The Local Agency Investment Fund (LAIF) was created by statute in 1977 as an investment alternative for California’s local governments and special districts and is administered by the State Treasurer’s Office.  The program offers local agencies the opportunity to participate in a major portfolio which invests hundreds of millions of dollars using the expertise of the State Treasurer’s Office.  Participating agencies can withdraw their funds from LAIF at any time making funds readily accessible for cash flow needs.  The City currently has one LAIF account, which is used to temporarily hold idle cash and gain a better rate of return than our regular bank account.  Each LAIF account is limited to $75 million.  Staff is requesting to set up another LAIF account under the Garden Grove Sanitary District, in case large cash flow comes in before a suitable investment can be made, as well as the potential need for significant cash outflows anticipated in the short term.  LAIF is an allowable investment under the the City’s Investment Policy.

The City banks with MUFG Union Bank, Ltd. All cash related transactions including accounts receivable, accounts payable, and payroll are all processed through the City's General banking account under Union Bank.  To achieve higher rate of return and maintain short term liquidity, the City places its temporarily uninvested idle cash with LAIF.  LAIF is highly liquid and can be used as an extended "checking account". 

Each LAIF account allows a maximum of $75 million to be invested.  In a volatile market condition, and with the influx of property tax revenue at certain times of the year, public agencies often times would have more than $75 million in idle cash before a suitable investment can be made.  It is typical for a City to have multiple LAIF accounts under its component units, each are separate legal entities.  The City currently has only one account with LAIF, which covers all idle cash for its component units including the Garden Grove Sanitary District, Housing Authority, and the Successor Agency.  Depending on the timing of incoming revenues and outgoing expenditures, the current LAIF account can reach the limit of $75 million from time to time.  In order to maximize the benefits of LAIF, it is recommended that the Garden Grove Sanitary District open a separate account with LAIF.  This will ensure that the City can invest additional funds in LAIF when needed. 

LAIF requires that the GGSD Board adopt a resolution authorizing the investment of monies in LAIF. 

There is no cost to participate in Local Agency Investment Fund.

It is recommended that Sanitary District Board:

• Adopt the attached resolution authorizing investment of monies in the Local Agency Investment Fund.