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Item No. 1.
| MEETING DATE: 12/16/2024 |
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| TO: | HONORABLE MAYOR/CHAIR AND COUNCILMEMBERS/DIRECTORS |
| FROM: | JIM SADRO, CITY MANAGER/EXECUTIVE DIRECTOR By: Mel Shannon, Director of Finance |
| SUBJECT: | APPROVE AND ADOPT THE ANNUAL INVESTMENT POLICY FOR CALENDAR YEAR 2025
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RECOMMENDATION:
That the City Council, Successor Agency to the Redevelopment Agency of the City of La Habra, La Habra Civic Improvement Authority, City of La Habra Housing Authority, and La Habra Utility Authority review, approve and adopt the City's Annual Investment Policy for implementation beginning January 1, 2025.
DISCUSSION:
Each year, the City Council is presented with the City's Investment Policy for review and adoption. This review is generally conducted each December and, if approved, the new policy is implemented effective January 1st of the following year. The proposed Investment Policy is compliant with state law and is consistent with the City's currently adopted Investment Policy. On occasion, the state passes and adopts new laws that amend the California Government Code (CGC), including sections in the CGC pertaining to permitted investments made by local governments and entities.
After consultation with the City's external fund managers at Chandler Asset Management, staff proposes modifying one item and adding one new item to the City's current Investment Policy:
1. Modify item #16 in Appendix A, Summary of Investment Types & Restrictions: "Asset Backed and Mortgage Backed Securities from issuers not defined in sections 2 and 5 of the Summary of Authorized Investment Types & Restrictions":
The current Investment Policy allows for up to 10% of the City's Portfolio to be invested in these types of securities. Staff recommends increasing this limit to 15% of the Portfolio to provide more investment flexibility.
This higher amount will still be less than what the state code allows.
2. Add item #18 to Appendix A, Summary of Investment Types & Restrictions: "Joint Powers Authority (JPA) Pools" as a permitted Type of Investment, provided that:
a. The JPA is organized pursuant to California Government Code Section 6509.7 and invests in the securities and obligations authorized in subdivision (a) to (r), inclusive;
b. Each share shall represent an equal proportional interest in the underlying pool of securities owned by the JPA.
c. The JPA has retained an investment advisor who is registered with the SEC (or exempt from registration), has assets under management in excess of $500 million, and has at least five years' experience
investing in instruments authorized by section 53601, subdivisions (a) to (q).
The limit established for this new investment type will not exceed 25% of the City's Portfolio.
If approved by City Council, these recommended changes will remain in compliance with state law.
After consultation with the City's external fund managers at Chandler Asset Management, staff proposes modifying one item and adding one new item to the City's current Investment Policy:
1. Modify item #16 in Appendix A, Summary of Investment Types & Restrictions: "Asset Backed and Mortgage Backed Securities from issuers not defined in sections 2 and 5 of the Summary of Authorized Investment Types & Restrictions":
The current Investment Policy allows for up to 10% of the City's Portfolio to be invested in these types of securities. Staff recommends increasing this limit to 15% of the Portfolio to provide more investment flexibility.
This higher amount will still be less than what the state code allows.
2. Add item #18 to Appendix A, Summary of Investment Types & Restrictions: "Joint Powers Authority (JPA) Pools" as a permitted Type of Investment, provided that:
a. The JPA is organized pursuant to California Government Code Section 6509.7 and invests in the securities and obligations authorized in subdivision (a) to (r), inclusive;
b. Each share shall represent an equal proportional interest in the underlying pool of securities owned by the JPA.
c. The JPA has retained an investment advisor who is registered with the SEC (or exempt from registration), has assets under management in excess of $500 million, and has at least five years' experience
investing in instruments authorized by section 53601, subdivisions (a) to (q).
The limit established for this new investment type will not exceed 25% of the City's Portfolio.
If approved by City Council, these recommended changes will remain in compliance with state law.
FISCAL IMPACT/SOURCE OF FUNDING:
None
GENERAL PLAN RELEVANCE/CITY COUNCIL GOALS & OBJECTIVES:
General Plan Relevance--ED 9 Fiscal Strength-Stability
City Council Goals & Objectives--Management of Public Revenues and Fiscal Asset by closely monitoring assets, revenues, expenditures, and fiscal trends to ensure the City's long-term fiscal stability.
City Council Goals & Objectives--Management of Public Revenues and Fiscal Asset by closely monitoring assets, revenues, expenditures, and fiscal trends to ensure the City's long-term fiscal stability.