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Recommendation to Approve the City of Alameda Investment Policy. [City Council] (Finance 2410)
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Title
Recommendation to Approve the City of Alameda Investment Policy. [City Council] (Finance 2410)
Body
To: Honorable Mayor and Members of the City Council
From: Kevin Kennedy, City Treasurer
EXECUTIVE SUMMARY
Annually, the City Treasurer and the Finance Director review the City's Investment Policy (Policy) for changes and revisions that may be needed to comply with applicable sections of the California Government Code or any other changes to keep the Policy updated to current business practices. Tonight, the City Council is asked to approve the City of Alameda Investment Policy with proposed changes as outlined below.
BACKGROUND
Section 5-2 of the Alameda City Charter requires the City Treasurer to annually recommend to the City Council, at a public meeting, an Investment Policy for the Council's approval. The City Treasurer and Finance Director have reviewed and recommend these proposed changes to the City's Investment Policy. The Policy was last reviewed and adopted by City Council on July 2, 2024.
DISCUSSION
The City's Investment Policy affirms the fiduciary responsibility to safeguard public assets and identify the opportunities for a systematic investment process. Priority is placed first on securing the safety of principal and the liquidity needed for payroll and other City obligations, then on yield of the investment.
The City's Investment Policy is reviewed annually by the City Treasurer and Finance Director and is attached to this report (Exhibit 1). The policy has been developed in accordance with standards and policies established by the California Debt and Investment Advisory Commission (CDIAC) and the Association of Public Treasurers of the United States and Canada (APTUSC).
The Investment Policy provides for staff to submit quarterly Investment Transaction Reports to the City Council. Investment Transaction Reports include summaries of all transactions within the investment portfolio and a statement confirming that current liquidity is adequate to meet expenditures for the next six months, as required by the California Government Code.
The City Treasurer and Finance Director are proposing certain changes, as listed below and in the attached redline version, to the Policy to reflect actual practice, compliance with the statutes of the California Government Code governing the investment of public funds, and to provide further overall clarity with changes to socially responsibility investments.
Under Section IX, Authorized Investment, Maximum Maturities and Investment Amounts, staff is recommending updating the investment type for Local Government Investment Pools and Passthrough Securities to broaden the authorized investments per California Government Code Section 56301 (Code) and Senate Bill 882 (Bill). Please see below for a brief summary of the changes:
* Local Government Investment Pools:
o Added Shares of Beneficial Interest Issued by a Joint Powers Authority (JPAs) to utilize the Government Code.
o Updated Local Government Investment Pools description and augmented description of Shares of Beneficial Interest Issued by a JPA per the Government Code.
* Passthrough Securities:
o Replaced Passthrough Securities with a broader security type, Asset-Backed Security (ABS). Passthrough Securities is a type of ABS, changing this will allow City to invest in an ABS that meets the requirements in the Government Code.
o Augmented description for ABS per the Government Code.
The City Treasurer and Finance Director will continue to review the portfolio and its performance on a quarterly basis. It is through these evaluations that the recommended changes were developed, which are reflected in the attached Investment Policy.
ALTERNATIVES
* Approve the updates to the City of Alameda Investment Policy as described.
* Provide direction on additional changes to the Investment Policy to the extent that it still must comply with the California Government Code and provide sufficient ability and flexibility to manage the City's investment portfolio.
* Not approve the changes described; however, this will result in having an Investment Policy that is not compliant with the California Government Code.
FINANCIAL IMPACT
There is no financial impact as a result of the approval of the Investment Policy.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This activity complies with Section 5-2 of the Alameda City Charter, which provides that the Treasurer shall annually recommend to Council an investment policy.
Receiving this report is in alignment with the City's FY 2023-26 Strategic Plan under the priority to Practice Fiscally Responsible, Equitable and Inclusive Governance.
CLIMATE IMPACTS
There is no climate impact from acceptance of this report.
ENVIRONMENTAL REVIEW
This activity is not a project and is exempt from the California Environmental Quality Act (CEQA) pursuant to section 15378 (b)(4) of the CEQA Guidelines, because it involves governmental fiscal activities (approval of the investment policy), which does not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment.
RECOMMENDATION
Approve the City of Alameda Investment Policy.
Respectfully submitted,
Kevin Kennedy, City Treasurer
Ross McCarthy, Finance Director
Exhibit:
1. Investment Policy