Under state rules, cities can invest up to only $40 million at a time per inter-government agency. Glendale already has $80 million invested under the auspice of the city and its Redevelopment Agency.
Enter the long-dormant Financing Authority.
The last time the entity — made up of sitting council members, much like the Redevelopment Agency — was active was in 1999, when City Hall established it to help finance the new Police Station.
Now, 10 years later, the authority could see a second life under a proposal to the City Council on Tuesday.
“From my perspective, this is an easy way of maximizing return without putting city dollars at risk,” Borucki said.
With an interest rate at about 1.85%, the state fund is offering a more attractive alternative to the more typical money-market funds, which are now at about .45%, according to a city report.
The city’s roughly $440 million investment portfolio is weighted heavily on safe, short-term markets in order to keep the money liquid and easily accessible in order to take advantage of changing yields.
While the Local Agency Investment Fund, established in 1977, is typically for longer-term investments, cities can still withdraw money on a day’s notice, finance officials said.
“Obviously, we’ll take money out if the market recovers quicker,” Borucki said.
Investments in money-market accounts are typically for three months to a year at a time.
And despite the state’s ongoing fiscal woes, the fund is legally out of reach from lawmakers struggling to close billions in anticipated budget gaps.
“They have no claim to the money,” Finance Director Bob Elliot said.
If the City Council approves the new account Tuesday, the higher yield through the state investment fund could ultimately mean an additional $500,000 a year, even if the interest rate dropped from 1.85% to 1.25%, according to the treasurer’s report.
Roughly 25% of the return would be designated to the general fund, under the current makeup of the portfolio’s accounts, Elliot said.
The City Council will take up the matter at 2:30 p.m. Tuesday in council chambers, City Hall, 613 E. Broadway.
JASON WELLS covers City Hall. He may be reached at (818) 637-3235 or by e-mail at email@example.com.