City Council Agenda Report
Meeting Date: June 2, 2026
From: Alice Hui, Director of Finance/City Treasurer
Department: Finance
Submitted by: Joaquin Leon, Deputy City Treasurer
Subject
Annual Statement of Investment Policy for Fiscal Year 2026-2027 Recommendation
Adopt Resolution No. 2026-023 approving an Annual Statement of Investment Policy for Fiscal Year 2026-27 and delegating investment authority to the Director of Finance/City Treasurer.
Background
The Annual Statement of Investment Policy (Investment Policy) sets forth the course of action necessary to guide the decision-making of the City Council, Director of Finance/City Treasurer, and those authorized to make investment decisions in the administration of the City’s investment portfolio. The existing Investment Policy is in compliance with the California Government Code and is a restatement of relevant sections applying to investment activities. The Investment Policy is designed to ensure that the administration of surplus funds is performed in accordance with the “prudent investor standard” pursuant to California Government Code Section 53600.3. As such, capital preservation is of paramount importance; therefore, the City does not engage in speculative activities.
Pursuant to California Government Code Section 53646(a)(2), the City Treasurer shall annually render to the City Council an Annual Statement of Investment Policy which the City Council shall consider at a public meeting.
For Fiscal Year 2026-2027, staff has reviewed the Investment Policy in its entirety and proposes a number of targeted amendments. These amendments are intended to: (1) align policy language with current terminology used by regulatory and rating authorities; (2) amend Section
6.7 to extend the maximum maturity on eligible prime commercial paper investments from 270 days to 397 days, aligning the City's Investment Policy with California Government Code Section 53601(h), as amended by Senate Bill 595, effective January 1, 2026, which updated the maximum permitted maturity for commercial paper investments by local agencies; (3) establish explicit maximum maturity limits for certain authorized investment categories in a manner consistent with the City's overall investment objectives; (4) expand the existing Pooled Investment Funds category (Section 6.15) to include shares of beneficial interest issued by joint powers authority investment pools, providing additional investment opportunities and options within this authorized category; (5) clarify the scope of the City Treasurer's express authority to invest in long-term securities; and (6) establish, through amendments to Section 6.14 and new Sections 6.14.1 and 6.14.1.1, Weighted-Average Life (WAL) as the applicable maturity measurement standard for structured securities and introduce a defined term for that metric. In the event the City retains an Investment Advisor, the Investment Policy would require monthly WAL reporting and an escalation protocol for securities approaching or exceeding the 5-year WAL limit, while preserving the stated remaining maturity of the security as the applicable compliance measure in the absence of an Investment Advisor. No changes are proposed to the City's investment objectives, delegation of authority, safekeeping provisions, or prohibited investment restrictions.
Fiscal Impact
There is no fiscal impact associated with this report.
Attachments
1. Resolution No. 2026-023
2. FY 2026-27 Investment Policy (redline)