Title
A. RESOLUTION NO. 2017-161 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AUTHORIZING INVESTMENT OF MONIES IN THE LOCAL AGENCY INVESTMENT FUND (LAIF)
B. RESOLUTION NO. 2017-002 OF THE BOARD OF DIRECTORS OF THE CHULA VISTA MUNICIPAL FINANCING AUTHORITY AUTHORIZING INVESTMENT OF MONIES IN THE LOCAL AGENCY INVESTMENT FUND (LAIF)
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RECOMMENDED ACTION
Recommended Action
Council adopt resolution A and Authority adopt resolution B.
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SUMMARY
The Local Agency Investment Fund is established in the State Treasury under Government Code section 16429.1 et. seq. for the deposit of money of a local agency for purposes of investment by the State Treasurer. The deposit and withdrawal of money in the Local Agency Investment Fund in accordance with Government Code section 16429.1 et. seq. for the purpose of investment of monies is in the best interest of the City of Chula Vista and the Chula Vista Municipal Financing Authority. These investments are in accordance with the City’s Investment Policy goal to enhance the economic condition of the City while ensuring the safety of funds invested.
ENVIRONMENTAL REVIEW
Environmental Notice
Environmental Notice
The activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act State Guidelines; therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is required.
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Environmental Determination
The Director of Development Services has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a “Project” as defined under Section 15378 of the State CEQA Guidelines because it will not result in a physical change in the environment; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines, the activity is not subject to CEQA. Thus, no environmental review is required.
BOARD/COMMISSION RECOMMENDATION
Not Applicable
DISCUSSION
Resolution number 1977-8507 was approved by Chula Vista City Council on February 15, 1977 and was intended to establish an Investment account with the Office of the California State Treasurer Local Agency Investment Fund. This resolution was approved in accordance with the City’s Investment Policy goals and guidelines and requires updating in order to include current official names. The goal of investing in the Local Agency Investment Fund is to enhance the economic condition of the City while ensuring the safety of funds invested. The Local Agency Fund is included in the list of investment instruments available under the relevant California Government Code sections, 53600 et seq. and 53635 mentioned in the City’s Investment Policy. Each investment transaction is made in the context of first ensuring the "safety" of principal, second, investing only for that timeframe that the cash is not needed for operational purposes ("liquidity"), and last seeking the highest return possible ("yield") provided that the first two factors are met.
While the Government Code section mentioned in Resolution 1977-8507 is still current, this resolution was adopted under the City of Chula Vista only. Investing monies currently designated as reserves for current City Debt (issued under the Chula Vista Municipal Financing Authority) requires that the Chula Vista Municipal Financing Authority adopt a resolution approving investment in the Local Agency Investment Fund under its own name. It is also necessary to update the list of City Officials authorized to order deposit or withdrawal of monies in the Local Agency Investment Fund under Resolution 1977-8507.
The total cash in reserve held by Trustee US Bank (qualified for Investment in the Local Agency Investment Fund) as of July 31, 2017 was $12,014,441.00.
DECISION-MAKER CONFLICT
Not Applicable - Not Site-Specific
Staff has reviewed the decision contemplated by this action and has determined that it is not site-specific and consequently, the 500-foot rule found in California Code of Regulations Title 2, section 18702.2(a)(11), is not applicable to this decision for purposes of determining a disqualifying real property-related financial conflict of interest under the Political Reform Act (Cal. Gov't Code § 87100, et seq.).
Staff is not independently aware, and has not been informed by any City Council member, or Director of the Financing Authority, of any other fact that may constitute a basis for a decision maker conflict of interest in this matter.
LINK TO STRATEGIC GOALS
The City’s Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy Community, Strong and Secure Neighborhoods and a Connected Community. The Investment of monies in the Local Agency Investment Fund (LAIF) supports the Economic Vitality goal as it seeks to obtain reasonable interest yields to assist in lowering economic barriers to new growth.
CURRENT YEAR FISCAL IMPACT
The City earned an average daily interest rate of 0.20% on Reserve Funds of Bonded CFD’s (Community Facilities Districts). This Interest rate was earned through investments in Money Market Accounts during the period of July 01, 2017 through July 31, 2017. In contrast, the Local Agency Investment Fund (LAIF), as of August 18, 2017, is offering a daily interest rate of 1.09%. This investment would result in an estimated increase in interest income of 0.89% or $106,928.53 (estimated $24,028.88 to be earned in FY18 through Investment in Money Market Accounts compared to an estimated $130,957.41 to be earned through Investment in LAIF).
ONGOING FISCAL IMPACT
Through investments in LAIF, the City’s bonded CFD’s would continue to receive increased Interest Income from the higher interest rates offered by the Local Agency Investment Fund.
ATTACHMENTS
Resolution - City of Chula Vista
Resolution - Chula Vista Municipal Financing Authority
Staff Contact: David Bilby, Director of Finance/Treasurer