HomeMy WebLinkAbout05-31-2017 IOC Minutes
Minutes
Investment Oversight Committee
Wednesday, May 31, 2017
Regular Meeting of the Investment Oversight Committee
CALL TO ORDER
A Regular meeting of the Investment Oversight Committee was called to order on Wednesday, May
31, 2017, at 1:30 p.m. in the Council Hearing Room at 990 Palm Street, San Luis Obispo,
California, by Chair Bradford.
ROLL CALL
Present: Committee Members Katie, Lichtig, Derek Johnson, Rico Pardo, Steve
Barasch, Chair Xenia Bradford
Absent: Committee Member Heidi Harmon
Others Present: Al Eschenbach, Independent Auditor and ex-officio member; Izac Chyou, PFM
Asset Management LLC (City’s Investment Advisor); and Barbara Ehrbar,
Recording Secretary
PUBLIC COMMENT ON ITEMS NOT ON THE AGENDA
None.
1. REVIEW OF INVESTMENT OVERSIGHT COMMITTEE MEETING MINUTES
OF FEBRUARY 16, 2017
ACTION: MOTION BY COMMITTEE MEMBER JOHNSON, SECOND BY
COMMITTEE MEMBER PARDO, CARRIED 5-0 (HARMON ABSENT), to approve the
Investment Oversight Committee Meeting minutes of February 16, 2017.
Committee Member Barasch asked if any action had been taken on Item 4 (Discussion of
Committee’s Purpose, Membership and Terms) since the last meeting. Chair Bradford
indicated that there has been no action or further discussion on this item. Committee
Member Barasch indicated he would like to put this item on the agenda since no action has
been taken since it was discussed at that meeting. Chair Bradford suggested that this be
discussed today during Item 4.
Committee Member Lichtig indicated that while she did not attend the last meeting, she had
reviewed the minutes and felt comfortable approving them.
City of San Luis Obispo, Title, Subtitle
Minutes - Investment Oversight Committee Minutes of May 31, 2017 Page 2
2. PRESENTATION OF THE QUARTERLY INVESTMENT REPORT ON
PORTFOLIO PERFORMANCE
Chair Bradford distributed the Quarterly Investment Report. City Investment Advisor Izac
Chyou presented an overview of the market and an update on the City’s portfolio.
Committee member Barasch noted that the City does not have any local investments in its
portfolio now since Heritage Oaks Bank was recently acquired by Pacific Premier Bank,
which is based out of Irvine. He indicated that he would like to see some reinvestment
locally. Committee Member Johnson recommended that the report be updated to reflect the
new ownership of Heritage Oaks Bank.
Advisor Chyou updated the committee on what Sustainable, Responsible and Impact
Investing is (SRI) and how it’s managed.
Public Comment
None
---End of Public Comment---
ACTION: MOTION BY COMMITTEE MEMBER LICHTIG, SECOND BY
COMMITTEE MEMBER BARASCH, CARRIED 5-0 (HARMON ABSENT), to confirm
that the Quarterly Investment Report for the period ending March 31, 2017 is in compliance
with the City’s Investment Policy.
3. REVIEW INVESTMENT POLICIES AND PRACTICES INCLUDING SOCIALLY
RESPONSIBLE INVESTING AND DISCUSS INVESTMENTS IN FOSSIL FUEL
Advisor Chyou distributed a memo reviewing the City’s Investment Policy. He indicated
that consistent with City policy, there are no fossil fuel companies in the City’s portfolio.
He recommended four changes to the City’s policy as noted below:
Update credit rating language used in the policy to reflect a recent revision to
California Code;
Loosen the credit quality requirement of negotiable certificates of deposit;
All purchases of corporate notes rated “A” or better by one national recognized
rating agency; and
Add asset-backed securities to the City’s list of Authorized Investments.
In response to a question from Committee member Lichtig about what other benchmark
cities are doing, Advisor Chyou indicated that it is a common guideline for most cities do
allow the California Code to rely on only one nationally recognized statistical rating
organization, thereby allowing for split-rated securities that are “A” by one issuer and not
necessarily relying on two rating agencies.
City of San Luis Obispo, Title, Subtitle
Minutes - Investment Oversight Committee Minutes of May 31, 2017 Page 3
Committee member Lichtig indicated she would be more comfortable with the proposed
changes if she knew what other agencies have these practices in place. She would like to
have that information on record before forwarding these changes on to the City Council for
approval. Advisor Chyou noted he could provide that information.
ACTION: MOTION BY COMMITTEE MEMBER JOHNSON, SECOND BY
COMMITTEE MEMBER LICHTIG, CARRIED 5-0 (HARMON ABSENT), to continue
this item to the next regular meeting so that PFM can return with analysis of other agencies
that have adopted these recommended changes in their investment policy and what their
experience has been.
Committee member Lichtig clarified that the annual review by the Council will happen in a
timely fashion. Any proposed changes can move forward to the Council mid-cycle.
4.ITEMS TO BE ADDRESSED AT A FUTURE MEETING
Committee member Barasch requested that the item mentioned in the February 16, 2017,
meeting regarding the Committee’s purpose be addressed at the next meeting. He noted
that the investment arena is getting more complex, and it would be helpful to broaden the
base operations of the committee, if possible.
5.DISCUSSION OF INVESTMENT OVERSIGHT COMMITTEE CALENDAR
The next meeting is scheduled for August 10, 2017, at 1:30 p.m. Committee member
Lichtig indicated that at least two members of the committee would be unable to attend that
meeting. The Committee decided to move the August 10th meeting to August 17, 2017, at
1:30 p.m.
The following meeting is scheduled for November 9, 2017.
ADJOURNMENT
The meeting was adjourned at 2:51 p.m.
APPROVED BY INVESTMENT OVERSIGHT COMMITTEE: 08/17/2017