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Home My WebLink About09-21-21 Finance Com MinutesDUBLIN CITY COUNCIL FINANCE COMMITTEE Tuesday, September 21, 2021 — 4:00 p.m. 5555 Perimeter Drive Council Chamber Ms. Alutto called the Finance Committee meeting of September 21, 2021 to order at 4:00 p.m. Committee members gresen : Mr. Peterson, Ms. Alutto (Chair), Mr. Keeler Staff members present: Ms. O'Callaghan, Mr. Stiffler, Ms. Ocheltree, Ms. Blakt Also Dresent: Mr. DeRosa, three plus one; Mr. McCourt, Meeder Investment Management; Mr. Conrad and Mr. Bushallow, Manning & Napier APPROVAL OF MINUTE5 Mr. Peterson moved to approved the minutes of the June 7, 2021 Finance Committ meeting. Mr. Keeler seconded the motion. I The motion passed by the following vote: Mr. Peterson, yes; Mr. Keeler, yes; Ms. Alutto, yes. DISCUSSIQN ITEMS Mr. Stiffier gave a brief introduction of the items before the Committee and the consultants present. He outlined duties and responsibilities of the Finance Director and the Investment Advisor in relation to treasury management. The City's primary banking provider is U.S. Bank. Investments are managed by Manning & Napier and Meeder and they are responsible for following the City's investment policy. The City of Dublin utilizes three+one to manage liquidity. The City uses a sweep account with U.S. Bank. Currently we do not pay hard banking fees. The City pays investment fees with yields at roug $hly 50,000/year. Treasu!y Management Mr. Stiffier introduced Mr. DeRosa from three+one. Mr. DeRosa gave a brief overview of three+one and described them as a data company focused on liquidity and treasury services. They provide data to public entities as an independent third patty so that the public entity can confidently make decisions with investments. On the treasury services side, they collect information from banks and public entities to do benchmarking of fees. These things change as the interest rate environment changes. He shared a "'stress test" that they perform on an entity's cash position. The City of Dublin has a very strong liquidity position with a large portion of funds available to be placed in the fixed income category. The largest portion of Dublin's cash is available to be invested longer term. Each report is run using four years of data plus any new information. After the first report, three+one immediately identified the September 21, 2021 Page 3 Mr. Sti?Fler introduced Mr. Conrad and Mr. Bushallow from Manning & Napier. Mr. Conrad gave a background on Manning & Napier and shared that they were hired at the same time as three+one. Mr. Bushallow introduced himself and explained that he heads up the the fixed income department. He shared that the fixed income department is team -based and process - driven. Mr. Stiffier introduced the investment policy discussion. The policy was adopted in 2013 so it has been a few years since it has been reviewed. He stated that as a best practice, every policy should be reviewed every few years. That would be an appropriate way of ensuring those policies are current and engaging with the fundamental policies regularly. Mr. Stiffler stated that from a legal standpoint, the City is home -rule and unrestricted in Septembe 1, 2021 Page 4 our investment policy. That gives a significant amount of freedom and responsibility. Consultants gave some ideas regarding the investment policy. Staff is not proposing changes to the objectives. The potential modifications of this policy include updated terms to be more consistent with the market, add some flexibility for different investment types. Almost all proposed modifications are modifications that other governments utilize. Some exceptions may be buying foreign debt and some weighted average life versus final maturity. Mr. Stiffler asked the Committee for their input on policy objectives or what information is needed to move forward. Ms. Alutto asked for feedback on reviewing this and other financial policies every three years. Mr. Keeler stated that three years should be the longest. He has read policies where they have evaluated them annually. The financial markets change rapidly. Maybe a compromise would be every two years for the investment policy specifically. Mr. Peterson stated that he does not have an opinion on this and would trust the professionals. Ms. Alutto agreed with Mr. Keeler on the investment policy that it should be reviewed more frequently. She stated that the general fund and debt policy could be reviewed every three years without issue. Ms. Alutto confirmed that this will eventually have to come to Council. Mr. Stiffier OW M Mr. Keeler stated that he thinks there should be an investment advisory committee thai should be separate from Finance Committee. $200 million is a lot of money. The investment policy indicates that such a committee could be formed. There is too much work for just the Finance Director. Mr. Keeler stated that it should not be the Finance committee because he would want to enlist members from outside of Council; people with deep knowledge of the subject matter. Ms. Alutto stated that this topic should go before all of Council and she will include it in her report for feedback. Mr. Stiffler advised that if there was an ordinance recommending a policy modification, ?.nd a recommendation comes forward that the committee a second vote at the time the policy was modified. rTir. Peterson asked who would serve on this committee. Mr. Keeler stated three+one is essentially overseeing the management of the cash but that is $22 million which is a small portion of the overall total. The committee would provide oversight for the remainder. They could consider whether or not the yield is good enough. Ms. Alutto steered the Committee back to the policy discussion. Mr, Stiffler stated that the meat of the discussion is in the "Authorized Investments" section. Currently, the City is authorized to buy GNMA types of securities and Staff is suggesting to expand that and make changes with how the maturity is calculated on that. It expands the eligible pool of investments in a similar asset class. Mr. Keeler stated that he is in agreement with all of the suggestions. He suggested adding language about monitoring investments (frequency, authority, etc.). He also suggested adding criteria to terminate investment advisors. Mr. Keeler referenced September 21, 2021 Page 5 Section 35.105 d. and stated that the second sentence is unclear or incomplete. Ms. Alutto stated that she is in favor of being more vague regarding monitoring because she feels it is the Director's responsibility to determine how it gets monitored but it is appropriate to say that there is some type of monitoring. If there is a committee, they will likely be the ones to determine monitoring type and frequency. Mr. Peterson stated that this Council has trended in the direction of land acquisition and he asked if that is covered in this policy as a land use investment. Mr. Stiffier stated that from an investment strategy, land purchases are more a reallocation of asset classes rather than an expenditure of public funds. He stated that this policy is focused on liquid • or cash. The City has • in parks or buildings and ♦ • some of the things being managed in addition to cash. Ms. Alutto stated that is something very interesting to look at as a total investment umbrella. Ms. Alutto stated that she has no issues with the suggested modifications. She suggested bringing this back to their November meeting. Mr. Stiffier confirm some monitoring/benchmarking language added as well as cleaning up the sentence referenced by Mr. Keeler. He clarified that Staff is suggesting removing that brokers have to sign the investment policy under the statements • compliance. This will eliminate some bureaucracy. Mr. Stiffler stated that with weighted average life and final maturity, this takes the expiration date past the existing 5 -year time horizon. He referenced asset -back securities and as a class, they are worth discussion. The Committee had no additional questions. Mr. Stiffler committed to circulating the updated policy to the Committee in advance of the November meeting. There being no further business to come before the Committee, the meeting adjourned at 5:37 p.m. (_�4uat�yrk �of�ouncil