City treasurer reports $76 million portfolio, says safety and liquidity guide investments

Redondo Beach City Treasurer Eugene Solomon presented the fiscal year 2024-25 second-quarter investment report to the Budget and Finance Commission on Feb. 13, saying the city's portfolio totaled about $76 million as of Dec. 31, 2024.

Solomon told the commission that the portfolio was in compliance with the city's investment policy and that the review prioritized "safety, liquidity, and yield, in that order." He said the portfolio allocation at the December cutoff was roughly 42% in U.S. Treasuries, 42% in U.S. federal agencies, about 16.5% in corporate securities, and relatively small amounts in money market funds and LAIF/CAMP-type liquidity accounts. He summarized the quarter-to-date interest earned year-to-date as $1,070,841.28, with roughly $642,000 contributed to the general fund to date; the budgeted contribution to the general fund for the full fiscal year is $1,500,000.

Deputy City Treasurer Nilesh Mehta described the portfolio's weighted average maturity at about 1.46 years and said the portfolio's short-term liquidity position (measured as percent of portfolio maturing within 365 days) was 37.7%. Mehta told commissioners that the city had opened a CAMP account after council approval and that roughly $20 million in property taxes had been received at the end of the quarter; because that cash posted after the report cutoff, it was not reflected in the December portfolio values but had been invested in CAMP in January.

Greg Bals, the investment consultant on Zoom, framed the market context: the Federal Reserve had cut the fed funds rate about one percentage point from the prior year's peak and the U.S. Treasury yield curve had materially changed during the period. Bals said longer-term 3' to 5'year yields remained high by historical standards and that, when cash is available, the city can consider lengthening duration to lock in higher yields. "We still believe there are opportunities to take more duration to take advantage of higher yields with the safety we require," Bals said.

Commissioners asked several operational questions. Chair Allen and Commissioner Shervin asked how much cash was available to purchase longer-term securities now; Mehta replied that most of the portfolio was invested and that the next material maturities in the calendar year total about $31 million, distributed across months and therefore available at maturity to consider longer-duration purchases. Mehta said there were no material purchases in the quarter other than moving cash to CAMP and to money-market liquidity accounts.

A motion to receive and file the treasurer's quarterly report was made and approved by voice vote.

The commission and staff agreed to provide commissioners a maturities schedule (by month) in future presentations so the advisory panel and the consultant can anticipate available cash and timing for possible longer-duration purchases.

The commission also discussed inflation risk and whether the city's portfolio yields will keep pace with consumer price inflation. Mehta and Bals reiterated the department's priorities: safety, then liquidity, then yield, and said the treasury and consultant monitor opportunities to extend duration when cash flow and liquidity allow.