As the Corvallis City Council has been fixing to vote on a BDS resolution, they asked staff to prepare an Investment Resolution Analysis, which is now completed. And we really-really think you should read it. Prepared by Corvallis’ finance director, James D. Inglis, it’s light on jargon and it’s a surprisingly good read.
And now we feel bad because we assumed it would be a dreadful read because a finance-human wrote it, and as journalists we’re not supposed to assume, and well, it appears we judged an author by his title, which was also very wrong of us. Okay, we’ll just move along. We’ve included the analysis below, and our own analysis under that.
The Council will consider Inglis’ report at their upcoming Tuesday, September 2 meeting.
If you’re new to this conversation, BDS stands for Boycott, Divest and Sanction. The BDS movement explains itself as Palestinian led and asserts that Israel is a colonizing apartheid state that is committing genocide. Their stated goal is to eliminate the state of Israel. The New York Times reports the BDS movement has ties to Hamas and several other terrorist organizations.
Ward 2 City Councilor Briae Lewis, introduced the resolution. It tries to avoid saying it’s a BDS resolution, though it clearly is exactly that. The language in her draft is a dead-ringer for the rhetoric used on the BDS movement’s website. Her draft guides the City to find lists of companies to divest from at Investigate.info. It’s the only resource for lists that she cites. If you navigate to their website, their lists have titles like, Divesting for Palestinian Rights and Companies Profiting from Gaza Genocide. Those lists share many commonalities with BDS lists.
If there’s any distinction between Lewis’ resolution and the BDS movement, it is a distinction without a difference.
When Lewis introduced her motion to send the resolution for financial and legal review, Ward 6 Councilor Alison Bowden seconded. The yes votes were Councilors Lewis, Jim Moorefield, Ava Olson, Charlyn Ellis, Bowden, and Paul Shaffer.
Councilors Jan Napack, Carolyn Mayers and Tony Cadena voted no.
The Inglis Analysis
Executive Summary: The proposed investment resolution poses operational and financial risks to the City’s investment portfolio, potentially eliminating $150,000+ in annual returns while creating compliance burdens that could compromise the City’s ability to effectively balance multiple investment factors when making prudent decisions on behalf of the community.
Staff Analysis & Professional Consultation: Following an internal review, staff consulted with legal counsel and its investment advisors. The City has engaged Government Portfolio Advisors (GPA) as its advisor since 2014. GPA is a Registered Investment Advisor whose senior advisors have experience assisting public entities since 1983 with all aspects of the fixed-income investment management process. After a financial and legal review, staff have determined that there would be operational impacts. While those operational impacts would be manageable, this resolution poses risks towards the City’s ability to diversify, could negatively impact the City’s investment returns, and creates risk in the ability to demonstrate compliance.
Diversification: The City’s current investment approach carefully balances multiple risk factors for each investment decision. Interest rate risk, liquidity risk, market risk, concentration risk, and credit risk are all weighed alongside Environmental, Social, and Governance (ESG) investment considerations when making investment purchases. This comprehensive evaluation ensures decisions serve the community’s best interests across multiple dimensions. The City’s investment policy is structured to provide appropriate liquidity to meet monthly cash flow needs while prioritizing the preservation of principal through diversification. Diversification is the greatest tool the City has for limiting risks. It reduces concentration risk where a negative event affecting a specific area can disproportionately impact the portfolio. Diversification also allows the City to move between different investment categories to best produce the greatest possible yield in any given market.
The City’s financial policy allows for 8 different categories of investments (Treasuries, Agencies, Municipals, Corporate/Commercial, Certificate of Deposit, Banker’s Acceptance, Savings Account, Oregon Short Term Fund), each representing strategic options for balancing various investment factors. The current allocation reflects this balanced approach: 40.7% US Treasuries, 29.1% US Agencies, 4.7% Municipals, 9.6% Corporates, 2.2% Savings, and 13.7% Oregon Short Term Fund. This diversification allows staff to weigh multiple factors—interest rate risk, liquidity risk, market risk, concentration risk, and credit risk— when making investment decisions.
The adoption of this resolution would impact this balance. While none of the City’s current holdings are on the American Friends Service Committee’s (AFSC) list of companies to divest from, they are listed as being involved in concerning sectors focused on Borders, Occupations, and Prisons. Additionally, the City’s Full Corporate buy list is limited to 24 companies. Of the 24, 0 are on the AFSC’s divest list, but 9 are listed as involved in the sectors listed as a concern in this resolution. If Council adopted the resolution, Staff would need to update procedures to eliminate nearly 38% of the City’s Corporate options. This would have an impact on investment returns which will be discussed in the next section.
Additionally, depending on how broadly this resolution is interpreted, staff has concerns about what investment options would remain available for balancing these competing factors. While the term “companies” reduces risk for US Treasuries and Agencies, other areas could be impacted, including corporate bonds, certificates of deposit from banks with any potential exposure to restricted activities, and municipal bonds from jurisdictions with law enforcement or immigration enforcement functions.
Limiting these options would constrain the City’s ability to balance the multiple factors listed above, which are essential to prudent investment management, potentially forcing concentration in fewer investment types regardless of market conditions or portfolio needs.
Investment Returns: Based on the City of Corvallis’ current position size of $19,500,000, the increased value to the portfolio by holding corporates over the last 3 years has been $473,112 greater than if the City had held US Treasuries only, adding an additional $157,704 annually in interest income. This represents an average annual outperformance of approximately 0.81% annually above a Treasuries-only approach. The City currently balances its budget with the help of investment returns. The current budgeted revenue from investments, including corporates, is north of $8,000,000 annually in the current rate environment. While these rates can and do change over time, Corporates can help prolong the portfolios outperformance in a declining interest rate environment and have helped provide added benefit during times of high inflation.
Analysis of the resolution has shown that at a minimum, the City’s ability to invest in corporates would be limited. This increases the risk of being stuck in Treasury or other investment tools that provide less yield as the interest rate environment changes. While future rates are impossible to determine, putting further restrictions on the City’s investment portfolio is likely to result in lower yields, which track more closely to a US Treasuries only approach.
Demonstrating Compliance: The City currently maintains comprehensive ESG investment guidelines that provide clear, regularly updated exclusion criteria from recognized third-party providers. This systematic approach ensures investment decisions are based on established methodologies rather than subjective judgments. CC 09-02-2025 Packet Electronic Packet Page 46 Page 3 of 4 GPA leverages the methodologies of three independent ESG rating providers—MSCI, Morningstar Sustainalytics, and S&P Global ESG. In addition, GPA uses negative screening to exclude issuers within the industries of oil, tobacco, weaponry, alcohol, and gambling. They integrate the scores from each provider and disqualify any company that fails to meet the minimum threshold set by more than one individual methodology. ESG scores are updated and reviewed quarterly by GPA, ensuring the process remains current and objective.
There is no current process to objectively demonstrate compliance with the proposed resolution. While the proposed resolution mentions a specific online database to check corporations against before purchasing a bond, the lack of specific objective criteria in the resolution makes demonstrating compliance difficult. To comply with the resolution, staff would work with the City’s advisors to incorporate the AFSC information into an annual development of the City’s Corporate Buys list. While a process could be developed, it would not mitigate the risks outlined above and does not minimize legal risk for the City.
The resolution’s definitional ambiguity creates additional challenges. The statement regarding entities “directly, consistently, and knowingly involved in violations of human rights, such as genocide, apartheid, and illegal occupation, as well as other violations of international human rights law, including war crimes, ethnic cleansing, mass incarceration, and mass deportations” may seem specific, but it lacks clear measures to determine the “directly, consistently, and knowingly” criteria. Terms such as “mass incarceration” and “mass deportations” lack objective, measurable criteria, making consistent application challenging and potentially exposing the City to arbitrary enforcement challenges.
The City Attorney has advised that such ambiguous language exposes the City to potential third-party enforcement claims. If Council supports adopting this or a similar resolution, then the City Attorney recommends adding language to reduce that risk.
Closing: The City has a fiduciary duty to the community to be good stewards of the revenue being brought in. Part of that stewardship involves investing money to earn returns that stretch those dollars further while carefully managing risk through diversification and multi-factor analysis.
The City’s current investment process considers many factors beyond rate of return for each investment purchase. Interest rate risk, liquidity risk, market risk, concentration risk, and credit risk are all weighed alongside ESG considerations when making investment decisions. Liquidity timing to meet operating needs, market risk assessment, and portfolio diversification to mitigate concentration risk are all integral to this balanced approach.
After weighing all these factors, if a corporate security is identified as the best option at a given time, we then consider which corporation’s bond aligns with the City’s priorities and values. This systematic approach reflects how the City’s current investment policy parameters prioritize the multiple considerations the City must balance when purchasing securities.
The current financial policy has successfully balanced community values with prudent financial management while maintaining the flexibility essential for effective portfolio stewardship.
Recommendations: The proponents of this resolution acknowledge that the City’s portfolio does not contain any corporate securities that land on the investigate.info database’s divestment list. The investments the City holds were not the result of individual preferences, but rather the result of a robust system of checks and balances already in place to ensure the City invests tax and ratepayer dollars prudently through the City’s systematic, multi-factor approach. This suggests that the City’s existing ESG framework is effectively addressing the underlying concerns that motivated the resolution while maintaining the flexibility needed for balanced investment management. The council has two options before them:
City Staff Recommended; Option 1, Maintain current ESG investment framework: Continue implementing the City’s proven ESG guidelines that have successfully balanced community values with strong financial performance while preserving the City’s ability to weigh multiple investment factors and avoid the operational and legal risks identified above.
Option 2: Include AFSC details in the current ESG Investment framework – If Council accepts the risks outlined above and chooses to adopt the resolution, staff recommends the council direct staff to bring back a resolution that incorporates additional language as recommended by the City Attorney to help mitigate some of the risks outlined above. The resolution would be brought back for Council consideration at the next Council Meeting. If adopted, staff would incorporate the AFSC details into an annual development of the City’s Corporate Buys list and provide that list to the Council.
Obviously, there is no financial impact in the Council simply accepting the financial analysis as submitted, and the memo says that. But it also goes on to say, “If future action is taken to adopt the resolution, investment returns could be negatively impacted, and future budget adjustments may be necessary. Adoption of the resolution will also require additional staff resources to manage investments.”
The Advocate’s Analysis and Viewpoints
Currently, Government Portfolio Advisors, or GPA, uses negative screening to exclude issuers within the industries of oil, tobacco, weaponry, alcohol, and gambling, according to the City. Lewis’ resolution has also triggered a considerable sum of correspondence that centers on ideas of withdrawing from investments in prisons and the current U.S. treatment of immigrants.
We believe the City could screen against investments in companies seen as supporting imprisonment, or at least private prisons, and companies that profit from ICE. Some of us at The Advocate support those ideas, others not, but in general, our views on adding those exclusions are not strong one way or the other. At least, not right now.
We do however continue to adamantly oppose Lewis’ BDS resolution. And that is even before considering its impact on the City’s budget.
The BDS movement was founded twenty years ago. It has not yet had any impact. Maybe the movement has cost some companies a few dollars, but it has not saved one Palestinian life or benefitted the Palestinians in any way.
We’ve heard arguments that the BDS movement just needs more time. But this denies far too many central realities.
We’ve done some deep dive work on this topic. We’ve examined the BDS movement’s stated goal of eliminating the state of Israel entirely, and its ties to Hamas. That goal of annihilating a whole country; not generally considered a prescription for peace. The ties to Hamas; even less of a prescription. So, we also looked at alternatives to BDS; political actions that you can take, today, that offer real prospects for change in the Middle East. You can click here for that story.
Before that, we offered a tough deep-dive examination of Lewis’ resolution, concluding that it was implicitly antisemitic by almost any definition. We also learned it would profoundly impact how Jewish people view our shared community. And since then, we’ve learned how it would impact how Jewish people see the Council and Corvallis’ city government generally.
In our view, we would hope the Council rejects Lewis’ BDS resolution.
By Mike Suarez, Hallie Greenberg and Steven J. Schultz
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