City Council Staff Report Page 1 of 3 May 26, 2026
Staff Report
Agenda Item No. 6.3
DATE: May 26, 2026
TO: Honorable Mayor and Members of the City Council
FROM: Joan Malloy, City Manager
SUBJECT: Adopt a Resolution Approving the City of Union City Investment Policy for Fiscal Year 2026-2027
EXECUTIVE SUMMARY
This action is to review and approve an updated Investment Policy for Fiscal Year 2026- 2027 to incorporate recommendations from the City’s Investment Fiduciary. Staff recommends that the City Council adopt the attached resolution approving the updated Investment Policy for Fiscal Year 2026-2027.
STRATEGIC PLAN ALIGNMENT
This staff report aligns with Goal A: Financial Stability and Sustainability.
BACKGROUND
The City’s Investment Policy sets forth the City’s investment objectives, risk preferences, authorized investments, and other investment-related priorities. A thoughtful and comprehensive investment policy not only provides accountability for investment officials but also promotes public trust in investment decisions. Developing, reviewing, and monitoring the City’s Investment Policy serves as an important tool of communication between the investment official, City Management, and the City Council.
Shuster Advisory Group, LLC (“Shuster”) has worked closely with City staff through regular meetings to review and evaluate the City's investment portfolio, including discussion on updating the City’s Policy and any recommended changes to the Policy.
Shuster is an independent SEC-Registered Investment Advisor with over $11 billion in assets under management. As a fiduciary, Shuster specializes in serving the unique investment needs of governmental agencies, special districts, and institutional clients, including more than 120 cities and public entities. Shuster provides comprehensive retirement plan consulting and fiduciary investment management services, including investment selection, monitoring, and oversight. In addition, Shuster offers expertise in managing Section 115 Trusts and operating cash assets, helping public agencies Agenda Item No. 6.3
City Council Staff Report Page 2 of 3 May 26, 2026
optimize liquidity, preserve capital, and enhance yields across reserve and long-term funds. The firm also serves private wealth clients through tailored portfolio management and planning services.
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.
DISCUSSION
The current Investment Policy Statement remains compliant with CA Code Section 53601. However, updates to the CA Code in recent years have expanded investment flexibility for local agencies while preserving the core principles of safety, liquidity, and return.
Shuster has recommended targeted updates to the City’s IPS to align with current statutory allowances and incorporate best practices in public fund management. These changes are designed to enhance yield potential, streamline the portfolio structure, and ensure the City remains well-positioned in a dynamic interest-rate environment.
Proposed updates include:
1. Allowing the maturity of agency asset-backed and mortgage-backed securities to be measured by Weighted-Average-Life (WAL), which is not to exceed 5 years, pursuant to CA Code Section 53601(o).
2. Increasing the maximum allowable maturity for commercial paper to 397 days, pursuant to CA Code Section 53601(h).
3. Setting the maximum portfolio allowance for bankers’ acceptances in any one commercial bank to 30%, pursuant to CA Code Section 53601(g).
4. Clarifying that the current maximum allowance for any LAIF account is $75 million.
5. Enhancing the reporting data inputs for more informative monitoring of the Fixed Income portfolio's exposures and risk across security types.
The recommended threshold limit updates above reflect the latest allowable limits within CA Code 53601. While these limits may not be fully utilized, it's important to maintain flexibility given dynamic market conditions.
FISCAL IMPACT
There is no direct fiscal impact associated with updating the City’s Investment Policy Statement.
Agenda Item No. 6.3
City Council Staff Report Page 3 of 3 May 26, 2026
RECOMMENDATION
Staff recommends that the City Council adopt a Resolution approving the City of Union City Investment Policy for Fiscal Year 2026-2027.
Prepared by: Chu Thai, Finance Director
Submitted by: Chu Thai, Finance Director
Attachments
1. Draft Resolution