City of Ottawa hopes to boost investment returns with a new board

·2 min read
The City of Ottawa wants to recruit and appoint a municipal investment board aimed at getting better returns on money for which it doesn't have an immediate need. (Kate Porter/CBC - image credit)
The City of Ottawa wants to recruit and appoint a municipal investment board aimed at getting better returns on money for which it doesn't have an immediate need. (Kate Porter/CBC - image credit)

The City of Ottawa wants to create a new board that could put its reserve funds and endowment into a broader range of investments, in the hopes of getting higher returns and do a better job weathering the cost of rising inflation.

Regulations in Ontario have historically meant municipalities have a limited and conservative list of options for investing money for which they don't have an immediate use.

The provincial government changed the Municipal Act in 2018, however, to allow a "prudent investor regime" — beyond the City of Toronto. A group of nine smaller towns and cities have already begun pooling their money for investing.

The City of Ottawa now intends to create its own "municipal investment board" that will be given the control to manage investments and diversify the city portfolio, and it will recruit appointees.

In a report presented to the finance and economic development committee Tuesday, city finance staff noted Ottawa's reserve fund of more than $2 billion had an investment return of just 1.18 per cent in 2021, but they hoped to boost returns long term by moving to the new model.

Staff noted "inflation erodes the purchasing power of a municipality over time" and the new regime could help it "mitigate this issue."

"The city currently holds $2.1 billion in investments of which staff conservatively estimates half could be classified as funds not immediately required and could be invested over a longer term," staff said in the report.

No member of the finance and economic development committee asked questions on Tuesday before approving the report to create the new investment board.

Coun. Shawn Menard, who is not on the committee, said he was happy to see the city move toward outsourcing authority for investing to an external board. Menard hoped the city would look at refusing to invest in the fossil fuel industry for environmental reasons.

The chief financial officer will now come up with a policy to set out the City of Ottawa's targeted return on its investment, and the level of risk it is willing to take. That would go before a newly elected city council at the end of 2021.

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