FINANCE & INTERGOVERNMENTAL COMMITTEEAGENDA

Regular MeetingWednesday, June 28, 201710:00 AM - Heritage Room2580 Shaughnessy Street

1. CALL TO ORDER

2. ADOPTION OF THE AGENDA

2.1 Adoption of June 13, 2017 Finance and Intergovernmental CommitteeMeeting AgendaRecommendation: That the June 13, 2017 Finance and IntergovernmentalCommittee Meeting Agenda be adopted.

3. CONFIRMATION OF MINUTES

3.1 Minutes of May 30, 2017Recommendation: That the Minutes of May 30, 2017 Finance andIntergovernmental Committee meeting be adopted.

4. DELEGATIONS

4.1 TranslinkAn update on Translink initiatives

5. REPORTS

5.1 Municipal Finance Authority Survey on Socially Responsible InvestingRecommendation: That the Director of Finance be authorized to respond tothe survey on behalf of the City of Port Coquitlam that the city is notinterested at this time in investing in an SRI fund.

6. RESOLUTION TO CLOSE

6.1 Resolution to Close the Finance and Intergovernmental CommitteeMeeting of June 13, 2017Recommendation: That the Finance and Intergovernmental CommitteeMeeting be closed to the public under the following subsection of section 90(1)j) information that is prohibited, or information that if it were presented in adocument would be prohibited, from disclosure under section 21 of the

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Freedom of Information and Protection of Privacy Act;k) negotiations and related discussions respecting the proposed provisionof a municipal service that are at their preliminary stages and that, in the viewof council, could reasonably be expected to harm the interests of themunicipality if they were held in public.

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Minutes of the Meeting of the Finance & Intergovernmental Committee

Held on May 30, 2017

FINANCE & INTERGOVERNMENTAL

COMMITTEE MINUTES OF

TUESDAY, MAY 30, 2017

To review all matters referred to the Committee that are related to the

overall administration of the City including human resources, the City's

finances including audit, and other government organizations.

A meeting of the Finance & Intergovernmental Committee of the Corporation of the City of Port Coquitlam

was held in the Heritage Room, City Hall, 2580 Shaughnessy Street, Port Coquitlam, on May 30, 2017 at 4:45

pm.

PRESENT:

Mayor Greg Moore

Councillor Laura Dupont

Councillor Michael Forrest

Councillor Darrell Penner

Councillor Glenn Pollock

Councillor Dean Washington

Councillor Brad West

STAFF REPRESENTATIVES:

John Leeburn, Chief Administrative Officer

Lori Bowie, Director of Recreation

Nick Delmonico, Fire Chief

Karen Grommada, Director of Finance

Gabryel Joseph, Manager of Corporate Office & Lands

Jennifer Little, Manager of Planning

Steve Traviss, Director of Human Resources

Laura Lee Richard, Director of Development Services

Robin Wishart, Director of Corporate Support

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Minutes of the Meeting of the Finance & Intergovernmental Committee

Held on May 30, 2017

1. ADOPTION OF THE AGENDA

1.1 It was moved and seconded:

That the Agenda of the May 30, 2017 Finance and Intergovernmental Committee meeting be

adopted.

Carried

2. ADOPTION OF MINUTES

2.1 It was moved and seconded:

That the Minutes of the May 23, 2017 Finance and Intergovernmental Committee meeting be

adopted as circulated.

Carried

3. REPORTS

3.1 CRCP April Monthly Report

A discussion on the CRCP April Monthly report.

3.2 CRCP SCOPE OF OFFSITE WORKS

A discussion on the CRCP Scope of Offsite Works.

4. ADJOURNMENT

It was moved and seconded:

That the Finance and Intergovernmental Committee Meeting of May 30, 2017 be adjourned at 4:52pm.

Carried

________________________________ ____________________________________

Mayor Moore Karen Grommada

Mayor Director of Finance

The official Minutes of the May 30, 2017 Finance & Intergovernmental Committee Meeting are not read and adopted until certified correct by the Committee

Chairperson.

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Report to FIG

DATE:

June 5, 2017

TO:

Finance and Intergovernmental Committee

FROM:

Karen Grommada, Director of Finance

SUBJECT:

MUNICIPAL FINANCE AUTHORITY SURVEY ON SOCIALLY

RESPONSIBLE INVESTING

EXECUTIVE SUMMARY

The Municipal Finance Authority of British Columbia (MFABC) has issued a survey to find out

if there is an interest from regional districts and municipalities for a socially responsible

investing (SRI) – type pooled investment fund option. This report provides information on SRI,

and staff is seeking direction on how the city will respond to the survey.

The city’s investments are limited by the guidelines in the Community Charter, and the city

currently invests with credit unions and MFABC to maximize investment returns while

maintaining short term liquidity. Socially responsible investing may be defined as an investment

strategy which seeks to consider both financial return and social good to bring about social

change. SRI funds may use negative and/or positive screens of environmental, social and

governance risks to align a portfolio to specific values. Because with SRI there is a higher risk,

higher fees and less liquidity than the investments the City is currently investing in, it is

recommended that the Director of Finance respond to the survey that the city is not interested at

this time in investing in an SRI fund.

RECOMMENDATION

That the Director of Finance be authorized to respond to the survey on behalf of the City of Port

Coquitlam that the city is not interested at this time in investing in an SRI fund.

BACKGROUND & COMMENTS:

The Municipal Finance Authority of British Columbia (MFABC) has requested feedback from

all regional districts and municipalities as to their interest in a socially responsible investing

(SRI) – type pooled investment fund option. One individual per municipality is to submit a

response on behalf of the organization. This report provides information on SRI and staff is

seeking direction on how the city will respond to the survey. See attachment 1 for the survey.

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Guidelines on the investment of municipal funds in BC are laid out in the Community Charter.

Eligible investments under Section 183 of the Charter include:

Securities of the Municipal Finance Authority;

Pooled investment funds under section 16 of the Municipal Finance Authority Act;

Securities of Canada or of a province;

Securities guaranteed for principal and interest by Canada or by a province;

Securities of a municipality, regional district or greater board;

Investments guaranteed by a chartered bank;

Deposits in a savings institution, or non-equity or membership shares of a credit union.

Guidelines for MFABC pooled funds are laid out in the Municipal Finance Authority Act.

Eligible investments under Section 16 of the Act and the Pooled Funds Investment Policy

include:

Investments permitted under the provisions of the Trustee Act respecting the investment

of trust property by a trustee (“Prudent Investor Rule” guides these funds)

Highly rated commercial paper issued by Canadian corporations;

Investment-grade rated Canadian corporate bonds;

o Includes securitized instruments (i.e. credit card trusts);

Deposits, notes and certificates guaranteed by a savings institution;

Securities of a Canadian province or municipality; and

Securities of the government of Canada or the United States.

At December 31, 2016, the City of Port Coquitlam had the following types of investments:

Cash in the bank Guaranteed by a chartered

bank

$ 7,245,717

Term deposits with credit unions Guaranteed by Canada $160,000,000

Municipal Finance Authority Pooled Funds Pooled investment funds $ 6,062,702

In common with many public institutions, the MFABC has been approached with requests to

divest their pooled investment fund program of fossil-fuel related investments. The MFABC

believes that the narrow approach of divesting from fossil-fuel related investments is not feasible

(see attachment 2), however, they are open to exploring a broader, “socially responsible

investing” based approach to investment management.

Socially responsible investing may be defined as an investment strategy which seeks to consider

both financial return and social good to bring about social change. SRI funds may use negative

and/or positive screens of environmental, social and governance risks to align a portfolio to

specific values.

Examples of potential environmental, social and governance screens are:

Environment Social Governance

Greenhouse gas emissions Fair trade products Executive compensation

Climate change impacts Workplace health and safety Bribery and corruption

Renewable energy Labour standards Shareholder rights

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Energy efficiency Child labour Business ethics

Resource depletion Employee relations Board structure

Chemical pollution Diversity Risk management

Waste management Freedom of association Source: MFABC & Principles for Responsible Investing Association

This approach does come with potential negative financial trade-offs which can include, but are

not limited to:

Increased cost and complexity of managing an SRI type fund

Reduced diversification

Reduced liquidity

Uncertainty surrounding the concept of “fiduciary responsibilities” in this context.

In order for a new SRI-based fund to be viable, several matters would need to be addressed:

A resolution from the city demonstrating an understanding of the potential increased risk

and higher fees;

A commitment to invest a minimum amount of capital for a period of no less than three

years; and

A commitment to participation in the development of SRI-based screening criteria and

various policies to set up and administer the proposed fund.

The MFABC survey has been designed to gauge the general level of interest in the establishment

of an SRI-based pooled investment fund (Appendix 2).

The SRI-based pooled investment fund is not recommended by staff as an investment option for

the city due to the reduced liquidity during a period of time when the city has a significant cash

flow requirement with the community recreation complex, in addition to the expected reduced

investment revenue that would be received in comparison to the current investments because of

the higher administration fees.

It is recommended that the Director of Finance be authorized to respond to the survey on behalf

of the City of Port Coquitlam that the city is not interested at this time in investing in an SRI

fund.

CONCLUSION

Taking into consideration the city cash flow requirements and the negative impact to investment

revenue if the city were to invest in a SRI fund, it is recommended that the city respond to the

MFABC Socially Responsible Investing Survey, that the city is not interested at this time.

Prepared by Karen Grommada, Director of Finance

Attachment 1: MFABC Socially Responsible Investing Survey

Attachment 2: The MFA’s position on divesture from fossil-fuel related assets

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Socially Responsible Investing

Survey InstructionsSurvey InstructionsSurvey InstructionsSurvey Instructions

Each BC local government may submit only ONE (1) survey. To submit a

response, you must provide your contact information andandandand you must

acknowledge that you are the person authorized to respond to the survey on

behalf of your local government.

Local Government*

Choose option...

Your Name*

Position or Job Title*

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Email Address*

Phone Number*

Acknowledgement*

I am the person authorized to submit this survey on behalf of my local

government.

Question 1*

Would your Municipality / Regional District be interested in investing in a

socially responsible pooled investment fund if offered by the Municipal

Finance Authority of BC? (If "No" is selected, you may skip to Question 4.)

Yes

No

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Question 2

Would your organization accept the following requirements of participation in

a socially responsible (SRI) fund:

a) Funds must remain on deposit for a minimum period of 3 years to allow the

fund to defray costs and ensure viability.

b) Confirm your understanding that an SRI-type fund has reduced

diversification and attracts higher fees relative to traditional pooled funds.

c) Confirm commitment, prior to investing, either through a council resolution

or an investment policy, that specifically allows for investment in an SRI-type

fund.

d) A representative from your organization must be willing to participate upon

request in an “advisory group” to define the parameters of such a fund.

Yes, agree to all.

No.

Question 3

What is the dollar amount your organization would be willing to invest in an

SRI fund?

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Question 4

Do you have any additional comments you would like to share with the MFA

about Socially Responsible Investing?

Submit

Save and resume later

0%

Powered by Surveypal

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MEMORANDUM

DATE: September 7, 2016

TO: Municipal Finance Authority Members

RE: The MFA’s position on divestiture from fossil-fuel related assets

The MFA Investment Advisory Committee and Trustees received several reports from both

our fund managers, Phillips, Hager, and North, and management in late 2015 and early 2016

on the topic of fossil fuel divestment. In addition, we monitored the review processes and

outcomes of other institutional investors, namely large Canadian Universities, to the

divestiture question. It is worth noting that every Canadian University that we are aware of

that has formally considered this option has elected not to pursue divestiture.

As a result of these reviews and third party analysis, the committee instructed MFA

management to maintain the status quo with respect to Pooled Fund investment offerings at

this time. MFA Members were informed of this decision at our recent Annual General

Meeting.

The issues we considered included:

The difficulty of defining what corporations would be considered fossil fuel or related

companies as there are a wide variety that could be contemplated, including

extraction, pipeline, transportation, and other companies that are large scale users of

fossil fuel. There is no industry standard around this terminology.

The impact that divestment would have in concentrating existing portfolios into

remaining sectors, resulting in reduced diversification.

The primary goals of MFA Pooled Funds which are to provide the lowest possible cost

and risk, for the highest possible return for our customers.

Unlike other investment portfolios, our Pooled Funds are limited to fixed income

investments by our Act and may not invest in equities or outside of Canada. To our

knowledge, there are currently no fossil-fuel-free fixed income funds in Canada.

Bond holders have less influence than shareholders. As BC Local Governments are

precluded from investing in equities, the amount of influence that could be exerted is

questionable.

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Oil and gas related businesses represent a meaningful portion of the Canadian

economy and capital markets, and some BC communities are well-supported by these

industries. Any changes made to the structure of the MFABC investment funds affect

all clients invested in the funds, not just those that wish to divest from fossil fuels.

Many of the large fossil fuel intensive companies are also some of the largest investors

in renewable energy production and research, therefore excluding them also excludes

opportunities to invest in fossil-fuel alternatives.

Many standalone renewable energy companies are non-investment grade, carrying a

credit rating of below BBB, making them ineligible for MFABC’s investment funds.

Those that are investment grade are few in number and small in issuance and have

low secondary market liquidity, making them difficult or expensive to buy and sell.

The difficulty to create new fund(s) with enough consistent investment to offset

related costs (economies of scale and consistency of amounts invested to sustain a

viable fund).

We have had very little demonstrated demand from our clients to make changes to

existing Pooled Fund offerings.

The fact that the Pooled Fund Portfolios are voluntary and our clients have other

options to those products available to them.

If you have questions or comments to share with our team and our Trustees, please email us

at: mfa@mfa.bc.ca

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