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LAKE FOREST : City Adopts Interim Investment Policy

The City Council adopted a temporary investment policy on Tuesday that will manage the city’s remaining cash while about $9.5 million in reserve funds remain frozen by the county.

The interim plan will ensure that the $4.5 million accessible to the city will not be vulnerable to the collapse of a single organization by spreading the funds into three investment groups.

The policy also ensures that remaining reserve funds will be easily available for emergencies by requiring that all investments mature in less than a year.

Council members also took the recommendations of financial director Dave Bass a step further by calling for monthly reviews of the city’s investment status.

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The council also banned reverse bond purchases and indicated it will evaluate the interim policy in July.

Under the interim plan, no more than 50% of city investments will be deposited with any single investment source.

Of the $4.5 million in city reserves, about $3.5 million is in the Local Agency Investment Fund. The remaining $1 million is deposited in the bank.

The city will funnel about $2 million into federal securities, which do not include any risky derivative investments. The $2-million investment will be completely liquidated by June.

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In addition to requiring that all investments mature within a year, the policy will see that 75% of the city’s portfolio matures in less than six months.

The city will consider permanent changes to its investment policy in the future. The task of deciding the nature of those changes will be handed to an investment review committee that will be appointed within the next several weeks.


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