City finance staff presented a revised draft investment policy intended to replace the existing 1995 policy in the municipal code and to be adopted by council resolution.

Staff said the updated policy reflects the city’s current pooled-cash accounting, adds training requirements for staff and guidance for external managers, and explicitly lists prohibited investments — including cryptocurrency, which staff said is forbidden under state law as an allowable municipal investment. On dealer and counterparty requirements, staff described a more comprehensive questionnaire that will ask for current securities licensing, FINRA registration, Washington Securities Division registration and municipal references.

The draft adds a detailed diversification schedule to replace the old policy’s single 25% rule. It also proposes a structure for average portfolio maturity (a target average not to exceed about 3.5 years) and a hard cap that would prevent investments longer than five years. Staff said they will remove a proposed language requiring the lesser of 15% or $10,000,000 of the portfolio to mature within six months because that would force a shift out of the state local government investment pool (LGIP) and reduce interest earnings.

On performance measures, staff proposed changing the benchmark from the 6-month Treasury and federal funds averages to the LGIP yield rate; staff noted the LGIP yield was about 4.4% and the city portfolio’s February yield was about 3.7%. Staff said the city’s safekeeper bank is BNY Mellon, and that monthly transaction reporting (and quarterly portfolio summaries) will comply with the RCW as required.

Committee members asked for practical clarifications about training, downgraded securities and whether the city would automatically bring certain events to council attention. Staff said training is often provided by the city’s broker and through conferences such as the Washington Public Treasurers Association meetings, and that if a security downgrade occurred the finance director (with the investment adviser) would recommend action within 30 days and would likely notify council.

Committee members generally praised the update and suggested that the packet for council include a redline showing changes against the existing policy. Staff said they would move forward with the draft and recommended adopting the policy by resolution rather than leaving it in the municipal code.

The committee did not take a formal vote at the meeting; staff requested committee feedback before the item goes to the full council.