so mario mentioned provides some options for including socially responsible investing criteria in the annual investment policy as well as our banking services request for a proposal that will be going out in the next couple months there are a couple different areas i'll be going over today first just providing some general background on the issue and why we're here today after that i'll be moving on to the annual investment policy i'm going to provide some sample policies that other municipalities what we're seeing other cities doing and then provide some options for including criteria in our investment policy as well as what to do with our current investments that potentially have social investment issues or concerns next i'll move on to the banking services request for proposal we are planning to distribute that in the next couple months i'll provide some background and framework for why we are issuing a request for proposal and then as well as provide what other cities are doing what criteria they might be using and then the options for including the criteria and our banking r so first just some general background on why we're here mister smile did give some background already but over the last couple months we have heard a lot of community concerns about some of the investments currently held by the city they're primarily related to the certificates of deposit certain certificates of deposits and certain corporate notes there's also been some concern raised with our banking relationship with union bank and that's largely related to the dakota access pipeline and their environmental polic environmental or what they might be investing in or funding it's actually union bank's parent company that provides the financing to dakota access pipeline we've also heard concerns a request from the community regarding adopting a socially responsible investment policy so that's kind of the framework of what started this and why we're here then on may rd at that finance committee mister samara provided a little background on the issue and at that finance committee did direct us to investigate different options for including criteria in the investment policy before i get into some examples of what other cities are doing i thought it'd be helpful to look once again at what our composition of our portfolio is right now we have about forty six percent agencies but you'll see we have about four percent in certificates of deposit and five percent in corporates dollar wise that amounts to about seven million in cds and ten million in corporates our annual investment policy allows us to invest up to thirty percent of our portfolio in corporates and fifteen percent and cds i did want to mention that in the past when rate yields were higher and there was a bigger disparity between different types of investments we did invest in more corporates so that number would rather than be ten million would be upwards of fifteen twenty million dollars in corporates and a larger percentage of our portfolio so just to state the obvious the the focus is really on the corporates and cds because it doesn't really apply to any other categories which are much larger in terms of our portfolio do you know just ballpark what sort of the high benchmark for corporates was as a percentage of the portfolio at one point we were close to thirty percent because we weren't at two hundred and seventy million but so before i look at some options we've been able to identify for finance committee today i thought i'd be helpful to look at what some other cities are doing with their annual investment policy the next few slides do go over what i found with other cities the first be in the city of portland the city of portland has taken a slightly different direction than most other cities they actually created a socially responsible investment committee several years ago and that committee was required to look at certain concerns when evaluating companies those would be environmental health labor practices ethical concerns tax avoidance extreme market dominance and human rights violations and the committee was tasked with developing a corporate securities do not buy list that list was then presented to the council for review and however in two thousand and seventeen council actually decided to just eliminate investing in corporate debt entirely so the policy does allow investing in certificates of deposit with banking institutions but no longer allows for corporate debt i did want to note that they did not divest of any of the existing do not buy securities so they are still in their portfolio and i assumed they're being held to maturity i've not seen any action to divest of those monica took a slightly less severe stance i guess i would call it their policy does include a section on socially responsible investing it does require investing in entities that support the environment equality of rights and promote community economic development and it restricts any investments in companies they're involved in fossil fuel or the funding of fossil fuels companies tobacco weapons military systems nuclear power it also required that what didn't require what happened was recently in two thousand and sixteen they came back and based on what happened with wells fargo with a lot of the information that came out and the fines they went back staff went back to council and recommended divest wells fargo in two thousand and seventeen council made the decision to divest of all banking relationships and investments of with all's fargo and wells fargo was the city of santa monica's bank so they are currently looking to replace that bank right now and they are divesting of any investments next the city of san francisco and city of palm springs they both adopted pretty similar investment policies with regards of social responsibility it includes the section however it it encourages investment in entities that support things such as fair labor practices equality of rights serving the local community economic development however it doesn't exclude them it doesn't restrict from purchase from purchasing the investments in any of these companies it's only encourages basically the policy  requires an evaluation of the social responsible investing goals in conjunction with the safety liquidity and yield if they can get a similar safe and investment that also provides the same liquid and the same yield then they are to buy it as opposed to going with something that doesn't meet the goals that might provide a higher yield or more safety i did want to point out that as i mentioned there are no companies that are explicitly forbidden evaluated at the time of purchase and they use they mentioned a couple different ways of evaluating the time of purchase their own research using third party sites and also contacting the companies directly but they all do it at the time of purchase so based on what we saw other cities doing and some of my research we really were able to identify four options for including socially responsible investing criteria in the annual investment policy the first one taking a stand similar to portland and prohibiting all corporates as well certificates of deposit that's what we've been focusing on and this will this will have some financial impacts i thought it was important to also discuss what the impacts of any of these options would be this will negatively impact yields and our interest earnings corporates and certificate certificate certificates of deposit generally have a higher yield as they have a slightly higher risk than federal agency securities federal agency securities or treasuries are considered extremely low risk they're either backed by the federal government or they're guaranteed or they're a federal agency company so they're considered very low risks they don't provide as high of a yield as say a corporate does or a cd does so we w ill see an impact if we do decide to go with that option yes yes that's a mister samara had a good point that we do our annual investment policy does require a minimum rating so these are corporates that have a minimum rating of an a rating so these are highly high value corporates they're not high quality thank you  so they still have they're still considered low risk i think that's important to say option two would be to include a section on s ri which explicitly restricts the type of companies based on their actions whether it be environmental  funding of the dakota access pipeline whatever socially responsible criteria the finance committee would like this also may negatively impact yields i'm an interest earnings not to the same extent as option one but it might unable it might cause us to not be able to purchase certain investments that have higher yields also if we research at the time of purchase it could result in some delays and it could we could lose the purchase sometimes decisions are made very quickly fifteen thirty minutes some of these ones that have a higher yield to go very quickly so if we do have to take the time to research them we could lose the purchase option three it's very similar to what san francisco and palm springs has included in their investment policy this is to include the section on sr i which encourages investment but doesn't explicitly restrict investment in companies that meet the certain  socially responsible criteria i did want to point out that also similar to option two that if we research at the time of purchase we could it could result in the loss of purchase what we're seeing what i'm seeing right now and i mean i've spent a lot of time looking into this is that there are some third party sites that are starting to offer research capabilities and rating but they're not complete a lot of them are beta testing there are some objectivity concerns we don't have a lot of information about who is managing the site there fees related to them a lot of the sites also are only if the companies request a rating so they have a limited number of companies they won't have all of the companies we're looking to invest in some of the ones i looked at our global impact investing radiance system and investors responsibility research center the second one was actually noted by san francisco and their investment policy as one that they did use it provides a lot of research material but not a rating so it's thought it's important to note that there are i think that the technology is coming and that we will see more going this direction but at the time there is no one comprehensive rating site i also wanted to point out for option three this may be a little bit more reactive as more information is develops we would then  finance committee and recommend divestment an example of that being wells fargo as more information comes out and we were found out about their business practices and their fines at that time we could potentially come to finance khomeini asked to divest and the last option is to not include sr i in the policy keep it status quo this would have no impact on our ability to purchase no impact on yield and no impact on interest earnings but would not include any social responsibility criteria there a considerations i just wanted to note before any decision was made is that if we do include s ri in our policy i would recommend that we define the socially irresponsible behavior very clearly whether it be fossil fuel investment or dakota access pipeline investment tobacco companies unethical business practices if we go a little bit more general and just note environmental or labor concerns it's a little bit harder to research but it does still it would still enable us to do some research but if we're more definitive about what we're excluding it would be easier at the time of purchase so i'm sorry i'm gonna go back one second based on all of our research and analysis we're not making a strong recommendation but we are we are if we had the option we would recommend option three i'm gonna go back and just show it to you one more time this is to include a section on s ri that encourages investment but doesn't restrict any investment in that way we can evaluate every purchase based on liquidity yield safety and s ri all at the same time and make the decision at the time of purchase and we would do most likely our own research use as many third party sites as we can but we'd need to bet those third party sites make sure that they are free of any kind of bias and do our best at the time it may result in more situations where we would have to come back and and recommend divestment if more information were to come to light at a later date so before we discuss the options and or make any or look to finance committee to make any kind of recommendation i  thought important to just look at what do we have in cds and corporates it's a little bit small i saw i'm sorry about that but had to fit them all in there we have about seven million in cds and ten million in corporates and that this is as of june thirty two thousand seventeen you'll notice that we have one large four million dollar cd at the very bottom of the list with union bank but primarily we invest in cds of two hundred and fifty thousand dollars that's because that's the fdic limit that's what we're insured for if anything were to happen with that bank we would get our money back so basically it's risk free investing and on corporates we have ten million we generally invest in two million dollar increments so i thought make it a little easier to see i'd pull up the three that have actually come up several times in the last couple months over some concerns regarding fossil fuel investment ethical business practices that's the goldman sachs two hundred and fifty thousand dollars cd the four million dollar union bank cd and the two million dollar wells fargo note i did want to point out that the union bank four million dollar cd actually matures in two weeks so i think that's a bit of a moot point we're looking actually at this time right now of closing that so that will be gone as of september so it leaves us with goldman sachs at two hundred and fifty zero and wells fargo of two million dollars so those are the two that we would need to make we would ask finance committee to make any kind of decisions on little more information on those two securities so what could we do with them option one divest we could actually sell both of them we would have a net loss on sale of the two the goldman sachs actually is is right now at a gain whereas the wells fargo is actually at a loss but net depending on the market the market is still  changing day to day we would have a loss probably about ten to fifteen thousand dollars combined then we could reinvest into your security to have the same meet the same maturity ladder have the same liquid funds at the same time of the original investment and the current treasury rates about one three three percent so we would receive less than interest earnings if we reinvested at this time the option to is to hold the maturity and there's about two years remaining on both one has slightly more than two years one has slightly less than two years so if we held  and sale and no lost interest earnings but we would have to hold them for those last two years so i thought that rather than moving on to the banking part of the presentation it would be helpful to stop at this point and i'm looking staff is looking for a direction from finance committee on including socially responsible criteria in the annual investment policy that will be reviewed and so at this point in time you're the one who picks the investments and then mister sumar eo does the final approval is that kind of the short version so what is your kind of implicit socially responsible different so with the cd i don't look in any socially responsible investment criteria there we look at risk and financial yield and safety liquidity two hundred and fifty thousand dollars is what we're buying now because it's one hundred percent risk free because it's fdic insured in terms of corporates we generally look at what leaf invests in we have a lot of money with leaf with state leaf and we look at what they generally invest in and try to to mirror at least somewhat mirror what they're doing but i don't look at like specific social investment criteria since it's not in our investment policy okay and regarding union bank how did we end up with four million if two hundred and fifty thousand  that's insured so in the past a previously in our annual investment policy we didn't have the two hundred and fifty thousand dollars where we didn't have to look at a rating so they cd that cd is highly rated it had a minimum rating and in the past we would invest in  in denominations of two million or four million in cds if they met the minimum ratings whereas we changed the policy i believe was two years ago that allowed us to invest at that two hundred and fifty thousand dollars threshold regardless of irradiance since it's fully insured so that's what we do now  from two thousand and twelve that's the purchase date so it just predates the two hundred and fifty thousand dollars guideline and is that a guideline or is that a hard and fast policy that is in our annual investment policy that we can invest in anything up to two hundred and fifty thousand dollars without a rat ing so how hard is it to find potential investments are there hundreds out there and you're you're picking kind of based on how well they're known and their ratings or are there just ten and you've got to just limit eliminate a couple  possibilities because it's competitive in other cities are gonna grab them up or relieve depends on the week but it's definitely not hundreds because we do have very specific ratings and we require a very high rated corporate or cd if it's over the two hundred and fifty thousand dollars we still can go over two hundred and fifty for the cd if it's rated appropriately because of that high rating it does limit what we can invest in pretty significantly so it's say on an on a week on average maybe there's ten to twenty that meet that criteria that would be in the yields that we'd be interested in the time range we're interested in the yield some of them are longer than five years we don't invest longer than five years one of the biggest things that restricts the our options is we try to fill gaps in our in our ladder or maturity ladder so we're always having things mature throughout the five year period so we may get a good piece of a good security but we will say you know we already we're too heavy in this one term so we don't want a three year one one a two year so that oftentimes narrows those options that's a very very good point we follow a five year maturity ladder and make sure the most important we have three principles is safety of our portfolio liquidity and then yield so we look to make sure that we have the cash we need to meet operations before we look to yield and they're staggered also to provide a little more predictability and stability so you have them staggered over five years so they don't all come due and in one year in which case you'd have to jump back into the and potentially unfavorable circumstances exactly so once you do identify a potential investment how competitive is it or how what's what's the percentage chance that you'll actually be able to secure that investment it really depends on on the market at the time what reits are doing and what the investment is if it's a quality investment we can lose it within a half an hour if we don't act quickly sometimes they're available all day it just depends on what the markets doing since we don't chase the market we just invest when we need to when we best available cash to meet our cash needs there are times when the market is not the yields are not as high and it's not as hard to get an investment so we might be able to wait a couple hours but there it's been quite often we have actually lost out on investments by not reacting within a half an hour or forty five minutes and it's although we don't chase yields but if there's an operon that's got a you know a bigger spread or a bigger yield then it's gonna go quickly and sometimes there's limited o talked to them and they they recognized that we were we had a cd with another institution and they said would you be willing to invest in ours and we said what kind of rates would you offer and the operative airy competitive there in fact there when they wouldn't we would never get any close to that now or even back then it was a kind of an introductory offer so it was for us we just said well we'll capitalize on that and put four million dollars into that versus two it was because of the yield and because of a new relationship we had with them  so we have the additional presentation about banking services but we have a bunch of folks who i'm sure we want to speak to probably both items not just the investment policies with the banking services rfp so i don't know depending on what the committee wants to do do we want to have the rest of the presentation th so moving on to the banking services request for proposal while finance committee did not direct us to specifically look at socially investment socially responsible investment criteria related to banking services for inclusion in the rfp we felt that we should bring this back to you since we are addressing the issue and we are we'd already planned on issuing a request for proposal this is why we came today with some information first a little background our contract with union bank terminates in fiscal year two thousand eighteen it actually terminates december st two thousand and seventeen it also provides for annual extensions at the city's discretion the city decided in fiscal year two thousand and seventeen to issue a request for proposal for banking services for various reasons originally the city was with santa barbara bacon trust for over thirty years in santa barbara bank at trust was purchased by union bank and we went with union bank and signed a three year contract and two thousand and fifteen however there was a substantial increase in banking fees at the time and so we are looking to issue a request for proposal to evaluate other banking fees and see what other options are out there when we originally planned on issuing the rfp some of the community concerns had had come to light regarding social responsibility  with regards to investing and so we felt it was best to postpone issuance of the rfp and obtain direction from finance committee regarding any inclusion of criteria in our rfp a little more framework on the banking services rfp i did want to mention there are some difficulties with including socially responsible criterion and banking services rfp the city of santa bar has a very complex services there are a lot of departments a lot of services it's not a simple organization some of examples of our scope of services are lockbox for tens of thousands of customers custodial services for a portfolio exceeding one hundred and fifty million dollars we have  online banking reporting requirements that enables us to automate systems also to do required reporting and sending of transactions through wires and ach eft we have collateral on requirements we also need the ability to interface with our existing financial system which is tyler munis that this allows for many automated processes an example of that is downloading checks that have cleared they'll automatically clear in our system as opposed to manually going through every check issued by the city and clearing it out of our system also another example is payroll direct deposit for all of our employees so those are just some of the services it can go on we have you know dozens of them so i wanted to point out that it is a very complex issue also many regional banks are just not able to meet all of these scopes of services i'm aware of some regional banks that don't have lockbox services we'd have to use a third party vendor to do lock operations they also might have some issues getting the proper collateralization they also have i know of some regional banks that have limited online banking options they do things more manual still so those were just a few things i wanted to bring to your attention  the other issue is that sometimes it can be difficult to evaluate social responsibility of large national banks and that's due to their parent companies or subsidiaries an example of this is with our current bank union bank it is their parent company that actually financing the dakota access pipeline so there are often many different relationships you'd have to look at to see what all of those parents and parent companies and subsidiaries are doing if you were to exclude for example any funding of the dakota access pipeline so this if we if we were to exclude any banks that find the dakota access pipeline it would actually eliminate seven of the largest banks in the city from our proposal primarily limit submissions to local or regional banks i just wanted to make you aware that that would significantly limit our submissions i also wanted to point out that banking relationships and information changes over time as i mentioned santa barbra can trust was originally our bank and it was purchased by union bank which changed you know who the parent company was and what they were investing in also wells fargo what was determined to be unethical business practices that was just recently discovered last year and we were not aware of that information the time of making investments with them so information can change and why that's especially important is that it is a very long process to change banks it's about twelve to eighteen months it takes the input from all departments information technology and finance are heavily involved in testing and review of transactions reports making sure interfaces work properly one  to require programming on there and to meet the banking needs so that's just one example of it's it's not a simple transition to a new bank so now that we've covered a little bit of some of the issues with including socially responsible criteria in an rfp i wanted to look at what are some other cities doing that have recently issued rfps i was unable to locate an rfp that actually included specific criteria excluding or evaluating banks that provide financing for certain financing for certain types of companies in other words i could not find an rfp that excluded banks that provided financing for the dakota access pipeline or fossil fuels or weapons or anything to that extent what i was seen mostly was related to community economic development so south san francisco palo alto claremont berkeley santa monica those are just some of the cities did see include a section on social responsibility investing but it was entirely related the community reinvestment act i would shouldn't say entirely some went a little bit further but they all included the community reinvestment act rating basically what that is is the community reinvestment act is a federal law that encourages banks to meet the credit needs of all the community so including the low and middle income community it provides it requires something to do it and then there's a rating of whether or not they're meeting those needs so every company can get every bank will get a rating whether there's four outstanding satisfactory needs to improve or substantial non compliance and those radiant's are readily available and can be researched and those i'm seen in rfps of these different cities some have assigned points to their rating may be four points out of a maximum  four points out of a hundred might be related to what rating they have cra rating or they may have set a minimum rating for submissions such as satisfactory or outstanding i did want to mention that in one or two rfps they did consider business practices when evaluating whether or not there were any improper sales tactics or business tactic tactics used and whether some included that an rfp and then one also just included in their rating sheet whether or not they believe that bank to be an ethical bank the one thing i wanted to mention is that the limitation with this is that you could have a bank that you would otherwise may be considered socially irresponsible but because they they're doing other things and then the community could have a high rating under this metric so this is not really about social and responsibility environmental it's just are they doing a good job helping to invest in their own communities good point so based on on our research looking at what other cities are doing and just understanding the complexities around including sr i in the banking rfp we came up with what we believe to be five options for including social responsibility criteria in the banking services rfp the first would be to just exclude banks that provide financing to the dakota access pipeline or any fossil fuel companies this will as i mentioned before significantly limit the submissions and the range of fees offered it will exclude seven of the largest banks in the city it may also impact the ability for this the ability to meet the city's banking needs i mentioned the complexity of the scope of services and all of the very large national banks it could impact our ability to have all of our banking needs met of the online banking and the lockbox services so just wanted to mention what that might do by putting that in the  the second option would be to exclude banks based on business practices and that primarily you know we look at somebody like a wells fargo that was determined to have unethical business practices and was fined and this at times can be difficult to evaluate it's often discovered at a later date like it did with wells fargo but we could at this time do it and and exclude anybody that at this time we know has been fined or has what was termed unethical business practices this could limit submission will bite we know by at least one wells fargo would be excluded in this case and it would rain it would reduce the range of fees for at least one bank there'd have to be more research for me to know if they would exclude more than one it may impact the abilities the the  bank's ability to meet our needs but it all depends on how many submissions would be removed third rather than excluding anybody it would be to include criteria on whether a bank provides financing dakota access pipeline andor has unethical business practices we could establish a point system generally and rfps do have a point system we could actually assign a certain number of points to this criteria and it may drop some of the banks out of consideration or it may not it just depends on the point system used fourth option would be to exclude or evaluate banks only on their investment community economic development this is what we were seeing with many many cities and that is what i was previously referring to as the community reinvestment act rating we could actually put either a minimum rating or assign points related to the rating in our rfp the issue with this one is it does not address  environmental social or ethical concerns it really just focuses on community investment and the last option is to leave the banking rfp as is and do not include social responsibility criteria in the proposal this would have no impact on the number of submissions so we have the largest number of submissions and the largest range of fees being offered this would provide the strongest chance of meeting all of our banking needs but it would not address any of those social responsibility issues or concern community members or finding this committee might have so at this time we're looking for direction from finance committee on including social responsibility criteria both in the investment policy and in the banking services request did you find any cities that have done this i did not know the only rfps i found were the ones that included the cra rating and looked at some some evaluation of ethical business practices but nothing regarding to go to access pipeline or fossil fuels and that's looking at cities like berkeley or austin who might be a little more progressive i looked at i didn't see anything in berkeley and the one thing i wanted to note is this is anybody that's actually gone out for banking services a lot of  cities have maintained the same bank for a long time so it was a little bit difficult to find cities that had recently issued an rfp i did i don't recall if if berkeley had recently issued an rfp but i must have i probably custodial services so lockbox is that just a literally a box it's locked there so lockbox services for our utility payments and what happens is the payments are sent to a center a lockbox processing facility where they are scanned and then applied to a customer's account the payments are applied to the account so the actual check comes in with a remittance tub and is applied to the account and we pay a percentage of that to the processor we pay fees related to how many they process okay and  didn't notice anything in your scope of services for a bitcoin we have no no intentions of doing that how long is the typical term of the rfp for a banking relationship are you thinking this is a three or two year or five year kind of bet for a contract once we enter into contract generally it's a three year contract with renewals potentially one or two year up to five years well i guess you know if they're a good bank and we have a good relationship you know i don't put a limit on it you know we i could see us doing a five year contract with extensions beyond that we you know santa barbara can trust did a great job for us great service and all that we were happy with them and we had them for many many years so i could see us having a bank and relationship banking relationship for ten years easily if things are working well okay thank you well i think there's there's no more questions from the committee so we'll have public comment now and if you just want to come up to the microphone and just tell us your name and then let us know what you thinking we should probably you know if folks would limit themselves to a couple minutes that would be great and we don't have a clock and timer but we're all need to be back at two o'clock at the council meeting so if you could be if somebody else says something that you agree with you can shorten your remarks and get us moving quicker thank you nope i guess not they're ringing the bell so is that better thank you okay much better thank you all for wonderful comprehensive report i really appreciate all that work there are quite a few of us here and we've talked a little bit about also the time restraints so i think i'll be you know covering most of the general points so you won't be expecting a large line although i do encourage anybody else to make their comments as as they wish bail i'm here on behalf of myself and the son of our standing rock coalition we've been working towards divestment and encouraging the adoption of sr i policy for our city since i guess it was february we first started with that i you'll have received a letter of endorsement that we've been circulating in the community regarding divestment from the banks that are funding that it could access pipeline but i'd like to just take a couple minutes and and read that it's about page and a half and so that should cover quite a few issues so this past november you introduced and list of trusted local organizations opposed to the dakota access pipeline we want to reiterate our profound gratitude that you and council have passed resolution number since the concerns and rationale presented in this resolution remain relevant we believe the logical and honorable next step for our city to take um this would be to take this gesture of goodwill and divest its holdings from  financial institutions that fund the dakota access pipeline we must remember that frontline communities such as this standing rock lakota sioux tribe as well as the other seventeen million people downstream from the proposed pipeline route disproportionately from dirty energy development and infrastructure they are now even more likely to suffer from health problems as a result of water contamination since the trump administration issued the permit for the code access pipelines completion which has already leaked twice and is now and the administration is now dismantling environmental protections on a federal level the decision to reroute the dakota access pipeline away from endangering the predominantly white city of bismarck north dakota serves to demonstrate a continuation of inequality and systematic genocide all policies without clean water people die as the resolution states the city has an ongoing duty to maintain a positive relationship with our two mesh community it is therefore vital that we follow up with meaningful action beyond our words that have been stated for support for f peoples the first nations of this land we would also like to acknowledge the important decision council made on june six two thousand and seventeen to commit to a hundred percent renewable energy goal by two thousand and thirty we hope council recognizes that divestment supports this goal the purpose of increasing renewable energy reliance is to decrease reliance on dangerous fossil fossil fuels the purpose of divestment is the same we do not support fossil fuel projects that make climate and climate change worse especially when such projects violate indigenous treaties and threatened to poison the drinking water supply for vulnerable communities let's not forget that santa barbara remains susceptible to and continues to suffer from the same threats posed by the fossil fuel industry as noted in the resolute of solidarity with standing rock finally it would be a contradiction for the city to claim the one hundred percent renewable go while simultaneously banking with and profiting from financial institutions subsidizing fossil fuel expansion therefore we feel we should not fund these projects the city presently has business with three financial institutions with direct ties to the dakota axis pipeline which goes against the spirit of solidarity solidarity resolution from november as well as the most recent renewable energy resolution these banks are wells fargo goldman sachs and union bank wells fargo has an estimated four hundred and sixty seven million dollars invested in the dakota access pipeline through loans and credit guarantees goldman sachs has over two hundred and forty three million dollars invested union banks parent company tokyo mitsubishi has over five hundred and forty eight million dollars invested in the pipeline profits for that union incurs from the city the city's banking business becomes capital that physically builds the stated intention of the standing rock solidary resolution would support the city's climate action plan of two thousand and twelve and helped us to achieve our one hundred percent renewable goal thank you for considering divestment from dapple finance years implementation of a socially responsible investing policy and for your ongoing expression of solidarity with the indigenous peoples and this in norsemen has been has been signed and endorsed by the the various community groups including the barber a new band of chumash indians the bbc i the santa barbara standing rock coalition food and water watch sierra club santa barbara chapter blacklivesmatter santa barbara clergy our revolution santa barbara city college the santa barbara county action network santa barbara huskers for humanity travel trust foundation showing up for racial justice the santa barbara group and now that covered quite a bit and there's something else that has really come to heart in the last couple days that i just want to kind of address here  we're all aware with what's happened to charlotte hill and the direction of some in this nation thinking that certain kinds of behavior is acceptable that certain people have more rights than others and that is one of the core issues here now as i mentioned this pipeline was going to go above bismarck but the predominately white community there said oh no  no not you can't endanger our waters okay fine let's just run it down here and it seems like you know whenever we talk about racism you know there are a lot of different aspects of it but predominately it seems to be seen as a black and white issue or brown you know but for some reason the red color seems to be kind of invisible it's been happening for a long time and this in charlotte ville has woken people up and opened up compassion and as a spiritual man i see that's one of the positive outcomes of suffering sometimes we have to look at suffering in the world and think why does this happen and if it can motivate us to make better decisions for the future then you know we're doing the best to make lemonade out of it but i was just thinking about charlotte ville and just imagine if there had been private security troops that came out with pepper spray rubber bullets attack dogs imprisoning hundreds and hundreds of those peaceful protesters putting them in dog kennels while they're just trying to protect their water you know that would have been all over the news but instead she and then covered it for about a minute and a half and you have to go to jon democracy now or someplace else to read about it since then the federal courts have been releasing people dismissing the charges saying actually yes they were right they were constitutionally right to protect their lands they should have been consulted these were violations of treaties they were violations of environmental policies that were put in place to protect people but somehow it it doesn't get seen i talk with people now standing rock isn't isn't that over no it's not and you know this is where you know i've been i've had the fortune of being adopted by elders of the  lakota tribes and i would love to be able to tell them about the work that we're doing here i'm really grateful that the three members on the finance committee are also leaders for the environmental movement for  community and i understand this is a really complicated issue especially with the banking but i feel like santa barbara is small enough that with work we can work out some solutions that can kind of set the benchmark or set a direction for other communities in other cities because if if other cities have billions invested and more complex structures it's even harder for funding countries that the united states government has sanctions against so you know the straight and narrow is a hard path to walk but if some if an organization shows that they're willing to bend the rules and we find that out it always makes me wonder you know what other rules are they bending that we won't find out about for another ten twenty years so what are we unwittingly funding how many deaths are we actually paying for because those security companies that fire the rubber bullets and brought in the dogs on pregnant women and children attack dogs they weren't even licensed to be security in north dakota there's a big investigation about that tiger swan has been infiltrating and spying on members of food and water watch these are ongoing investigations right now and who paid for those security companies who was paying their paychecks at the end of the day i don't want it to  and and just recently there was something that was really beautifully said you  know wonderful person said i'm very honored to be part of a city that stands for justice and peace and for making sure that we speak out and show up wherever there's hatred and bigotry in our midst and to call out those who refused to do so and that was said this weekend by our mayor helene schneider at the rally condemning the actions in charlotte bill so i appreciate the beautiful nature of our leadership here and thank you all for your work in your time thank you mister capra i appreciate that anyone else want to follow that come on up doctor if the next person in line wants to come up in the front that will save some time as we're getting to the microphone we will need some time to chew through this too so please consider that as well thank you thank you for listening to the community and thank you for your thorough research and investment options and responsible investment your research attest to the immaturity of the field responsible investment as a resident of santa barbara i'd like to see my city at the forefront of this move toward social and environmentally responsible investment i urge you not to solely focus on the cra ratings that is the community  reinvestment actions but to also focus on the impact that our money our investments have beyond santa barbara i echo what emiliana said about all the concrete effects of our money and our investments on communities elsewhere and remind you all as you probably don't need but that we live in a frightening age of climate change and under an administration tha no regard for ethics so thank you for considering these options and i'll be following and watching your decisions thank you thank you for your  responsible investing in banking i hope and pray the council recognizes the importance of this decision the union bank cd maturing in two weeks and saying that it's no longer an issue and yet that it continued as you said sir a continued banking relation like a relationship might be considered would continue i mean that it would continue is troublesome to me offering a high yield to potentially purchase the city's good faith and trust in perpetuity seems an obvious motive so saying that there's a lockbox issue i mean we can move into the st century i mean can move yeah we can take leaps and we can maybe make changes to ensure that any potential losses aren't such you know extreme losses so anyway i just seeing that there are difficulties with including socially responsible criteria and banking services rfp i see that as being more of a whitewashed way forgive me for saying that but more of a whitewashed way of saying we are not ready to make these bold statements so again i thank you for your time and for your concern and for your efforts that you've been making to listen to the community and yeah thank you thank  you thanks very much for your time and for the forum it sounds like there are there too and thank you for a really an enlightening presentation and an informative presentation about two pretty important issues and i think i think it's safe to say that no one in this room is against our city having more income i think more income is great and i think it's also safe to say that everyone in this room is probably in favor of of having our investments be more in favor of socially responsible companies and organizations and then the question is how do we reconcile those two things and everyone's trying to figure that out you presented three models the the portland model the santa monica model and the san francisco palm springs model on the first topic which was do we want to do a socially investment socially responsible investment policy directive in the policy and to me you know if portland can do it then i mean shoot or santa barbara we should be able to do it and yeah the arguments against doing it seem to be that it's tough and unwieldy and hard to implement and we might make less money so so right okay and then there's the san francisco and city of palm springs thing which really has no teeth to it at all in in other words it's kind of like nice words but it doesn't actually require any different action and and what i heard you saying is that part of why we don't look at the social responsibility of companies we invest in now is that's not in the policy in fact it would be kind of music irresponsible to do that because the current goal is to maximize returns and minimize risk and those are the only policies so if people who are inclined to go for something more socially responsible really aren't enabled to do that under the current policy then maybe it warrants revising if that makes any sense and so i don't know what the right decision is but that to me kind of is the bottom line are we willing to go to some trouble not in significant trouble to and and possibly lose some return in favor of doing this so that's the first thing then the banking thing is kind of the same thing we might have fees we might have less choices about banks we might need to help regional banks get up to speed to serve our needs and and it might take a long time so again you know the question is is it worth it and that's very tough when it comes to financial matters when worth is measured in dollars because what we're talking about is not dollars is something else and in a community like this i think i think you know like there's a lot of people here who think there that there is a value to the something else not you know the city spends money on things that i really care about so having less of that money yeah i don't like that but i personally don't like more the idea that we are with is i just personally i'd go for the strongest options lose a little bit of money go hard rfp cut those seven banks look at maybe the county credit union or i don't know something cool like that or something that we we never really spent i think enough time and dialoguing with you guys about was potentially creating a municipal public bank in santa barbara that would just serve all the all right conversations about state banks are kind of those conversations are going on a state level a little bit or not a little more than a little bit i think part of it is like marijuana money and other stuff but all the criteria that that you listed julie you know whatever it is the lockbox and like all the other stuff i don't really understand i'm sure that if we created a public bank we could just plug those things in i don't know how you get the capital for that but that would be a really cool option and so lose a little bit of money look into public banking screw those seven banks and  peoples and i will definitely vote for any mayoral candidate or city council member running for the two thousand and eight election who was willing to sacrifice a little bit of money for the greater good that's just my thoughts so thank you very much is there anybody else that wants to speak after this speaker then hurry up and get in line cuz we're really gonna be tight here and honestly i think we're gonna we're gonna run out of time because we need to talk and then we need to get to the council meeting at two zero so i think you know just out of your interest our shared interest in finishing up this item i would urge you to do you want an investment socially responsible investment policy or do you want to talk so think about that please i am delighted to represent the older white demographic which i've heard about and that you've been happy to see them at some of the meeting so here we our and our world is in a crisis our environment is going to hell in a hand basket and you folks can have a palpable effect on that by leading by not being squeamish and by not missing the opportunity to go bo go bold thank you thank you vague here about exactly what the negative impacts were be there wasn't even a like a quantitative estimate let alone estimate how that would actually impact the ability to function so perhaps we could look at how it actually impacted or ability to fund their programs i also think there's a you know financial gain in the long term by having flexibility maybe becoming like options one and two here which are not mutually exclusive says may impact ability meet the city's banking needs which work very clearly listed out and a couple slides later but it takes twelve to eighteen months as you said to change banks so it seems like a good idea to assess the risk of a bank later turning out to have unethical business practices and maybe them we could benefit from restructuring the way restructuring our banking needs to have more flexibility and be able to choose the banks that we trust i just wanted to reiterate what i think is the great importance of considering a socially responsible investment which is non traditional but i feel that particularly looking at the events surrounding the dakota access pipeline and protests where the federal government and entities of our free market are failing to uphold basic human rights i feel that is a moral imperative for all individuals and communities to consider what we can do for other individuals and other communities thank you thank you very much next speaker i just wanted to point out that as the finance committee you need to be responsible for finances and that part of that responsibility is a social responsibility that's not just the numbers and i hope you keep that in mind i also want to point out there is a background or history for doing this because  the city already is socially responsible in hiring contractors so this is not an unusual request and unusual consideration and i'd also like to suggest that a community bank would help a lot of people who are concerned about this because we all had the same problem of wanting to divest and of not knowing what bank we want to support we would love to support the city thank you thank you this i just wanted to piggyback off of what i believe emiliano said earlier in regards to what is being financed by wells fargo and goldman sachs these aren't really organizations they are at the very very least vulture capitalist organizations and in my view at the most terrorist organizations because they do support you know the dogs attacking people and things like that and  so just for me personally and i think many people in here doing a deal with the devil to profit short term may not be the best thing to do so you know with that i'd really encourage divest inc and supporting the people over profit thank you you i thank you i'm sara my ani and i just wanted to point out that the uc system as i understand it divested from dakota access pipeline so they might be a model to look into and also that there is no mystery now about this particular issue and i understand sometimes you know information isn't available but in a case where there there is no mystery i think it's the responsible thing to do to act and i think that a lot of people are aware of the the issue here the controversial  and damaging aspects of these investments and so while it takes time to research the existing rating systems that you mentioned it seems to me that there will be more  rating systems available i think that there's a lot of interest in this nationwide and so i guess i i don't accept the premise that that we would necessarily be losing money even in the relative short term i just think that banks are going to have to be accountable to people so i guess one thought is to potentially research not just the rfps but the ways that people are making responsible investments and maybe had been for a long time so those are the things i want to say thanks thank you very much okay i don't know that we have enough time to do this i think we could try to start and do something i don't know it's up to you guys we have probably five minutes now and unfortunately we're not having a meeting of the f so councils dark until the beginning of september what is the pleasure of the committee i could start by shooting off some motions and see if i have support or not all right let's just try and see how far we get so on page five the first set of options we have i would recommend the option that i think staff also recommended which is option three include a section which encourages investment in socially responsible companies so what my motion would be to ask staff to design something under this option to bring back to the full council for for discussion and possible implementation well let's bring it back to the finance committee because i don't think we're really going to have time to to chew on this very well but i see that the part of that would be that staff look into the uc policies that were mentioned by one of the speakers ism as just is there a model out there that that we can follow it but i'd agree with that so i second it do you want it to go to finance committee or it should come back here i think we need to again we're just quick draw here we're stating a laying out something and you know i'm in my motion to bring it back here okay any other comments i do want to point out we're gonna be back on the  th anyway to to adopt our investment policy we have until september th to adopt it so we can bring that sort of and they suggested language that could be adopted theoretically okay any other questions any other comments all those in favor say  be for the two that aren't expiring so i would leave union bank to expire i guess there probably would be time to do much there anyways but so my motion would be to divest from wells fargo and goldman sachs is there a second to the motion struggling with that one please forget it really be fast here i'll second the motion is there any discussion well i i do feel like first of all the changing direction i think is that is the most important thing that in going forward we are not going to be investing in these things and i'm also concerned about every ten thousand dollars that we lose our let's go to the food bank  take the money out of the food bank we take the money out of the kids summer programs where does this money come out of and so i just i want to change direction and i want to do it without hurting any of the great programs that we have any other comments councilman we're doing is and i have the same concern my proposal would be maybe the community would have a fundraiser maybe a concert and maybe they could raise funds to offset some of this money so if it did end up having to come out of it because we spend about eight hundred to a million eight hundred thousand a million dollars every year giving it to local nonprofits so that's kind of the discretionary money so it would probably come out of there so if the community wanted to have a fundraiser that would be great we're talking i think about fifteen thousand depending on when include criteria on whether a bank provides financing to decode access pipeline and business practices depending on point system may draw banks may drop many banks out of consideration so i like the unit i like the idea of a point system because ideally we can have several columns or several indexes that we examine and we just grade banks along the whole things instead of just looking at the bottom line let's do a triple bottom line let's look the impact on society let's look at the impact on the environment and then the impact on on the numbers so that would be my motion would be to push forward with number three so this is a scoring system correct okay that works for me second systems that are coming into play they're not fully vetted yet but as we as we continue this work they're going to think they will get stronger and on the banks we finding ourselves a little bit cornered but let's at least start with what's the worst and what's the least worst and that's where the scoring system can can come up with we are very limited in what we can use in the way of a bank it's wonderful idea to go with a community bank or these other ideas but we have  obligations to we have we are the protectors of the city's fisc and that definitely our banker is a key player in that so it to be very careful on that front but i like the scoring as a way to at least  put some pressure it does we will put some pressure on our banking institutions customer dominguez and ultimately the the real issue is just the corporate system in america it's set up with a single bottom line on how much money they can make the ceo is duty bound by law to return the highest possible quarterly profit so they're on a three month cycle so they they really have a hard time meeting the social and environmental bottom line even if they wanted to so we're struggling to find investments that are profitable yet are not in the social sector the social sector being nonprofits and government so it's it's it's a fundamental dilemma because of our american corporate system so i encourage you all to speak with your legislators and try to to fix the whole system because we're going to struggle as a little city within this whole system that's not necessarily serving our ends and regarding the scoring i hope you all stay involved and help out with this cool both in helping us shape the criteria we want to look at  the banks we're looking at and also providing the data to fill that scorecard out once we've established the criteria because it's an immense task there's corporate shells and trusts so we're gonna require a lot of assistance i hope you're all up to the task it's just smarter do you have anything that you wanted to add to this conversation or at this point or we will be coming back and yeah we're fine with those recommendations it will come back with some some ideas great thank you all those in favor of the motion say aye aye opposed and abstain the matter carries and we are adjourned thank you for coming