REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Al Zelinka, City Manager
PREPARED BY: Alisa Backstrom, City Treasurer
Subject:
title
Adopt Resolution No. 2023-03 approving the 2023 Investment Policy
body
Statement of Issue:
Pursuant to California Government Code, the Treasurer of the local agency may render an annual statement of investment policy to the legislative body for consideration and adoption. The City Treasurer, with the assistance of the Investment Advisory Board, has prepared an updated investment policy.
Financial Impact:
Not Applicable
Recommended Action:
recommendation
Adopt Resolution No. 2023-03, “A Resolution of the City Council of the City of Huntington Beach Approving the Statement of Investment Policy 2023.”
end
Alternative Action(s):
Do not adopt Resolution No. 2023-03.
Analysis:
The City Treasurer is responsible for the administration of the investments of City of Huntington Beach. The purpose of the Investment Policy is to establish cash management and investment guidelines for the investment of the City’s unexpended cash balances, which exclude employee retirement funds, funds governed by bond indenture agreements, and other funds managed separately. This policy shall apply to each investment transaction and the entire portfolio, which must comply with the California Government Code, Sections 53600 through 53683, and all other applicable laws and regulations.
The City’s Investment Policy may be rendered annually to the City Council to ensure its consistency with the overall objectives of preservation of principal, liquidity and return. The attached Investment Policy has been reviewed by the City’s Investment Advisory Board and approved as to form by the City Attorney.
The investment policy has previously been reviewed and certified by the California Municipal Treasurers Association, which was founded in 1958 and whose mission is to lead in promoting and enhancing the fiduciary responsibility and integrity of individuals responsible for public funds. The Investment Advisory Board reviewed the policy at its meeting of October 20, 2022.
There are two updates to the Investment Policy for 2023, both in Section 10. Authorized and Suitable Investments.
1) Section 10.(n) With the sharp upward trend in interest rates throughout 2022, longer-term portfolios lag the market interest rates as securities within the portfolio are typically held until maturity to avoid losses. The result is that such funds are not available for reinvestment at the current market rates. Shorter-term investment options became more attractive and the City moved some funds to the California Asset Management Program (“CAMP”). CAMP is a California Joint Powers Authority ("JPA") established in 1989 to provide California public agencies with professional investment services. The CAMP account provides daily liquidity and is rated AAAm, the highest rating, by Standard & Poor’s. It is a permitted investment for all local agencies under California Government Code Section 53601(p) and within the City’s Investment Policy. Previously, the maximum allowable amount for this type of investment (Joint Powers Authority pools) according to the City’s Investment Policy was $20 million. However, there is no limit according to the State code. In order to more properly match the allowable amounts for pools within the City’s Investment Policy, the limit for this type of investment has been raised to $75 million. This matches the allowable investment amount in the policy for both the State of California’s LAIF account and the Orange County Investment Pool. For further information on the California Asset Management Program, please go to: <https://www.camponline.com/>
2) Section 10.(o) According to the California Government Code Section 53601(q), obligations of the International Bank for Reconstruction and Development (“IBRD”), International Finance Corporation (“IFC”), or Inter-American Development Bank (“IADB”), as a category referred to as “Supranationals,” shall not exceed 30 percent of the agency's moneys. In order to allow for flexibility and diversification within the portfolio, as well as to match the government code, the allowable percentage shall be increased from 10 percent to 30 percent of the City’s total portfolio. As such investments must be rated in a rating category of “AA” or its equivalent or better (and currently all such allowable investments are rated “AAA”), it is deemed reasonable to allow this 30 percent limit.
Environmental Status:
Not applicable.
Strategic Plan Goal:
Financial Sustainability, Public Safety or Other
Attachment(s):
1. Resolution No. 2023-03 of the City Council of the City of Huntington Beach adopting the 2023 Investment Policy
2. City of Huntington Beach Investment Policy 2023
3. PowerPoint presentation