Farmers Branch adopts investment policy, approves participation in TexStar and LOGIC pools amid procurement questions

The Farmers Branch City Council unanimously adopted its annual investment policy and approved resolutions authorizing participation in the TexStar and LOGIC local government investment pools on June 3.

Leanne Huddleston, director of finance, presented the item with Greg Warner of Hilltop Securities. Huddleston said the policy review is an annual requirement under the Public Funds Investment Act and that Hilltop would serve as the city's investment adviser. "We have been hired as the city's investment adviser," Warner said, adding that advisers do not exercise discretionary control: "We do not take control of funds. We do not exercise discretionary authority over those funds. The ultimate decision and the ultimate authority for the investment of the funds remains with the city's investment officers, specifically the finance director."

Council discussion focused on three topics: the pools themselves, the size and handling of the city's portfolio, and procurement process concerns after recent staff turnover. Warner explained that local government investment pools operate like money-market funds with overnight liquidity and a goal of maintaining a stable $1 net asset value; TexStar (a government-only pool) invests in U.S. Treasury and agency obligations, while LOGIC includes commercial paper and corporate obligations and typically offers higher yield and slightly higher risk. Huddleston reported approximately $46 million in city investments as of April 30, with roughly $30 million currently in TexPool; Hilltop advised splitting funds among multiple pools for diversification, and suggested maintaining 25–35% of the portfolio in highly liquid buckets.

Councilmember Roman and others asked about fees and procurement. Warner said TexStar charges about 6 basis points and LOGIC about 9.75 basis points; Hilltop's contractual fee would be approximately 4 basis points, and total annual adviser/management fees were estimated in the $50,000–$60,000 range. Councilmembers noted the city did not issue a request for proposals (RFP) for an investment adviser after an unexpected departure of the prior treasury staff. Huddleston said the Hilltop arrangement was an interim measure to ensure securities were under custodianship and to maintain oversight while the finance department filled vacancies; the city manager and staff said the council could revisit selection of a permanent adviser in the future.

Council approved three items: Resolution No. 2025‑069 adopting the investment policy, Resolution No. 2025‑083 authorizing participation in TexStar, and Resolution No. 2025‑084 authorizing participation in LOGIC. Staff said they would report back as the finance department completes recruitment and to confirm adherence to procurement policy for any longer‑term contracts.