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File Number: 17-621 <br />1.B. Announcements <br />None <br />2. DISCUSSION ITEMS <br />2.A.17-583 Benchmark Study Presented by Chandler Asset Management <br />Director Baum introduced Carlos Oblites of Chandler Asset Management. Mr. Oblites presented the <br />investment strategy used for the City of San Leandro’s investments of $45 million. Mr. Oblites stated <br />that investment portfolio is governed by California Government Code, which is very restrictive, as well <br />as by the City’s Investment Policy. The average final maturity in the portfolio is 1.6 years and average <br />yield is 1.45% as of 6/30/17. Mr. Oblites’ presentation provided a look at four different benchmarks. <br />The longer the index, the more return the City will receive however, the risk is also higher. Mr. Oblites <br />stated that if the City chose to invest in a longer index, 5 years and more, the City would have to think <br />about selling before the maturity date and be comfortable with a higher volatility to ensure a higher <br />return rate. <br />Councilmember Hernandez asked three questions of Mr. Oblites. The first question was in regards to <br />how the City of San Leandro compares to neighboring cities. Mr. Oblites stated that although there are <br />some cities that have investments with a shorter maturity date there are some that have longer duration <br />investments but for the most part, neighboring cities follow the same format. The second question of <br />how the City of San Leandro is doing globally. Mr. Oblites stated that interest rates are on the rise and <br />there is a strength in the economy however there are signs of inflation. There is also a pressure on <br />interest rates that could devalue the investments. The third question on what Chandler would <br />recommend, Mr. Oblites stated that the 1-3 year approach is a solid approach and has worked well for <br />the City of San Leandro. However, if the City is feeling a little braver, we could go longer but will <br />definitely need to sell before maturity. <br />2.B 17-557 Discussion of Loan Agreement for BAL Theatre <br />Assistant City Manager Kay introduced the discussion for the loan agreement for BAL Theatre. <br />There is a $400,000 loan on the property that Mr. Dillman and his wife has taken out with a <br />balloon payment due. The City has provided loans to non-profit organizations and although the <br />property is owned by the Dillmans, the theatre is run by the non-profit organization, Curtain Call <br />Performing Arts. The City is looking to provide a loan for the balloon payment, and the theatre will <br />be used as collateral. There is a total of $54,000 of liens on the property. The appraisal of the <br />theatre is just over $1 million. The loan to the BAL Theatre is a 30-year loan with 3% interest. <br />There is also a $100,000 forgivable loan, which is consistent with the City’s façade loan program. <br />There is flexibility of the loan so that the funds may be used for inside improvements as well as <br />outside. If the improvements are maintained, the loan will be forgiven. If approved by Council, <br />30% of the loan could be prepaid and the balance will act like a reimbursement once receipts are <br />provided as proof of payment. <br />There is a joint use requirement within the loan agreement. Four times during the year, the City <br />may use the BAL Theatre, at cost. In addition, there are to be no new encumbrances against the <br />property without the approval of the City. <br />Page 2 City of San Leandro Printed on 10/30/2017 <br />24