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Item No. 1.
| MEETING DATE: 12/01/2025 |
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| TO: | HONORABLE MAYOR/CHAIR AND COUNCILMEMBERS/DIRECTORS |
| FROM: | JIM SADRO, CITY MANAGER/EXECUTIVE DIRECTOR By: Jack Ponvanit, Deputy Director of Finance |
| SUBJECT: | APPROVE AND ADOPT THE ANNUAL INVESTMENT POLICY FOR CALENDAR YEAR 2026
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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, 2026.
DISCUSSION:
Each year, the City Council reviews and adopts the City’s updated Investment Policy. This review is traditionally conducted in December, with the new policy taking effect January 1 of the following year. The proposed 2026 Annual Investment Policy remains fully compliant with California Government Code (CGC) requirements and continues to reflect the prudent investment practices historically maintained by the City.
For Calendar Year 2026, several updates are recommended. These updates reflect recently enacted state legislation, alignment with Chandler Asset Management best practices, and revisions needed to ensure the City’s policy remains consistent with the California Government Code.
Summary of Key Changes Included in the 2026 Investment Policy
1. Investment Objectives (Pages 1–2, Section 1.1.1C)
The term “Yield” has been replaced with “Return” to better align with standard investment terminology and to reflect the City’s objective of managing funds to maximize overall return while prioritizing safety and liquidity.
2. Permitted Investments – Government Code Update (Page 3, Section 1.3.4)
Senate Bill SB 595, recently enacted and effective January 1, 2026, extends the provision regarding securities that may result in zero interest accrual (when backed by the U.S. Government) from January 1, 2026 to January 1, 2031.
The Investment Policy has been updated to reflect this statutory extension.
3. Selection of Depository Institutions, Investment Managers, and Broker-Dealers (Page 6, Section 1.5.3C)
The section related to External Investment Advisory Services has been revised to align more closely with Chandler Asset Management’s recommended best practices, emphasizing:
· Clear delineation of advisor responsibilities
· Consistency with prudent investor standards
· Strengthened expectations for regulatory compliance and reporting
· Assurance of manager expertise in managing public agency portfolios
These reforms enhance clarity and strengthen safeguards around the City’s use of external investment professionals.
4. Allowable Assets – Revisions to Align with California Government Code (Pages 9-14, Appendix A)
Several investment type parameters have been updated to bring the City’s policy into full conformity with State Code, particularly:
· Clarifying percentage limits
· Ensuring issuer requirements match Government Code provisions
· Strengthening language around maturity constraints
· Updating concentration limits to reflect statutory thresholds
These revisions ensure the City’s policy matches current law and removes inconsistencies between State Code and the City’s prior policy version.
The recommended updates strengthen the City’s Investment Policy by aligning it with current State law, clarifying permitted investment types, and incorporating best practices for external investment management. If approved, the revised 2026 Investment Policy will govern all investment activities beginning January 1, 2026.
For Calendar Year 2026, several updates are recommended. These updates reflect recently enacted state legislation, alignment with Chandler Asset Management best practices, and revisions needed to ensure the City’s policy remains consistent with the California Government Code.
Summary of Key Changes Included in the 2026 Investment Policy
1. Investment Objectives (Pages 1–2, Section 1.1.1C)
The term “Yield” has been replaced with “Return” to better align with standard investment terminology and to reflect the City’s objective of managing funds to maximize overall return while prioritizing safety and liquidity.
2. Permitted Investments – Government Code Update (Page 3, Section 1.3.4)
Senate Bill SB 595, recently enacted and effective January 1, 2026, extends the provision regarding securities that may result in zero interest accrual (when backed by the U.S. Government) from January 1, 2026 to January 1, 2031.
The Investment Policy has been updated to reflect this statutory extension.
3. Selection of Depository Institutions, Investment Managers, and Broker-Dealers (Page 6, Section 1.5.3C)
The section related to External Investment Advisory Services has been revised to align more closely with Chandler Asset Management’s recommended best practices, emphasizing:
· Clear delineation of advisor responsibilities
· Consistency with prudent investor standards
· Strengthened expectations for regulatory compliance and reporting
· Assurance of manager expertise in managing public agency portfolios
These reforms enhance clarity and strengthen safeguards around the City’s use of external investment professionals.
4. Allowable Assets – Revisions to Align with California Government Code (Pages 9-14, Appendix A)
Several investment type parameters have been updated to bring the City’s policy into full conformity with State Code, particularly:
· Clarifying percentage limits
· Ensuring issuer requirements match Government Code provisions
· Strengthening language around maturity constraints
· Updating concentration limits to reflect statutory thresholds
These revisions ensure the City’s policy matches current law and removes inconsistencies between State Code and the City’s prior policy version.
The recommended updates strengthen the City’s Investment Policy by aligning it with current State law, clarifying permitted investment types, and incorporating best practices for external investment management. If approved, the revised 2026 Investment Policy will govern all investment activities beginning January 1, 2026.
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 Revenue and Fiscal Asset by closely monitoring assets, revenues, expenditures, and fiscal trends to ensure that City’s long-term fiscal stability.
City Council Goals & Objectives – Management of Public Revenue and Fiscal Asset by closely monitoring assets, revenues, expenditures, and fiscal trends to ensure that City’s long-term fiscal stability.