City Council Meeting: February
12, 2008
Agenda Item: 1-H
To: Mayor and City Council
From: Carol Swindell, Director of
Finance
Subject: Annual Update on City Investment Policy
Recommended
Action
Staff recommends that the City Council approve a revised City Investment
Policy; extend the delegation of investment authority to the Director of
Finance, as City Treasurer, from March 1, 2008, through February 28, 2009; and adopt
the resolution updating the list of persons authorized to conduct transactions with
the State Local Agency Investment Fund (LAIF).
Executive
Summary
State law requires that the City adopt an investment policy (Attachment
1) and that the City Council annually consider the policy at a public
meeting. The Santa Monica City Charter delegates
the authority for investing City funds to the Director of Finance as the City
Treasurer. State law requires that the
Council delegate investment authority to the City Treasurer for a one-year
period, renewable annually. The current
delegation of authority carries through February 29, 2008.
Resolution No. 10198 (CCS), approved February 27, 2007, designates the
City position titles as well as the specific individuals authorized to conduct
investment transactions with LAIF.
Council authorization to add the recently created second Principal
Budget Analyst-Investments position to the list of authorized individuals is
required at this time.
Discussion
City
investments are made only in those instruments specifically authorized by
·
Safety –
Safety of principal is the foremost objective of the City’s investment
program. City investments shall be
undertaken in a manner that seeks to ensure the preservation of capital in the
overall portfolio by diversifying its investments among a variety of securities
offering independent returns.
·
Liquidity
– City investments are kept sufficiently liquid to enable the City to meet all
operating requirements which might be reasonably anticipated by structuring the
portfolio so that securities mature concurrently with anticipated cash needs to
the extent possible. Investments are
primarily made in securities with active secondary or resale markets. Additionally, an adequate liquidity buffer is
maintained for extraordinary circumstances.
·
Rate of
Return – The City’s investment portfolio is designed with the objective of
attaining a benchmark rate of return throughout budgetary and economic cycles
taking into account safety and liquidity requirements. The benchmark may vary from time to time
depending on the economic and budgetary conditions present.
The City continues to abide by the highest
professional standards in the management of public funds. The proposed changes are redlined and
are for the most part minor wording changes.
In addition, Section 8.3, which discusses funds held and/or managed by
fiscal agents, has been revised to specifically include funds held by the City
for legally restricted purposes, an example of which is Charnock settlement. Attachment 1-A was updated to reflect the
current City fund structure, and a definitions for “liquidity” and “Fed Funds”
were slightly revised in Attachment 1-C (Glossary). The
City’s Investment Policy has been certified by the Association of Public
Treasurers United States and Canada (APT) and is periodically submitted for
recertification per APT guidelines.
Previous Council Actions
Per State law, City Council annually
considers and approves the City’s Investment Policy (Attachment 1) and
delegates investment authority to the City Treasurer for a one-year period,
renewable annually. The current
delegation of authority carries through February 29, 2008. Also, Santa Monica City Charter Section 711
delegates the authority to invest City funds to the City Treasurer.
Financial Impacts &
Budget Actions
Interest earnings from the City’s pooled
investment portfolio are allocated to the various City funds based upon each
fund’s share of total City cash and investments. The projected revenues for each fund are
already included in the FY2007/08 budget, so no budget action is required by
this report.
Prepared by:
David Carr,
Principal Budget Analyst-Investments
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Approved: |
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Forwarded to Council: |
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Carol Swindell Director
of Finance |
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P. City
Manager |
Attachments: 1 – Updated City Investment Policy
2 – Resolution