Item 6-O

City Council Meeting: 02-23-99 Santa Monica, California

TO: Mayor and City Council

FROM: City Staff

SUBJECT: Recommendation to Revise City Investment Policy and Continue

Delegation of Investment Authority to City Revenue Manager/Treasurer

INTRODUCTION

This report recommends City Council approve a revised City Investment Policy and continue to delegate investment authority to the City Revenue Manager/Treasurer from March 1, 1999 to February 29, 2000.

BACKGROUND

State law requires that a City's investment policy and any material changes in the policy be approved by Council annually at a public meeting. Section 711 of the Santa Monica City Charter delegates to the Revenue Manager/Treasurer authority for investing City funds. Section 53607 of the State of California Government Code limits the authorization of the legislative body to delegate investment authority to a one-year period, renewable annually.

The Council last approved the Investment Policy and continued delegation to the City Revenue Manager/Treasurer on February 24, 1998. The City's investment policy has been awarded the Municipal Treasurers' Association of the United States and Canada Certification of Excellence Award and continues to adhere to these standards.

The shaded portions of the Investment Policy and its attachments indicate where additions have been made, and the lined through portions identify deletions.

DISCUSSION

The following changes have been incorporated into the attached Investment Policy:

1. Scope:

Section B of the Investment Policy has been revised to include information relating to the allocation of investment income, as recommended by recent Government Finance Officers Association policy guidelines.

2. Prudence:

Section F of the Investment Policy has been revised to include additional language regarding ethical behavior and conflicts of interest, per recent Government Finance Officers Association policy guidelines.

3. Records and Reports:

Section G of the Investment Policy has been revised to include language regarding the Treasurer's responsibility for establishing and maintaining internal control of City assets, per recent Government Finance Officers Association policy guidelines.

4. Diversification:

Section H (2d) of the Investment Policy has been revised to include a listing of eligible collateral for investments in repurchase agreements, to minimize the risk on the City's portfolio if such investments are made.

5. Socially Responsible Investing:

For some time staff has also been following "informal" socially responsible investing guidelines. Section J (2) of the Investment Policy has been added to formalize the guidelines.

6. Attachment A to Investment Policy:

The listing of City of Santa Monica Funds has been updated to include the Disaster Fund which is used to track disaster-related revenues and expenditures other than those associated with the 1994 earthquake.

7. Attachment B to Investment Policy

The listing of City of Santa Monica financial assets specifically excluded from coverage of the City Investment Policy has been updated to include the Main Library Improvements Project G.O. Refunding Bonds issued in 1998.

8. Attachment C to Investment Policy

The investment limit on the Local Agency Investment Fund (LAIF) investments has been revised to reflect current State law.

BUDGET/FINANCIAL IMPACT

There are no budget or financial impacts resulting from this staff report.

RECOMMENDATION

Staff recommends that Council approve the attached Investment Policy, and delegate to the City Revenue Manager/Treasurer investment authority for March 1, 1999 through

February 29, 2000.

Prepared by:

Mike Dennis, Director of Finance

Ralph Bursey, City Revenue Manager/Treasurer

Attachment: Revised City Investment Policy