Finance committee hears investment plan from Government Portfolio Advisors as $25 million in bond proceeds hit city account

The City of Santa Fe Finance Committee heard a presentation Aug. 25 from Government Portfolio Advisors on a proposed investment strategy to manage portions of the city’s operating funds and recent bond proceeds.

The presentation matters because the city reports roughly $389,000,000 in its operating fund and last week closed a $25,000,000 general-obligation bond sale that staff said is now in the city’s bank; how those dollars are invested affects liquidity and potential earnings available for operations and capital projects.

Deanne Woodring, president and senior adviser at Government Portfolio Advisors (GPA), told the committee her firm proposes a core investment portfolio that would be laddered with U.S. Treasury and agency securities, with average maturity around two years and individual maturities limited to five years to match the city’s current policy constraints. Woodring said GPA’s initial proposal called for building a $75,000,000 core portfolio and that the firm would work with city staff to develop an updated investment policy and ongoing compliance reporting.

Woodring said allowable securities under the city’s policy currently include U.S. Treasuries, federal agencies, New Mexico municipal bonds and money-market instruments, and that the policy’s maximum maturity constraint is five years. She also told the committee that state statute “6 10 10” allows longer maturities (up to 10 years) and that any change in allowable securities would be proposed in a revision to the city’s investment policy.

On fees, Woodring said the firm’s schedule is 4 basis points annually on the total balance invested. Councilor Lindell asked for arithmetic; Woodring stated that, at $75,000,000 invested, the fee would be $3,035,000 a year. (That number is the presenter’s statement during the meeting.)

Councilor Lee Garcia and others pressed on liquidity and risk: city staff described that of the $25,000,000 in recent bond proceeds, public works projects are expected to need $9,000,000 in the first year and roughly $8,000,000 in each of the next two years, so the remainder could be invested to earn yield until those cash flows are needed. Staff and the adviser explained two choices if funds were needed before maturities: let scheduled maturities provide cash flows or sell securities, which could produce a gain or loss depending on prevailing interest rates.

Assistant Finance Director Alexis Lautaro was identified by staff as the city’s internal point for this work; staff said the city amended its ordinance earlier this year to allow contracting for this role and went through an RFP process that selected GPA.

No formal committee vote was required or taken on the adviser’s proposal at the Aug. 25 meeting. City staff did report that the $25,000,000 in bond proceeds from last week’s closing are in the city’s account and that GPA will return with an updated investment policy, recommended constraints, and compliance reporting for committee and council review.

The presentation included market context: Woodring described recent higher interest-rate levels and said the firm seeks to capture market returns within legally allowed securities rather than maximize riskier returns. She said GPA would invest primarily in high-quality Treasuries and agencies, maintain custody and reporting separation, and provide a compliance report tied to the city’s custodial statements.

Next steps identified during the meeting: GPA and city staff will draft and present a proposed investment policy and portfolio structure for the finance committee’s review, present compliance and reporting templates, and recommend an initial amount of investments to deploy under the agreed policy once approved.

Speakers at the Aug. 25 presentation included Deanne Woodring and Samantha from GPA; Director Oster; Assistant Finance Director Alexis Lautaro; and members of the finance committee including Councilors Lindell, Cassatt and Lee Garcia. Staff also announced the bond closing and that the proceeds are in the city’s account.