The authority or prohibition to do what they do probably comes from the county or city government codes or the California government code. Check that, or call a lawyer who knows government law.
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That is not an "investment scheme." It is earning income from the float on payments the agency receives, which is a common practice. As my colleague correctly notes, the statutory authority under which this agency operates either allows or prohibits the agency from doing this.
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Probably so unfortunately; as pointed out by other counsel already! I find it difficult to believe that a public agency would engage in such conduct UNLESS authorized to do so by either statute, or other applicable authority!