Carlsbad board reviews $948M portfolio, discusses 12% internal liquidity target and $50,000 data subscription request

CARLSBAD — The Carlsbad Investment Review Board reviewed its fiscal year 2026 third-quarter investment report and discussed a proposed internal liquidity target and a budget request for market data and consulting.

Finance Director Zack Korech presented the quarterly portfolio review, saying the book value of the portfolio at quarter end was $948,000,000. He reported transaction activity for the period included $52,000,000 in maturities and $95,000,000 in purchases, with $22,500,000 in investment calls and an overall net increase of about $19,800,000 across roughly 100 investment transactions. "In total, there were $52,000,000 of maturities, $95,000,000 in investment purchases," Korech said during the presentation.

The presentation showed month‑to‑month yield improvement, with the portfolio yield rising from about 3.63% in January 2026 to about 3.71% in March 2026. Korech told the board that while rising interest rates cause mark‑to‑market declines on existing securities "that's just a paper loss" for a buy‑and‑hold portfolio and that the higher rates allow the city to reinvest maturing funds at stronger yields.

Korech summarized recent City Council–approved changes to the investment policy, which the council adopted after the reporting period. Those revisions replace a prior two‑thirds operating‑budget / 12‑month maturities liquidity calculation with a six‑month operating‑expenditure forecast; they also align corporate note credit standards with state code (moving to a single-A requirement) and remove the prior modified‑duration cap. Korech said the policy changes were implemented by the council after the quarter closed and therefore are not reflected in the quarter's performance figures.

Board members pressed on how the liquidity changes will be implemented. Korech described an internal, conservative "soft" target of roughly 12% overnight liquidity as an initial approach to safeguard cash flow — about three times the city's largest historic cash drawdown of roughly $40 million, or about $120 million in liquid assets — but emphasized that the 12% figure is an internal operating target and is not written into the investment policy. "The only thing that's in the IPS is that we maintain sufficient liquidity to meet our next six months' operating expenditure requirements," he said.

Board members also discussed contingency options for a severe liquidity stress, including the possibility of a revolving credit line; Korech said staff has not fully explored a line of credit and that municipalities typically have planning time when large capital projects (he cited Veterans Memorial as an example) affect cash flows.

Separately, Korech confirmed the preliminary budget presented May 19 includes a $50,000 request for a Bloomberg terminal subscription and ad hoc investment consulting services. He said final budget adoption will be decided June 16 and, if approved, the budget items would take effect July 1. "Included in that budget document in the presentation was a $50,000 request for both the Bloomberg terminal subscription as well as ad hoc investment consulting services," Korech said.

Board member Ganelan moved to agendize a deeper discussion of whether the city's assets‑under‑management and scale warrant adding permanent internal investment staff rather than continued reliance on ad hoc consultants; a board member seconded the motion and the chair said the item will be placed on a future meeting agenda. The motion to agendize was approved for a future meeting; no formal vote tally was recorded in the transcript.

The meeting opened with routine roll call and approval of the minutes of the special meeting held Feb. 27, 2026; Chair Peacocks moved to approve the minutes, a board member seconded, and the motion passed unanimously. The meeting adjourned after brief discussion of peer engagement and the schedule for the next quarter's review.