Title
Recommendation to Approve the City of Alameda’s Investment Policy. (Finance 2410)
Body
To: Honorable Mayor and Members of the City Council
EXECUTIVE SUMMARY
Annually, the City Treasurer and the Finance Director review the City of Alameda’s (City) Investment 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. The City Council is asked to approve the City’s 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. Prior to the Investment Policy being recommended to City Council it was first reviewed by the City’s Portfolio Managers, Chandler Asset Management and PFM Asset Management LLC. The City Treasurer and the Finance Director reviewed the Portfolio Managers’ recommendations and are recommending the proposed changes be incorporated into the City’s Investment Policy.
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’s Portfolio Managers, 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 requires staff to submit quarterly investment reports to the City Council. Investment reports include investment summaries with the market value of securities and a statement confirming that current liquidity is adequate to meet expenditures for the next six months, as required by the California Government Code Section 53646.
The City Treasurer is proposing certain changes to the Policy, as listed below, to reflect actual practice, implement changes as directed by the City Council, and provide further clarity. Other than minor edits for clarity, the only substantive changes to the policy are as follows:
• The City Auditor shall establish an annual process for independent review of these controls by an external auditor. This review will help to ensure compliance with the City’s investment policies and procedures.
• Under a provision sunsetting on January 1, 2026, no more than 40% of the portfolio may be invested in Commercial Paper if the City’s investment assets under management are greater than $100,000,000.
• Under a provision sunsetting on January 1, 2026, securities backed by the U.S. Government that could result in a zero or negative-interest accrual if held to maturity are permitted.
• The Finance Director, with the concurrence of the Treasurer, shall submit an annual investment report to the City Council in order to provide a clear picture of the status of the current investment portfolio.
• The Finance Director, with the concurrence of the Treasurer, shall submit a monthly report of all securities transactions, with three reports representing the quarterly reporting period, to the City Council no later than 60 days following the end of each quarter.
ALTERNATIVES
• The City Council could approve the investment policy with the recommended changes.
• The City Council may choose not to approve the above changes.
• The City Council may provide direction to the Treasurer and the Finance Director to review additional changes to the Investment Policy prior to approval.
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 City Council an investment policy.
CLIMATE IMPACTS
There are no identifiable climate impacts or climate action opportunities associated with the subject 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.
CITY MANAGER RECOMMENDATION
The City Manager concurs with the recommendation by the City Treasurer to approve the amended Investment Policy.
Respectfully submitted,
Kevin Kennedy, City Treasurer
Financial Impact section reviewed,
Annie To, Finance Director
Exhibit:
1. Recommended Investment Policy
cc: Eric Levitt, City Manager