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June 2, 2020Finance Committee Minutes <br />the City of San Leandro’s Investment Policy Statement for 2020-2021 <br />Assistant City Manager/Interim Finance Director Warmerdam provided background and <br />highlights. The committee was asked to review the City’s current investment policy with <br />plans to seek approval from Council in June. <br />City staff has worked with Mr. Dennehy from Chandler Asset Management (Chandler) <br />to review the current investment policy and to recommend any changes if needed. No <br />changes are recommended at this time. Last year the City made changes to <br />incorporate socially responsible investing such that no investments included gun <br />manufacturing, fossil fuel production, private prisons, and tobacco producers. <br />The investment policy is a high-level policy statement primarily governed by the <br />California (CA) Government Code to follow certain guidelines. The three investment <br />objectives in order of priority are safety, liquidity, and yield/return. Per the code, the <br />City is not allowed to invest in any stocks (equity), and because of this the City’s <br />portfolio was not impacted by recent market fluctuations. <br />Assistant City Manager Warmerdam introduced guest presenter Bill Dennehy of <br />Chandler. <br />Mr. Dennehy presented highlights of the quarterly report and portfolio. <br />Mr. Dennehy stated that the policy is reviewed on an annual basis in consideration of <br />any changes in the CA Government Code. The policy incorporates all of Chandler’s <br />best practices, including allowing to invest out five years, consider longer-term <br />investments in certain asset classes in the future when interest rates improve. Last <br />year the major change to the code was Assembly Bill 1770 which liberalized the policy <br />and essentially broadened the options of eligible securities investments. This was <br />adopted by the City. <br />Topics in the presentation included: Employment, Inflation, Housing, Federal Reserve, <br />Unprecedented Fed Intervention, Coronavirus Aid, Relief, and Economic Security <br />(CARES) Act, Portfolio Characteristics, Sector Distribution, Investment Performance, <br />and the Transaction Ledger from January 31, 2020 through April 30, 2020. <br />Mr. Dennehy stated that American Honda holdings is the only account for concern due <br />to the credibility rating. <br />PUBLIC COMMENTS3. <br />None were provided. <br />COMMITTEE MEMBER COMMENTS4. <br />In response to Committee member questions, Mr. Dennehy clarified the following: <br />- Hard data was provided for inflation. <br />· <br />- The changes made by the City divesting from certain holdings to reflect more social <br />responsibility are de minimis, with the portfolio not resulting in much deviation. <br /> - To align with this policy, one Wells Fargo note was sold before maturity. There is <br />still a ChevronTexaco account that is awaiting maturity before sale. <br />Page 2City of San Leandro <br />83