report As of April 30, 2026