TO:
Honorable Mayor and Members of the City Council
THROUGH:
Talyn Mirzakhanian, City Manager
FROM:
Libby Bretthauer, Finance Director
SUBJECT:Title
Consideration of: a) Adopting the Investment Policy for Fiscal Year 2026-2027 and b) Delegation of Responsibility for Investing Funds to the City Treasurer (No Budget Impact) (Finance Director Bretthauer).
A) ADOPT INVESTMENT POLICY FOR FY 2026-2027
B) DELEGATE RESPONSIBILITY FOR INVESTING FUNDS
Body
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RECOMMENDATION:
The Finance Subcommittee and City staff recommend that the City Council adopt the Fiscal Year (FY) 2026-2027 Investment Policy (Policy) and continue the existing delegation of responsibility for investing funds to the City Treasurer.
FISCAL IMPLICATIONS:
There are no fiscal implications associated with the recommended action.
BACKGROUND:
Consistent with California Government Code Section 53646, the City’s adopted Financial Policies state that the Finance Subcommittee and City Council shall annually review and update, as appropriate, the City’s Investment Policy. Furthermore, the Investment Policy shall be adopted by the City Council based upon the Finance Subcommittee’s recommendations.
The Finance Subcommittee reviewed and approved the FY 2026-2027 Investment Policy at its August 6, 2026, meeting, in advance of the City Council’s review.
DISCUSSION:
City staff reviewed the current Investment Policy and consulted the City’s investment brokers on potential updates to align with recent legislation and evolving market conditions. Additionally, guidelines issued by the California Debt and Investment Advisory Commission (CDIAC) and California Municipal Treasurers Association (CMTA) were reviewed and are incorporated as appropriate.
The City’s Investment Policy was last certified by CMTA in FY 2021-2022. This Investment Policy Certification recognizes and validates that the City of Manhattan Beach’s Investment Policy adheres to the State of California Government Code and meets the program requirements within 18 different topic areas deemed to be best practices for investment policies. Those topics include:
1. Scope
2. Prudence
3. Objective
4. Delegation of Authority
5. Ethics and Conflicts of Interest
6. Authorized Financial Dealers and Institutions
7. Authorized and Suitable Investments
8. Review of Investment Portfolio
9. Investment Pools/Mutual Funds
10. Collateralization
11. Safekeeping and Custody
12. Diversification
13. Maximum Maturities
14. Internal Controls
15. Performance Standards
16. Reporting
17. Investment Policy Adoption
18. Glossary
Since the last certification in FY 2021-2022, no substantive changes to the Investment Policy have been necessary until this year. For FY 2026-2027, recent changes in the State Government Code have prompted the following revisions in Section 9. Investment Instruments. These changes are identified in the attached red-line version of the Policy:
1. Commercial Paper term maximum updated and ratings language added to reflect change in State Code;
2. Medium-Term Notes updated to reflect a higher portfolio maximum (30% from the current 20%) in State Code, eliminated restriction by sector, and updated ratings minimum language to reflect State Code;
3. Negotiable Certificates of Deposit updated to reflect State Code and remove the unnecessary ratings minimum statement;
4. Money Market Mutual Funds criteria updated to reflect State Code; and
5. State Local Agency Investment Fund (LAIF) section updated to apply to all State and County Investment Pools allowable in the State Code.
Additionally, Attachment A: Allowable Investment Instruments Per State Government Code was updated per CDIAC’s Local Agency Investment Guidelines Update for 2026.
Proposed Changes #1-4 above align with the City’s current practices. Regarding #5, authorizing participation in County Investment Pools would enhance the City's investment flexibility and yield potential without compromising portfolio safety or liquidity. These changes are allowed under State Code and are commonplace in other cities.
The proposed changes were reviewed and approved by the Finance Subcommittee on August 6, 2026, for recommendation to the full City Council.
Delegation of Investment Authority to the City Treasurer
Pursuant to the California Government Code Section 53607, the legislative body (City Council) of the local agency may invest funds of the local agency or delegate that responsibility to the Treasurer of the local agency. The Treasurer assumes full responsibility for all investment transactions and makes a monthly report of those transactions to the legislative body until the delegation is revoked or expired. The legislative body may renew the delegation of authority each year.
The City Council has previously delegated Investment Authority to the City Treasurer, most recently in August 2025. Staff recommends that the City Council renew that delegation of responsibility for FY 2026-2027. This recommendation, if accepted, continues the long-standing City Council delegation of authority to the City Treasurer that is vital to the efficient operation of the City’s treasury management.
PUBLIC OUTREACH:
After analysis, staff determined that public outreach was not required for this Policy.
ENVIRONMENTAL REVIEW:
The City has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a “Project” as defined under Section 15378 of the State CEQA Guidelines; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines, the activity is not subject to CEQA. Thus, no environmental review is necessary.
LEGAL REVIEW:
The City Attorney has reviewed this report and determined that no additional legal analysis is necessary.
ATTACHMENTS:
1. Investment Policy for Fiscal Year 2026-2027 (Redline Version)
2. Investment Policy for Fiscal Year 2026-2027 (Clean Version)