City Treasury Invests $75M in LEAF Fund To Enhance Portfolio Liquidity

In the heart of Redondo Beach's City Hall, city officials gathered on August 14, 2025, to discuss critical financial strategies that will shape the city's fiscal future. The Budget and Finance Meeting, led by City Treasurer Eugene Solomon, focused on the city's investment policies and the performance of its financial portfolio.

A significant topic of discussion was the recent decision to increase the investment allocation in the Local Agency Investment Fund (LEAF) from $65 million to $75 million. This change aligns with state code requirements and reflects a strategic shift to enhance liquidity and returns on investments. Under the new policy, the city can allocate up to 100% of its assets into LEAF, which primarily invests in U.S. Treasuries and agencies, ensuring a balance between safety and yield.

Rick Phillips, the senior vice president and chief investment strategist from METRE Investments, provided insights into the city's investment performance. He reported that the current asset allocation includes 55% in treasuries, 25% in agencies, and smaller percentages in certificates of deposit and commercial paper. The effective rate of return for the city’s portfolio stood at 3.07%, slightly below the benchmark yield of 4.4%. This discrepancy has raised concerns among officials about the city's ability to maximize returns while maintaining liquidity.

The meeting also highlighted the importance of cash flow management, with Solomon emphasizing the need to meet both ongoing and unexpected cash requirements. The city has successfully met its cash flow needs for the quarter, but discussions revealed a cautious approach to future investments, particularly in light of fluctuating interest rates and economic uncertainties.

Commissioners expressed concerns about the city's financial health, particularly in comparison to neighboring cities. Redondo Beach's sales tax revenue growth lagged behind that of Hermosa Beach and Manhattan Beach, prompting discussions about the need for strategic initiatives to boost local economic activity.

As the meeting concluded, the commissioners unanimously approved the recommended changes to the investment policy, signaling a commitment to prudent financial management. The discussions underscored the delicate balance between ensuring liquidity, maximizing returns, and navigating the complexities of the current economic landscape. With a focus on stability and growth, Redondo Beach aims to enhance its financial resilience in the years to come.