Land for parks, public parking, easements and roadways sometimes attracts the attention of the city of Tehachapi to invest, purchase, or lease property and invest in bonds or other financial opportunities.
The latest policy outlining the scope of transactions and how public surplus funds may be used to gain a return was discussed at a recent City Council meeting. In March, the council approved the current investment policy without any changes.
“We are not real estate brokers. We don’t buy or sell. If we buy it's because there is a public need. We don’t buy to make a profit,” City Manager Greg Garrett said in an interview.
The city owns various parks, buildings and yards within city limits and may request easements for public right of ways, construction, maintenance or to enhance roads, and may purchase property to maintain city assets or infrastructure, Garrett said.
If the city is interested in property, it will appear under the closed session agenda. If any agreement or closure is reached, it's announced after closed session.
Public agencies and local officials may invest public “surplus monies not required for the immediate necessities of the local agency,” according to the city’s 2019 investment policy.
“The investment policy applies to all financial assets of the city of Tehachapi as identified in the city’s audited Annual Financial Report, with the exception of those financial assets governed by bond indentures or bond resolutions,” said the policy.
More than $13 million in investment funds are listed in the city of Tehachapi’s Treasurer Report of January. These funds come under the Local Agency Investment Fund, Central San Joaquin Valley Risk Management Authority, Successor Agency to the Tehachapi Redevelopment Agency Fund and other enterprise, capital and special district investments.
Some of these investments are from bonds, funds from the state treasurer’s office or property taxes that have been used to revitalize downtown.
The LAIF program began in 1977 to provide local agencies with an investment alternative — if they choose to participate in a major portfolio that includes the state’s government funds. Local agencies are free to withdraw their funds at any time and the state is prohibited by law from ever borrowing LAIF dollars or moving the money into the state budget, said Mark DeSio, communications director for State Treasurer Fiona Ma.
“The State Treasurer's Office takes very seriously the safety and liquidity of our Local Agency Investment Fund. We continually review policies and take the proper steps necessary so that public funds are invested correctly and wisely," added DeSio.
Hannah Chung, the finance director for the city, is in charge of investment decisions. Management of the investment decisions also comes from “trustees and fiduciaries subject to the prudent investor standard,” according to the policy. The City Council and management have a say in city investments.
Chung declined to comment on the investment policy.
The policy added, "The finance director will maintain a list of financial institutions, selected on the basis of credit worthiness, financial strength, experience and minimal capitalization authorized to provide investment services." They are also “responsible for all transactions undertaken and shall establish a system of controls to regulate the activities of subordinate officials.”
Three city officials have authority to sign checks or make deposits, transfers, or disbursements into any city bank account. Such transactions must be signed by two of three people: Chung, Garrett or current city treasurer Susan Showler.
Garrett is authorized to make purchases less than $30,000 without taking the matter to the City Council for approval and is the main purchasing agent within the city. This procedure was approved by City Council vote and purchases are allowed as long as they are within the scope of the investment policy.
For purchases of $30,000 to $70,000, three bids will need to be obtained and one bid approved by the City Council.