AGENDA ITEM
TO: HONORABLE MAYOR
AND MEMBERS OF THE CITY COUNCIL
FROM: CARLO TOMAINO
CITY MANAGER
BY: SIAMLU COX
ADMINISTRATIVE SERVICES OFFICER/FINANCE DIRECTOR
DAVID CASTRO
MANAGEMENT ANALYST
SUBJECT:
title
ANNUAL ADOPTION OF THE CITY'S INVESTMENT POLICY FOR PUBLIC FUNDS AND RESOLUTIONS FOR PARTICIPATION IN THE CALIFORNIA FINANCE INTERGOVERNMENTAL TRUST (CALFIT) INVESTMENT POOL
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 ultimate goal of an Investment Policy is to enhance the economic status of the City 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 adoption of a companion policy addressing Successor Agency funds. The City is also providing an introduction of a new investment option under Government Code 53601, that includes the ability to invest in joint powers authority local government investment pools (part of the City’s current investment policy), and to become a participant in the California Finance Intergovernmental Trust (CALFIT) investment pool.
Strategic Plan Goal(s):
Goal No. 1 Financial Stability: Ensure the City’s long-term financial stability and resilience.
Goal No. 5 High-Functioning Government: Strengthen internal communication, recruitment, retention, systems, and processes to increase the effectiveness and efficiency of City services.
recommendation
Recommendation:
City Council:
Adopt a 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 a 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
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Fiscal Impact:
There is no fiscal impact associated with the proposed recommendations. Becoming a participant in CALFIT would allow the City of Signal Hill to access professional investment management services cost-effectively, with the goal of further diversifying its portfolio within the parameters of the California Government Code while protecting principal, meeting liquidity needs, and enhancing investment returns over time.
Background:
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 City's cash, treasury, and investment management functions and serves as a guide for setting and achieving program objectives, defining rules, establishing benchmarks, and reducing exposure to risk. Staff would also 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.
The Investment Policy is based on 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 also 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 monthly Schedule of Investments. Staff does not recommend changes to the Investment Policy at this time.
California Finance Intergovernmental Trust (CALFIT):
CALFIT is a pooled investment option created under a joint exercise of powers agreement among California public agencies. CALFIT is a high-quality, short-term investment option that offers public agencies a convenient way to invest in highly liquid, investment-grade securities, carefully selected to optimize yields while prioritizing safety and liquidity. This investment option is an allowable option within the City’s current investment policy, very similar to the California Asset Management Program (CAMP) and Local Agency Investment Fund (LAIF).
CALFIT will strengthen and diversify the City’s investment portfolio in accordance with the safety, liquidity, and yield hierarchy. Key features that align with the City's investment goals include:
• Stable Net Asset Value (NAV): The pool is designed to maintain a stable NAV of $1.00 per share, which is critical for principal preservation.
• High Rating: CALFIT is rated AAAm by S&P Global, reflecting the highest degree of safety for principal invested.
• Liquidity: The pool offers same-day liquidity for redemptions submitted by 11:00 a.m. PT.
• Financial Structure: Dividends accrue daily and are paid monthly, with no transaction fees, ensuring efficient cash management.
• Local Focus: Formed in California by California government agencies and managed by a California-based investment firm, Chandler Asset Management, Inc.
Conclusion:
The annual adoption of the Investment Policy ensures that the City remains in compliance with State law while maintaining a conservative framework that prioritizes the safety of public funds. Furthermore, the City intends to become a participant in the CALFIT investment pool, providing an additional high-quality, liquid investment option. This strategic expansion of the City's investment options supports long-term financial stability by diversifying the portfolio and enhancing earnings potential without compromising principal or liquidity. Staff recommends that the City Council and Successor Agency adopt the provided resolutions and authorizing the City's participation in the CALFIT program.
Reviewed for Fiscal Impact:
_________________________
Siamlu Cox
Attachment(s):
A. City Council Investment Resolution
B. Successor Agency Investment Resolution
C. Investment Policy 2025
D. CALFIT One Pager
E. CALFIT Information Statement
F. CALFIT Joint Exercise of Powers Agreement
G. CALFIT Stable Value Pool Fact Sheet as of November 30, 2025