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RDA#03-006

August 12, 2003

SUBJECT:

Investment and Cash Management Policy Update for FY 2003/2004 (RTC#RDA03-006)

REPORT IN BRIEF

The Redevelopment Agency’s Investment and Cash Management Policy requires that it be reviewed annually to ensure consistency with respect to the objectives of safety, liquidity, yield and relevance to current laws and financial and economic trends. State law also requires that the Redevelopment Agency’s Investment Policy be rendered annually to the Redevelopment Agency. The Redevelopment Agency’s Investment policy is the same as the City’s Investment Policy, which was brought to the City Council for approval earlier at tonight’s City Council meeting.

BACKGROUND

In accordance with State law, the Redevelopment Agency adopted a policy governing cash management and investment of City funds on July 30, 1985. This policy has routinely been updated on an annual basis.

EXISTING POLICY

The key provisions of the existing policy are as follows:

  1. Safety of principal is the foremost objective of the investment program. Diversification is required in order that potential losses on individual securities do not exceed the income generated from the remainder of the portfolio.
  2. Liquidity-the portfolio will remain sufficiently liquid to enable the Redevelopment Agency to meet all operating requirements which might be reasonably anticipated.
  3. Return on Investment-the portfolio will be maintained with the objectives of safety and liquidity first, and then the objective of obtaining a market rate of return throughout the budgetary and economic cycles, taking into account the Redevelopment Agency’s investment risk constraints and the cash flow characteristics of the portfolio.

DISCUSSION

Since City staff invests all City funds, including funds of the Redevelopment Agency, the report of compliance and of portfolio performance for Redevelopment Agency funds was included in the report made earlier to the City Council.

The proposed Investment Policy for FY 2003/2004 is the same as last year’s policy and is attached for Board review.

FISCAL IMPACT

There is no major fiscal impact associated with the adoption of the Investment and Cash Management Policy. Interest earnings for FY 2002/2003 for all City funds totaled $9.7 million.

PUBLIC CONTACT

Public contact was made through posting of the Council agenda on the City’s official notice bulletin board, posting of the agenda and report on the City’s web page, and the availability of the report in the Library and the City Clerk’s Office.

ALTERNATIVES
  1. Adopt the attached Investment Policy as presented.
  2. Adopt the attached Investment Policy with changes as proposed by the Redevelopment Agency Board.

RECOMMENDATION

It is recommended that the Redevelopment Agency adopt the attached Investment Policy for FY 2003/2004.

Prepared by:
Therese B. Balbo
Finance Manager

Reviewed by:
Mary J. Bradley
Agency Treasurer

Approved by:
Robert S. LaSala
Executive Director/Secretary

Attachments

  1. Investment and Cash Management Policy for FY 2003/2004

 

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