SAN CLEMENTE : Council Tightens Investment Policy

In the aftermath of the county financial debacle, City Council members have approved an investment policy they hope will result in a closer watch on the city’s money.

The new policy will diversify city investments, steer away from risky financial instruments and pinpoint the value of the city’s portfolio every month.

“There are times when we’re going to see the value of this account grow less,” said Councilman Joseph Anderson. “We need to remember not to get excited the first time it goes below the horizon.”

The policy initially called for banning all risky investments, such as those blamed for the collapse of the county’s portfolio. But Councilman Steve Apodaca noted that the city would violate the policy if it continues to participate in the state investment pool, which still includes a small number of higher-risk investments.

“I’d hate to pass a policy that we’re immediately in violation of,” he said.

The council amended the policy to prohibit the city from directly participating in risky investments. Mutual funds, money market accounts and investment pools would still be allowed.

Council members also agreed to require most investments to be cashed in within two years.

“They generally won’t go that far,” said city Finance Director Paul Gudiersson. “About 25% can go over two years, but that won’t happen a lot.”

Other key points of the investment policy include:

* Requiring three bids for every investment transaction.

* Yearly reviews of investment policy, procedures and transactions by an independent auditor.

* Mandating that any entity making an investment on behalf of the city sign a form stating they understand San Clemente’s investment policy.

The council also approved spending $8,800 to buy computer software that will help track the city’s investments.