TO:
Honorable Mayor and Members of the City Council
THROUGH:
Mark Danaj, City Manager
FROM:
Bruce Moe, Finance Director
Libby Bretthauer, Financial Analyst
SUBJECT:Title
Adoption of Annual Investment Policy and Delegation of Responsibility for Investing Funds to the City Treasurer (Finance Director Moe).
APPROVE
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_____________________________________________________________________
Recommended Action
RECOMMENDATION:
The Finance Subcommittee and City Staff recommend that the City Council approve the 2015-2016 Investment Policy, and delegate the responsibility for investing funds to the City Treasurer.
Body
FISCAL IMPLICATIONS:
There are no fiscal implications from modifying the current investment policy guidelines.
BACKGROUND:
The City’s adopted Financial Policies state that the City Council shall annually review, and modify as appropriate, the City’s investment policy. The Finance Subcommittee reviews and approves the policy in advance of Council review and adoption.
DISCUSSION:
At its July 1, 2015 meeting, the Finance Subcommittee reviewed and approved the recommended revisions to the City’s Investment Policy. The modifications are the result of a review of the current policy by the City’s investment brokers as well as City staff, and are designed to allow flexibility while maintaining safety of a diversified portfolio and provide further clarity and consistency within the document.
The following changes were approved by the Finance Subcommittee, and are recommended for City Council approval. Changes to the policy are shown in redline form on the draft Investment policy attached.
Addition of terminology to the Glossary section:
1. AVERAGE DAYS TO MATURITY: The average time to maturity of all the debt securities held in a portfolio.
2. MAKE WHOLE CALL: A type of call provision on a bond allowing the borrower to pay off remaining debt early. The borrower makes a lump sum payment derived from a formula based on a predetermined spread to an index (typically a Treasury Note), or par value of the bond.
3. WEIGHTED AVERAGE MATURITY: The average amount of time remaining before maturity, weighted by the percentage of the debt securities held in the portfolio.
Delegation of Investment Authority to the City Treasurer
Pursuant to the California Government Code 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, who 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 that authority to the City Treasurer, most recently in August 2014. City staff recommends that the City Council renew that delegation of responsibility for investing funds to the City Treasurer for the coming year.
CONCLUSION:
The Finance Subcommittee and City Staff recommend that the City Council approve the 2015-2016 Investment Policy, and delegate the responsibility for investing funds to the City Treasurer.
Attachment:
1. Investment Policy 2015-2016 (redline)