AGENDA ITEM
TO: HONORABLE MAYOR
AND MEMBERS OF THE CITY COUNCIL
HONORABLE CHAIR
AND MEMBERS OF THE CITY COUNCIL AS SUCCESSOR AGENCY
FROM: CARLO TOMAINO
CITY MANAGER
BY: SHARON DEL ROSARIO
ADMINISTRATIVE SERVICES OFFICER/FINANCE DIRECTOR
SUBJECT:
title
RESOLUTIONS ADOPTING INVESTMENT POLICIES AND INTRODUCING A NEW INVESTMENT OPTION UNDER THE JOINT POWERS AUTHORITY LOCAL GOVERNMENT INVESTMENT POOLS
summary
Summary:
The City’s Investment Policy provides guidelines for the prudent investment of the City’s available resources and outlines policies for maximizing the efficiency of the City’s cash management process. The Investment Policy serves to enhance the City’s economic status while protecting its pooled cash. In accordance with California Government Code Section 53646(a), an annual rendering of the City’s Investment Policy shall be presented to the City Council for consideration. Staff does not propose changes to the Investment Policy at this time. In addition, the City Council, as Successor Agency, will consider the adoption of a companion policy addressing the Successor Agency funds.
As permissible under Government Code 53601(p) which includes the ability to invest in joint powers authority local government investment pools, and as allowed by the City’s current Investment Policy, the City is introducing a new investment option and participation in California Cooperative Liquid Assets Securities System, also known as the California CLASS Prime Fund portfolio.
Strategic Plan Goal(s):
Goal No. 1 Financial Stability: Ensure the City’s long-term financial stability and resilience.
recommendation
Recommendations:
City Council:
Adopt the resolution, entitled:
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SIGNAL HILL, CALIFORNIA, ADOPTING ITS INVESTMENT POLICY FOR PUBLIC FUNDS
Successor Agency:
Adopt the resolution, entitled:
A RESOLUTION OF THE CITY COUNCIL AS SUCCESSOR AGENCY OF THE CITY OF SIGNAL HILL, CALIFORNIA, ADOPTING ITS INVESTMENT POLICY FOR PUBLIC FUNDS
body
Fiscal Impact:
There is no fiscal impact associated with the proposed recommendations. Becoming a participant of California CLASS would allow the City of Signal Hill to access professional investment management services in a cost-efficient manner, further diversifying its portfolio within the parameters of California Government Code while protecting principal, meeting liquidity needs, and enhancing investment earnings over time. The resolutions related to this proposed action are attached (Attachments A and B).
Background:
Annual Adoption of Investment Policy:
The primary objective of the City’s Investment Policy is to provide a framework of approved securities in which the City can legally invest. The Investment Policy drives the cash, treasury, and investment management functions of the City, and serves as a guide for setting and achieving program objectives, defining rules, establishing benchmarks, and reducing exposure to risk. It is also important to note that rating agencies pay close attention to the City’s Investment Policy and portfolio in determining its credit rating, which is a key element when seeking financing options (Attachment C).
Analysis:
The Investment Policy is based on the State of California Government Code, Sections 53600 through 53609 and 53630 through 53686. These laws, as well as guidelines set forth by the Association of Public Treasurers of the United States and Canada, the California Municipal Treasurers Association (CMTA), and the Government Finance Officers Association (GFOA) have aided City staff in policy development. The State laws and established guidelines encompass a broad array of allowable investments and investment standards to suit the different needs of California's local agencies.
Annual adoption of the City’s Investment Policy provides an opportunity to regularly review the policy to ensure its consistency with the overall objectives of safety, liquidity, and yield, as well as its relevance to current law and economic trends. The Investment Policy applies to the City's Pooled Investment Portfolio, Bond Proceeds Portfolio, and the Special Districts Portfolio. These portfolios encompass all funds under the oversight of the City Treasurer or approved designee.
The Investment Policy is more conservative than what is allowed by State law as it further restricts the percentage of allowable credit investments (Appendix C of Exhibit A to the Resolutions). Currently, the Finance Department presents the Schedule of Investments on a monthly basis. This level of disclosure exceeds the quarterly reporting requirement by the State. The City’s banking investment broker also reviews the policy periodically to ensure compliance with applicable State statutes and provides recommendations for strategic changes to position the portfolio in a way that maximizes yield while maintaining safety and liquidity.
Staff intends to continue presenting the Investment Policy annually for adoption and will continue to present the Schedule of Investments monthly. Staff does not recommend changes to the Investment Policy at this time.
California Cooperative Liquid Asset Securities System - California CLASS:
California CLASS is a pooled investment option created via a joint exercise of powers agreement by and among California public agencies. California CLASS Prime Fund option offers public agencies a convenient method for investing in highly liquid, investment-grade securities carefully selected with the goal of optimizing yields while prioritizing safety and liquidity. CLASS has over $1 billion in assets as of February 2024. Currently, there are three options under the California Joint Power Authority (JPA) investment pools:
1) California CLASS
2) CAMP (the City is a current participant)
3) CalTRUST
The California CLASS is an investment option currently allowable within the City’s current investment policy, very similar to California Asset Management Program (CAMP) and Local Agency Investment Fund (LAIF) (Attachment D). Below is a snapshot of investment prime pool benefits, including the allowance of same day withdrawals and transfers, dollar-for-dollar net present value, daily accrual of dividends that are paid monthly, and no transaction fees. An expanded benefit information sheet is included with this report (Attachment E).
As discussed, the proposed action is to adopt the current Investment Policy and enable the City to participate in another investment tool called CLASS. Subject to City Council authorization, California CLASS would strengthen and diversify the City’s investment portfolio in accordance with the safety, liquidity and yield hierarchy and, therefore, the City has applied to become a participant in this joint power’s authority government investment pool.
Reviewed for Fiscal Impact:
_________________________
Sharon del Rosario
Attachments:
A. City Council Investment Resolution
B. Successor Agency Investment Resolution
C. City Council and Successor Agency Investment Policy 2024
D. California CLASS Information Sheets
E. California CLASS Prime Fund Information Statement