Item - 2017.EX25.7

The Executive Committee:

1.  Referred the item to the Deputy City Manager and Chief Financial Officer, with the request that he consult with the Investment Board on the draft Investment Policy in Attachment 1 to the report (May 2, 2017) from the Deputy City Manager and Chief Financial Officer, prior to submitting the final Investment Policy for Council's consideration before January 1, 2018.

This report recommends a revised Investment Policy for Council's consideration.  The proposed Policy responds to amendments made by the Province through Ontario Regulation 360/15 ("the Regulation"), under the City of Toronto Act, 2006 that allow the City to invest its general and sinking funds, according to the "Prudent Investor" standard. This standard commonly guides pension and endowment fund investing in Ontario and other jurisdictions. Under this standard, the City will have considerably greater flexibility in the types of investments that it can make but the City must, according to the new regulation, "exercise the care, skill, diligence and judgement that a prudent investor would exercise" in making these investments.

This authority will come into effect on January 1, 2018.  Prior to that date, the City is required to complete the following two steps:

1.  Establish an Investment Board (which was the subject of a report that was adopted by Council at its meeting held on March 28 and 29, 2017) to which Council delegates its investment powers, and

2.  Approve an Investment Policy that will direct the Board's activities by establishing the City's requirements with respect to:

a.  Return on Investment;

b.  Risk Tolerance; and

c.  Liquidity

The Policy is being tabled in draft and it is recommended that it be forwarded to the Investment Board for its review and comments.  Staff will prepare a final Investment Policy for Council approval that considers the Investment Board's comments.

The Board is required by regulation to develop an Investment Plan and strategy to be used to implement the Investment Policy.  Their Plan will define the methods and means that the Board will use to manage the City's investment portfolios within the parameters of the Policy.