Danville Express

Newsfront - January 19, 2007

Town fine-tunes investment policy

$40 million invested for best yield, some liquidity

by Jordan M. Doronila

The Town of Danville's investment policy keeps its millions of dollars safe, said town staff, while giving a prudent yield.

The Danville Town Council last month approved the town's investment policy, guidelines of how its money is invested. Council members and staff review the policy every year, said Town Finance Director Elizabeth Hudson.

"We have done well with this policy," Hudson said. "It safeguards the money by very clearly saying what you can invest in five years."

The major change in the document this year involved making its wording compliant with California state code, specifically about which personnel are authorized to invest and stating they must follow the "prudent investor standard."

The town has an operating budget of $22.5 million for 2006-07. It invests $40 million in federal agencies; $9 million in U.S. Treasury Bonds; $10 million in cash in local agency funds; and $5.3 million in U.S. Corporate Notes.

The local agency funds are highly liquid.

"We can pull money out of it daily," Hudson said.

The policy also defines the criteria of what investments are appropriate for the town's portfolio, Hudson said.

But the town is unauthorized to purchase stock, she noted. "It (the policy) is very conservative," she said.

Some of the federal agencies the town invests in include Fannie Mae and the Federal Home Loan Corp., also known as Freddie Mac.

The policy has been refined incrementally over the years, said Hudson, in her staff report to the Town Council. She and an independent advisor have reviewed the policy this year.

She also noted the policy's objectives continue to be the safety of its principal, required liquidity of investments, and a prudent yield.

Contact Jordan M. Doronila at jdoronila@DanvilleWeekly.com.

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