HomeMy WebLinkAboutResolution 00-049 N.C.S. 03/20/2000 Resolution 1~To. 00-49
of the City of Petaluma, California
RESOLUTION OF THE CITY COUNCIL OF THE _
CITY OF PETALUMA APPROVING THE
INVESTMENT POLICY FOR 2000
WHEREAS, the City Treasurer has annually rendered to the City Council a Statement of
Investment Policy, and;
WI-IEREAS, the City Treasurer has the responsibility to invest the pooled idle cash from
all of the City's funds, and;
WHEREAS, the City Treasurer has developed a Statement of Investment Policy and
submitted said Policy to the City Council for review.
NOW, THEREFORE BE IT RESOLVED, that the City Council approves the 2000
Investment Policy as shown in Exhibit A attached.
Under the power and authority conferred upon tlus Council by the Charter of said City.
REFERENCE: I hereby certify the foregoing Resolution was introduced and adopted by the Approved as.to
Council of the City of Petaluma at a (Regular) ~I~~~P~j meeting form
on the ......_.2.Q.th---.... day of ..............Ma.rch.,......2.0.QD..._........., by the
following vote:
Ci y Attorney
AYES: Healy, Cader-Thompson, Maguire, Vice Mayor Torliatt, Mayor Thompson
NOES: None
ABSENT: Keller, Hamilton
ATTEST: _
City Clerk Mayor
(.louncil File
C~1 lU~RS Rcs. Nu...,.... 00-49_._. N.C.S.
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CITY ®F PETAL,UMA, CALIFO~TIA
2000 ~STATE~IENT OF ~NVESTNT P®LICY .
Paula 1VI. Cornyn
Interim Finance Director/City Treasurer
CitX of Petaluma California :2000 Statement of Investment Polite .
1
2 EXI-IIBIT A to Resolution approving Investment Policy
3
4 City of Petaluma,. California
5 2000 Statement of Investment. Policy
6
7 POLICY
g
9 It is the- policy of the City of Petaluma, CA to invest .public funds in a manner that will provide the
1o highest investment ,return with •the maximum security while. meeting the daily~cash flow demands .
ll of the: entity and conforming. to all. state and local statutes ,governing the investment of public
12 funds.
13
14 SCOPE -
15
16 This investment policy applies. to all financial assets of the City of Petaluma, CA. These funds are
17 accounted for in the City of Petaluma, CA Comprehensive Annual Financial Report and include:
18
19 General Fund
20 -Special Revenue Funds
21 Debt Service Funds
22 Capital Project Funds
23 .Enterprise Funds
24 Internal Service Funcls
25 Trust and Agency Funds
26
z7 This Policy shall also apply to funds of the Petaluma'Community Development Commission
28 (PCDC); -Petaluma. Public Financial Authority, Petaluma Public Facility Financing Corporation
29 and any other agency br trust funds under the control of the City Treasurer.
30
31 PRUDENCE
32
33 Investments shall be made with judgment and care -under circumstances then prevailing -which
34 persons of prudence,. discretion, and intelligence exercise in. the .management of their own affairs;
3.5 not for speculation,. but for investment,. considering the probable safety of their capital as well as
36 the probable income to be derived. - .
37
38. OBJECTIVE
39 ~ _
40 The primary objective in priority order, of the City's investment activities shall be:
41
42 1. Safety: Safety of principal is the foremost objective of the investment program.
43 Investments of the City of Petaluma, CA shall be undertaken in a manner that seeks to
44 ensure the preservation of capital in the overall portfolio.
45 2. Liquidity: The City's investment portfolio will remain sufficiently liquid to enable the City
46 of Petaluma,. CA to rrieet all operating requirements which might be reasonably
47 anticipated.
48 3. Return on Investmen_.ts: The City's.-investments hall be designed with the objective of
49 attaining a rate of return throughout budgetary and economic cycles, commensurate with
5o the City's investment risk constraints and' the cash flow characteristics of the portfolio.
51
52 DELEGATION OF AUTHORITY
53
54 Under-the City Charter Section 24, the City Treasurer is appointed by the City Manager with the
55 approval of the City Council. The City Treasurer is also the City Finance Director.
56
1
.City of Petaluma,. California 2000 Statement of Investment `Policy.
1 'The daily cash management, investment transactions and accqunt reconciliation's are the primary •
2 responsibilities of the City Treasurer. These activities are -also carried out by other members of
3 the Finance Department under, the direction of the City Treasurer.
4
s ETHICS AND CONFLICT OF INTEREST
6 ,
7 Officers and employees involved in the investment .process shall refrain from personal business
8 activities that could conflict'with .proper execution of the investment: program or which could
• 9 impair their ability to make impartial decisions. Officers and employees involved in the investment
1o process shall abide by.the Conflict of Interest Code,_,(California Government Code Section 1090
11 et seq.) and the California Political Reform Act (California Governinetn Code Section 81000 et
12 seq.).
13-
14 PERMITTED INVESTMENTS
is
16 -The City may invest. in the following investments sources that are .allowed by State Government
17 Code Section 5363 5:
18
19 -Local Agency Investment Foots (State LAIF or Sonoma County Investment Pool)
20 -Certificates of Deposits placed with commercial '
21 banks and/or savings and loan companies
22 -Negotiable Certificates of Deposit
23 -Bankers Acceptances
24 -Securities of the U:S. Government or its Agencies
25 -Repurchase Agreements. (for overnight investment)
26 -Commercial Paper
27 -Money Market
2s -Mutual Funds
z9 -Guaranteed Investment Contracts
30
31 COLLATE~RLIZATION
32
33 .Deposit-type securities (i.e: Certificates of.Deposit) shall be collateralized at the minimu"m State of
34 California collateral pool requirements -for any amount exceeding FDIC or FSLIC coverage.
35
36 BROKERS
37
38 In selecting securities brokers, the City Treasurer shall conduct. credit and capitalization analysis
39 to determine that firms are adequately financed to conduct public business.
40
41 LOCAL INVESTMENT POOL POLICIES AND REPORTS
92
43 To ,the extent there are investments in the State or Sonoma County investment pool's, the City
44 Treasurer shall review and maintain current copies' of the adopted investment .policies of the State
45 and Sonoma County: The policies shall be reviewed for concurrence with the investment policy
a6 of the City.
47
4s SAFEKEEPING AND CUSTODY
49 '
5o All security trarisactions entered :into by .the City of Petaluma; CA shall be conducted on a
51 delivery-versus payment'basis. Securities will be held. by third party custodian designated by the
52 City Treasurer and .evidenced by afekeeping receipts.
53
54 INTERNAL CONTROL .
55
56 The City Treasurer shall establish an annual process of independent review by an external auditor.
57 This review will. provide internal. control by assuring compliance with policies and procedures.
58
2
Cit~of Petaluma; California 2000 Statement of Investment Policy
1 PERFORMANCE STANDARDS
2
3 The investment: portfolio shall be designed with the objective; of obtaining a rate of return
4 throughout budgetary and economic cycles, commensurate with"the investment risk'constraints
5 and the cash flow needs:
6
7 The City's investment benchmark for market yield is the Three Month U.S. Treasury Bill, which
8 had an average yield .of 5.1% in January 2000.
9
1o The City's investment amount benchmark is to invest 97% of all idle funds.
11
12 REPORTING
13
i4 The City Treasurer shall provide a monthly investment report to the City Council, which provides
15 a clear picture. of the status of the current investment.. portfolio. This report will be formally
16 submitted to the City Council. each quarter at a public meeting.
17
18 Schedules in the quarterly Treasurer's Report will include the following:
19
20 - A list of individual securities held at the end of the reporting period by authorized.
21 investment category ~ .
22 - Average life and final maturity of all investments' _
23 - Earnings rate on an annualized basis
24 - Market value, par value and amortized book value
25 - Percentage of the portfolio by investment category
26
27
" 3
. City of Petaluma, California 2000 Statement of Investment Policy
1 ATTACFIMENT A
2
3 CITY OF PETALUMA
4 2000 Statement of Investment,Policy
5 '
6 SL1lvI1v1ARY OF TYPES OF INVESTMENTS
~ AVAILABLE TO LOCAL GOVERNMENTS
8
9 STATE INVESTMENT POOL (LAIFj
10
11 The Local Agency Investment fund (LATE) was created by'the State in 1976 to provide local
12 governments with access to a large •investment;pool that can generate higher interest yields and
13 provide a high. degree of liquidity. The deposits and withdrawals are done by electronic transfers
14 of funds (~~~ire transfers) and deposits earn interest on a daily basis.
is
16 Over 2,541 local agencies .participate in the LAIF investment .pool; These agencies invest
17 approximately'$14.5 billion, which is added to $1.9..7 billion in State funds fora $34.2 billion
18 investment portfolio. The, investment portfolio is widely distributed over many types of
19 investment instruments and is ono adversely impacted by sudden. shifts in the. investment market.
20 In :addition, the large portfolio and wide distribution provides for greater flexibility in investing to
21 take advantage of changing "interest rates.
22
23 There is a limitation of $Z0 million per.iegal .entity within an agency. There is also a maximum of
24 ten transactions; deposits or withdrawals per month.
2s
26 The security of LAIF investments is •in two parts. The State Treasurer and Controller's offices are
27 responsible for the accounting, processing, and. safe keeping. ofthe City's funds through the State
28 Treasurer's investment: procedure .and policies.. The State maintains.insurance and bonds covering
29 employee honesty and errors. The City funds are able to be withdrawn at any time and are
3o protected by State law from seizure or impoundment by any State Officer.
• 31
32 Once the funds are pooled with other local agencies, 'and invested,.. the security for the funds varies
33 with the investment. Each investment is secured by Federal Insurance, the US Government or
34 Federal Agency, collateral of major banks, or major corporation collateral. The security depends
3s on the type of investment.
36
37 Sonoma County Investment Pool
38
39 Thee Sonoma County Treasurer maintains an investment pool. in which the County, Schools,
40 Special Districts and Cities-.can participate. The investment portfolio totals approximately
4.1 $8"50;080,000. This investment pool operates in the same:manner as the State pool. The County
42~ Treasurer.'is subject to the same :State Government Code regarding investments as the City. As
43.. with the State investment fund, City funds can be withdrawn at any time and are protected by
44 State Law:from seizure or impoundment by any County Officer.
4s -
45 Certificates of Deposits (CD)
47
- 4s Certificates of Deposits,, somefimes.known as :'Jumbo :Accounts" or "Fixed CD's," are savings
49 accounts with Banks or. Savings and Loans. These accounts are for a specific amount, have a set
5o interest rate, and .set maturity date. There~is a substantial interest penalty if the CD is withdrawn
51 .prior to the maturity date.
. 52 .
4
t
- City of Petaluma, California. ~ 2000 Statement of Investment Policv
1 '
2 The State law .requires Public Fund CD's to be collateralized by the financial. institution at 110%
. 3 with iJS 'Government notes/bonds or at 150% with quality First Trust Deeds. This collateral can
4 be waived if Federal .Insurance (FDIC for banks or FSLIC for savings and loans) is available.
5 These federal agencies will insure each account up to $100,000.
.6
7 The City generally waives the collateralization requirements for the FDIC or FSLIC insurance.
8 The waiver'ofcollateral is a wide spread practice and will generally generate higher.interest rates
9 and provide the greatest security for he funds from the Federal Insurance Agencies. For deposits
10 in excess of $100;000, the collateralizationrcquirements are not waived.
11
12 Negotiable Certificate of Deposit (NCD)
13
14 This ,investment is similar to the Fix_ ed CD'a above. However, the' NCD can .be sold through a
15 broker on a "secondary market" prior to the maturity dafe. Normally, NCD's are issued in
16 $5:00,.00.0 and $`1;000,000 amounts. 'The, State Code limits NCD's to'not more than 30% of the
17 local agency's portfolio and to a five-year maximum. term. The security is the credit worthiness of
18 the issuer. These deposits are uninsured: and uncollateralized promissory notes.
19
20 Banker's. Acceptances (BAS
21
22 A Banker's Acceptance~is a time draft of invested funds, which,has been drawn on and accepted
23 for repayment by a bank. This financial.. irisfrument is generally used. for short term (30 and--180
24 days): financing of export, import, or storage of goods. By accepting the draft (investment of City
25 fiinds}, the:bank.is liable for-the payment at maturity. This bank liability makes the Banker's
26 Acceptance a marketable investment. 'T,he State Code.limits BA's to not more than.270 days to
27 maturity and 40% of the local agency's portfolio. In addition; not more than 30% of the local
28 agency's portfolio may be placed in any one`bank.
29
3o US Treasury Bills
31
32 Commonly referred to as T-Bills, these are short-term marketable, securities sold as obligations of
33 the US Government. ,They are offe"red in three month, six month,- nine month and one-year
34 maturities. T-Bills do not accrue interest but are sold at a discount, and' pay the face value at
_ 35 maturity.
36
37 US Treasury Notes
38
39 These are marketable, interest-bearing securities sold as obligations of the US Government with
40 original maturities of one to ten years. Interest is paid semi-annually.
41
42 US Treasury Bonds
43 '
44 These are- the same as US Treasury Notes except they have original maturities often years or
45 longer.
46
47 Federal AgencxIssues
48
49 Many Federal Government Agencies are. authorized to issue: short term and long term. obligations
5o that are used to finance various .programs such as home loans, business loans, farm loans, etc.
51 These Agencies were created by the Federal Government in the 1930's and have since become
52 independent ,quasi-public agencies. The security for their.issues is the guarantee of the Agency to
53 pay. The Federal Government has. only an implied liability•to the'extent that the Agency has an
54 open credit line to borrow from the U.S. Treasury. It is widely accepted that Federal Agency
55 issues are as secure as U. S. Government notes. .
56
57 There is an active secondary market available to sell these issues prior to maturity. The issues are
58 fairly liquid depending on the prevailing market interest rates at the time of sale..
5
- City of Petaluma- California 2000 Statement. of Investment Policv
. 1 Some of the more. common agency notes. are issued.. by'the Federal National Mortgage Association
2 (Fannie Mae);'Federal Home Loan Banks, Federal Home Loan Mortgage Corporation (Freddie
3 Mac), and the Federal Farm Credit Banks.
5 Repurchase Agreements and Reverse Repurchase A~~reements (Repos)
6
A Repurchase Agreement is a short-term investment, agreement to loan City funds for a fixed
s period in return~for a fixed interest -rate=and secured collateral; such as U.S. Treasuries or Agency
9 .Notes. This type of investment is usually done;foi` overnight or very short term (7 days)
to investment of funds left in the general operating checking account. Reverse Repurchase
" l l agreements `is a short-term investment; which is used to take advantage ofmarket interest rate
12 changes and increase the size of the portfolio-:. State law was amended in 1996 to limit the use of
13 both_repurchase and reverse repurchase' agreements. The City Council must approve each reverse
14' repurchase agreement. •
15
16 Commercial Paper (CP)
17
is Commercial'Paper are unsecured promissory notes of industrial .corporations, .utilities. and ,bank
19 holding companies. The notes are in bearer form in amounts starting at $100,000. State law
20 limits. the City to investments •in United States corporations having assets in excess of five hundred
21 million dollars with an "A" or higher rating. Cities may not invest more than 30% of the portfolio
22 in comrr?erciai paper and the CP's may not exceed a term of 1`$0 days:
23
24 Mutual,Funds'
25
26 An•investment company that pools:money and can invest in a variety of securities,. including fixed-
, ~ 27 income securities and money market ,instruments, cities may invest in Mutual Funds or Money
• 2s Market funds. that receive the highest.ranking or the highest letter and numerical rating by two of
29 the three largest nationally recognized rating services. -The Nlutual.Funds must abide by the same
3o investment restrictions and regulations. that apply to public ,agencies in California. Money Market
31 Funds "must :follow regulations.specifiedthc Security and-Exchange Commission under the
32 Investment Company Act of 1940: The City must verify that the Mutual Fund is in compliance
33 with state laws for public agencies prior to purchasing shares.
34
35 Guaranteed Investment Contract (GIC)
36
37 This is an agreement acknowledging receipt of funds for deposit, specifying terms for withdrawal
3s and guaranteeing c rate of interest to be paid. The investment. follows all state laws for the
39 investment of public funds. "
40
6
City of Petaluma, .California 2000 Statement of Investment Policv
1 Permitted Investments and. Conditions for Usin Them
- 2
3
4 Investment Type Ma.~imum Maximum % Quality
~ Maturity (2) of Portfolio Requirements
6
7
8 Local Agency Bonds 5 Years None None
9 US Treasury Obligations 5 Years None None
10 State of California Obligations 5 Years None None
11 CA Local .Agency Obligations ~ Years None None
12 US Agencies 5 Years None None
13 Bank Acceptances 270 Days 40% `3) Fed. Reserve Eligible
14 Commercial-Paper 180 Days 15% or 30% (4) A1/P1 Rating
15 Negotiable Certificates of Deposit 5 Years 30% None
16 Repurchase Agreements 1 Year None None
17 Reverse•Repurchase Agreements 92 Days 20% of Base None (6)
18 Medium-Term Notes 5 Years 30% A Rating
19 Mutual Funds N/A ~ ZO% (5) Multiple {7)
20 Money`Market Funds (1) NIA 20% Multiple (8)
. 21 Collateralized-.Bank Deposits 5 Years None None
22 Mortgage-:Pass-Thru Securities 5 Years 20% AA Rating
23 Time Deposits 5 Years None None
24 County Pooled Investment Funds N/A None None
25
26
27 Source: California Government Code Sections 33601 & 53635 (a-n)
28
29 (1') 'This document refers tq Money MarkeCMutual' Funds as Money Market Funds; They must have.an average weighted maturity of 90 days
30 or less~and abide by SECregulations:
31 (2) Section-S360I states any investmrnt that,ai the dine of purchase has over 5 years to maturity must be authorized by the legislative body not
32 less;than3.months prior to the investment
' 3 3 (3) 'No more than 30% of the surplus funds may be.in Bankers Acceptances of any one commercial bank.
34 ~ (a) Limit'is 30% if dollaz weighted average maturity of all commercial paper-does not exceed 3l days. Commercial paper issuers must be US
35 Corporations with $300 million plus in?assets. Purchases may'not represent mare than 10%'ofthe•outstandinB2Paper of an issuing
36' corporation,
37 (S) -No more than 10% of an agency's surplu"sfunds may be invested imany one mutual fund.. '
38 (6) Re3erse'Repurehase,Agrecmiints-must de made with primary dealers of the Federal Reserve Bank of New York and the securities used for
3 9. the agreemrnt must have been held by the ssuer'for at leasE30 days.
40 (zj &futual funds mustreceiye the highesE ranking,by2, ofthe 3 largest nationally recognized rating agencies or retain an.investment advisor
4'1 who:is registered, or exempt.&om registration; with the SEC and has at least S years' experience investing in securities and obligations
42 authorised in Section 53601 "and 53635 (a-j m'or n) of the Government Code`-with assets in excess of $S00 million.
43 (8) , Money market funds must receive;the higt~est`raiiking by 2 ofthe 3 largest nationally recognizad'rating agrncies or retain an investment
44 advisor who is registered, or exempt'from registration, with the SEC and has at least S years' experience managing money market funds in
45 excesraf $S00`million. '
46
City of Petaluma California 2000 Statement of Investment Policy
1
2 ATTACI;-IMENT B
3 ~
4 GOVERNMENT CODE SECTION 53635
5 AS AMENDED
6
' 7 53635. As far as possible, all money belonging to, or in the
8 custody of, a local agency, including money -paid to the treasurer or
9 other official to pay'the principal, interest, or penalties of bonds,,
10 shall be deposited for safekeeping in state or national banks,
11 savings associations or federal associations, credit unions, or
12 federally' insured. industrial ,loan companies in this state selected by
13 the. treasurer or other official having'the legal custody of the
14 money; or, unless. otherwise directed by the legislative body pursuant
15 to Section 53601, may be invested in the investments set forth
16 below. A local agency purchasing or .obtaining any securities
t7 described in this section, in a negotiable, bearer, registered, or
18 nonregistered format, shall require delivery of all the securities to
19 the. local agency, including those purchased for the agency by
20 ~ financial advisors, consultants, or managers using the agency's
2.1 funds, by book.entry, physical delivery, or by third-party custodial
22 agreement. The transfer of securities to the counter party bank's
23 customerbook entry account maybe used for book-entry delivery. For
24 purposes of°this section, "counter party" means the other party to
2s the transaction. A counter party .bank's trust department or separate
26 safekeeping department may be used for the physical delivery of the
27 security if the security is held in the name of the local agency.
28
29 (a) Bonds issued by the,local agency,'includng bonds payable
3o solely -out of the revenues from a reventae-producing property owned,
31 controlled, or operated. by the local agency or by-a department,
32 board, agency, or authority of the local agency.
33 '
34 (b) United States Treasury. notes;. bonds, bills, or certificates of
35 indebtedness, or those for which the faith and credit of the United
36 States are pledged for .the payment of principal and interest.
37
38 (c)' Registered state warrants or treasury notes,or bonds of this
39 state, including bonds payable solely out of the revenues from a
4o revenue-producing property owned,. controlled, or operated by the
41 , .state: orby. a department, board, agency, or authority of the state.
42
43 (d) Bonds, notes, warrants, or other evidences of indebtedness of
44 any local agency within this state, including bonds .payable solely
45 out of the revenues from arevenue-producing property owned,
46 controlled, or operated by the local agency, or by a department,
47 ~ board, agency, or :authority of the local .agency.
48 '
8
City of Petaluma; California ~ 2000 Statement of Investment Policy
1
2 (e) Obligations issued by banks, for cooperatives, federal land '
3 banks, :federal. intermediate credit banks; federal home loan banks,
4 the Federal Home Loan Bank, the Tennessee, Valley Authority, or in
5 obligations,. participation's; or other- instruments of, or issued by,
6 or fully guaranteed as to principal; and interest by, the Federal
7 National Mortgage Association; or in guaranteed portions of Small
8 Business Administration notes; or°in obligations, participation's, or
9 other instruments of, or issued by, a federal agency or a United
to States government-sponsored enterprise:
' 11
12 (f) Bills of exchange or time drafts drawn on and accepted by a
13 commercial bank; otherwise known as banker"s acceptances. Purchases
14 of bankers acceptances may not exceed:270 days maturity or 40 percent
15 of the agency's surplus funds which maybe invested pursuant to this
16 ~ - section. However, no more than 30 percent of'the agency's surplus _
17 funds may be invested in the bankers acceptances .of any one
18 ~ • commercial bank pursuant to this section.
19
20 Thin subdivision does not preclude a municipal utility district
21 from `investing any surplus money in its treasury in any manner
22 authorized, by the:Municipal Utility District Act, Division 6
23 (commencing with Section 11501) ofthe Public Utilities Code..
24
25 (g) Cgmmercial paper of "prime" quality of the highest ranking. or
26 of the highest letter and numerical rating as provided for by Moody's
27 Investors Service;, Inc., or Standard and -Poor's Corporation.
28 Eligible paper is further limited to issuing corporations that are
29 organized and operating within'the United States and having total
30 assets in excess of'five hundred million dollars.($500,000,000) and
31 having :an "A" or higher rating for the issuer's debt, ,other than
32 commercial paper; if any; as provided for by Moody's Investors
33 Service; Inc.; or Standard and Poor's Corporation. Purchases of
34 eligible comrnereial paper may not .exceed 180' days maturity nor
3'S represent more. than .10 percent of the outstanding paper of an issuing
36 ~ corporation. Purchases of commercial paper may not exceed 15
37 percent of the agency's, surplus money which maybe invested pursuant
38 to -this section. An additional 15 percent, or a total of 30 percent
39 of the agency's. money or money in its custody, may be invested
4o pursuant to this subdivision. 'The additional .15 percent maybe so
41 invested only if the dollar-weighted average maturity of the entire
42 amount does. not exceed 31 days. "D.ollar-weighted average maturity"
43 means. the sum., of the amount of each outstanding commercial paper
44 investment multiplied by the number .of days'to maturity, divided by
45 the total amount of outstanding commercial paper.
46
9
City of Petaluma, California 2000 ,Statement of Investment.Policy
1
2 (h) Negotiable certificates of deposit. issued by a nationally or
3 state-chartered`'bank or a savings association or federal association
4 or a state or federal credit union or by astate-.licensed branch of a
5 foreign. bank. Purchases of negotiable certificates of.deposit may
6 not exceed 30 percent of'the agency'ssurplus money which may be
7 invested pursuant to this section. For.purposes of this section,.
8 negotiable certificates of deposit do not come within Article 2
9 (commencing with Section 53630) of Chapter 4 ofPart 1 ofDivision 2
10 of Title 5, except that the amount so invested shall be subject to
11 the limitations of Section 53.638. For purposes of this section, the
12 legislative body of a local agency and the treasurer or other
13 official of the local. agency having legal custody of the money are
14 prohibited from depositing or investing local agency funds, or funds
15 in the custody of the local agency, in negotiable certificates of
~6 deposit issued by a state or federal credit union if a member of the
17 legislative body of the local agency, or an employee of the
is administrative officer; manager's office, budget office,
19 auditor-controller's office, or treasurer's ogee of-the local
20 agency also serves on the board of directors, or any committee
21 appointed by the board of directors; or the credit committee or
22 supervisory committee. of the state or federal credit union issuing
23 the negotiable certificates of deposit.
24
25 (i) (1) Investments in repurchase agreements or reverse repurchase
26 ~ .agreements of any securities authorized by this section, so long as
2~ ,the agreements :are subject to this subdivision, including the
28 delivery requirements specified in this section:
29
30 (2) Investments'in repurchase agreements may be made, on any
31 investment.. authorized in this section, when the term of the agreement
32 does not exceed one year: The market value of;securities that
33 underlay a repurchase agreement shall be valued at 102 percent or
34 greater of the funds borrowed against those securities and the value
35 shall be adjusted no less than quarterly.
36
37 (3) Reverse repurchase agreements may be utilized only when either
38 of the following conditions are met:
39
ao (A) The security was owned or specifically committed to purchase,
41 by the'local agency, prior to .repurchase agreement on December 31,
42 19.94, and was sold using a reverse repurchase agreement on December
43 31, 1994.
' 44
10
City of Petaluma ~Calfbrnia -2000 Statement of Investment Policy
1
2 The security to be.sold on reverse repurchase agreement has
3 been owned and fully paid for by the local agency for a nunimum of 30
4 days:prior to sale, the total of all reverse repurchase :agreements.
5 on investments owned by the local agency not purchased or committed
6 to purchase, prior to December 3 l_, 1.994, does not exceed 20 percent
7 of the base value. of the. portfolio, and the. agreement does not exceed
8 a term of 92 days, unless the' agreement includes a written codicil
9 guaranteeing a minimum earning or 'spread for the entire period
to between the sale ofa security using: a reverse repurchase agreement
11 and the final maturity date of the same security. ,
12
13 (4) After December 3 T; "1994,,.a;revecse repurchase agreement may
14 not be entered into with securities not sold on a reverse.repurchase
15 agreement and purchased, or committed. to purchase, prior to that
16 , date, as a means of financing or paying for the security sold on a
17 -reverse repurchase agreement; but may only be entered into with
18 securities owned and previouslypaid for, for a minimum of30 days
19 prior to the settlement of the reverse repurchase agreement, in order
20 to supplement the yield on securities owned and previously paid for
21 or to provide ,funds for the immediate payment of a local agency
22 obligation. Funds obtained or funds. within. the pool of an equivalent
z3 amount to that:obtained from selling a security to a counter party by
24 way of a reverse repurchase agreement, on securities originally
2s purchased subsequent to December~31, 1994, shall not be used to
26 purchase another security with a maturity longer`than 92 days from
27 the initial. settlement date of the reverse repurchase-agreement,
28 unless the reverse repurchase agreement includes a written codicil
29 guaranteeing a.minmurn earning or Spread for the entire period
30 between the "safe of`a security using a reverse repurchase agreement
31 and the final maturity date of the same security. Reverse repurchase
32 agreements specified in subparagraph (B) of paragraph (3) may not be
33 entered into unless the percentage restrictions specified°in that
34 subparagraph are: met, 'including the total of any .reverse repurchase
35 agreements specified in subparagraph (A) of paragraph (3).
36
37 (s) Investments in reverse ::repurchase agreements or similar
38 investments in which .the local agency sells securities prior to
39 purchase with a simultaneous agreement; to repurchase the security,
4o may only be made upon prior approval:'of the governing body of the
41 local agency and shall only be made with primary dealers of the
42 Federal Reserve Bank of New York.
43
11
City of Petaluma, California 2000 Statement of Investment Policy
I
2 (6)~ (A) "Repurchase agreement" means a purchase of securities by
3 the oral agency pursuant to an agreement by which the counter party
" 4 seller will repurchase the securities on or before a specified.date
5 .and for a specified amount .and the counter party will deliver the
6 underlying securities to the local agency by book entry, physical
~ delivery; or by third party custodial agreement. The transfer of
s ~ underlying securities. to the counter party bank's customer book-entry
9 account maybe used for book-entry delivery.
10
11 (B) "Securities," for purpose of repurchase. under this
. 12 subdivision, means securities of the same issuer, description, issue
13 date, and maturity.
14
15 (C) "Reverse repurchase agreement" means a sale of securities by
16 the local agency pursuant. to an agreement by which the local agency
17 will repurchase'the securities on or before a specified.date, and
18 includes other comparable agreements.
19
20 (D) For purposes of this section, the base value of the local
21 agency's pool portfolio shall be that dollar amount obtained by
2z totaling all cash. balances. placed in the pool by all pool
23 .participants,. excluding any amounts obtained through selling
24 securities by way of reverse .repurchase agreements or other similar
25 borrowing. methods..
26
27 (E) For purposes of this .section,. the spread i the difi~erence
2s between the cost of;fiznds obtained' using the .reverse repurchase
29 agreement and the, earnings obtained on the reinvestment of the funds.
30
31 (j) Medium-term notes of a maximum of five years' maturity issued
32 by corporations organized and operating within he United States or
33 by depository institutions licensed by the United,-States or any state
34 and operating within the United States. Notes eligible for
35 investment under this subdivision shall be .rated in a rating category
36 of "A" gr;ts equivalent or;better by a nationally recognized rating
37 service::Purchases of medium-.term notes may' not exceed 30 percent
38 of the agency's surplus money which may be invested pursuant to this
39 section.
40
12
City of Petaluma ;California - 2000 Statement. of Investment Policy
1
2 ('k) (1) Shares ofbeneficial interest issued by diversified
3 management companies that. invest in the securities and obligations, as
4 authorized by subdivisions (a) to (j), inclusive, or subdivision
5 (1) or (m) and that comply with the investment. restrictions of this
6 article and Article 1 (commencing with Section 53600). However,
7 notwithstanding these restrictions, a counter party to a reverse
8 repurchase agreement is not required to be a primary dealer of the
9 Federal Reserve Bank ofNew York if the company's board of directors
to
11 find's that the counter party presents a minimal risk of default, and
12 the value of the securities underlying a repurchase agreement maybe
13 100 percent of the ales price if the securities. are marked to market
14 daily.
is
16 (2) Shares of beneficial interest issued by diversified management
17 companies that are.money market funds registered with the Securities
18 ~ and Exchange Commission under the Investment Company Act of 1940 (15
19 U.S.C. Sec. 80a-1 et seq.).
20
. 21 (3) Ifinvestment is in.shares issued pursuant to paragraph (1),
22 ~ the company shall have met either of the following. criteria:
,23
24 (A) Attained the•highest,ranking or the highest letter and
25 numerical rating provided by not less than two nationally recognized
26 statistical rating organizations.
27
2g ~ (B) Retained. an investment adviser registered. or exempt from
29 registration with the Securities and Exchange.Commission with not
30 less than five years' experience investing in the securities and
31. obligations authorized by subdivisions (a) to (j), inclusive, or
. 32 subdivision (1) or (m) and with assets under management in excess of
33 five hundred million dollars ($500,000;0:00).
34
35 (4) If investment is in sha~es'issued pursuantto paragraph (2),
3'6 ~ the company shall have met either of the following criteria:
37
38 (A) Attained the highest ranking or the highest letter and
39 numerical rating provided by not less than two nationally recognized
4o statistical rating organizations.
41
42 (B) Retained an investment adviser registered or exempt from
43 registration with the Securities and Exchange Commission with not
44 less than five years' experience managing money market mutual funds
45 with assets under management in excess of five. hundred million
46 dollars ($500;000,000).
47
13
City of Petaluma _ California 2000 Statement of Investment Policy
1 ,
2 (5) The purchase price: of shares of beneficial interest purchased
3 ~pursuarit to this subdivision shall not include any commission that
~ the companies may charge and shall not exceed-20 percent of the
5 agency's surplus money that .may be invested pursuant to this section.
6
7 However, no more than TO percent of the agency's surplus funds may
8 be investedin~ shares of beneficial interest ofany one mutual fund
9 pursuant to paragraph (1).
~10
11 (1) Notes, bonds, or ether obligations which are at all times
12 secured by a valid. first priority ,.security interest in securities of
13 the. types listed by Section 53'65.:1 has eligible .securities for the
la purpose of securing local agency deposits having a market value at
15 least equal to that required by Section 536'2 for the purpose of
16 securing Focal agency deposits. The securities serving as collateral
17 °shall be .placed by delivery or book entry into the .custody of a
is trust company or the trust department of a bank which is not
19 affiliated with the issuer of the secured obligation; and the
20 security interest shall be perfected in accordance with the
21 requirements of the Uniform Commercial Code or federal regulations
22 applicable to the types of securities in which-the security interest
23 is granted.
24
25 (m) Any mortgage: pass-through security;, collateralized mortgage
26 obligation, mortgage-backed or other pay-through bond, equipment
. 27 lease-backed certificate, consumer receivable pass-through .
2s certificate, or consumer receivable-backed bond of a maximum of five
29 years maturity. Securities eligible for investment under this
3o subdivision shall be issued by an issuer'having an "A" or higher
31 ~ rating for the issuer's.debt as provided by a nationally recognized
32 rating.serviceand rated in a rating category of "AA" or its
33 equivalent or .better by a nationally recognized rating service.
34 Purchase of securities authorized by this subdivision may not exceed.
35 20 percent of the,agency's surplus money that' maybe invested
36 pursuant to this section::
37
38
T4
CITY OF PETALUMA, CA
CITY TREASURER'S MONTI~LY REPORT
For the Month of December 19.99
Cash activita- for the month
Cash and Invcstnicnts, Begiiuiiug of the Month ~ 28,556,829
Cash Receipts 10,632,969
Cash Disbursements (5,>O5.(176)
Adjustment No~~cmbcr Baiil:`Statenient Balance to November Book Balance * (602,878)
Cash and Ins cstmcnts, End of the Month ~ 33,081,844
Cash and [n~~cstmcnf Portfolio at Dccembci- 31, 1999
Percent Weighted
Market Par Value of Davs to Estimated
Value (Cost) Portfolio Maturity Annual Yield
Investments Manat;cd by Cite Ti•casurci~:
Local A~cnc~~ Investment Fund 16,9~d ~}?.tt 16.990,632 51..~6';~~ 1 5.2>"%~
Federal Agency Securities 8,3c)=1.,75 8,500,000 2~.G~)'% 1,268 6.5(1"~
Guaranteed faivestment Contract 2,75(;.(1;6 2,75(1,636 8.3 18(1 5.70%
California Arbitrage Management
Program 1.545,126 1,545,126 4.~i7`% 1 5.19%
Subtotal 29,559,967 29,791;794 90.05`%
Investments Managed by Fiscal Agents
California Arbitrage Management
Program 2,528,3 l4 2,528,314 ' 7.64% 1 5.19%
US Bank Ivloney'Markct 136,696 136,096 0.41 % 1 3.72%
First American Treasury
Obligations 87,70 l 87,701 0.27% 1 4.74%
Cash held by Trustees 4 4 0.00% 1
Subtotal, 2,752,115 2,752,115 8.32%
Checking Accounts 537,935 537,935 1.63% 1
Total Cash and Investments 32;856,017 33,081,844 10(1.(10%
ThcNoyember 19.99 City Treasurer`s Ivlonthl}~ Report listed ilie City's.checking account balances at the bank
stateiient amount. Thc~Trcasurer's~reports wii noa}~ list the clieckiilg account balances at ilic book balances, Tlie
difference between basil: and books is thaaddition of ;deposits. in transit at the end of the month and ilie deduction
of checks which. have been issued but not yet cashed.
Market Values were funiished by the State of California, Local Agency 'Investments acid Wells Fargo Securities.
I certify that this report contains the total amounts of cash acid investments at December 31, 1999. The
investments are in confornuty with the Invcst7nciit Policy as stated in Resolution. Number ~99-63, dated
March 15, ] 999. A copy of the Investment Policy is available for review in the Finance Department. The
City Treasurer's cash management program,provides sufficient liquidity to meet e~.penditure requirements for
the nc~t sip months.
Q~i.~~ ~~z
'Paula M. Corn~zt, Interim Finance Director
State of California
Foaled Money Inve tment Account
' Market Valuation
12/31/99
Carrying, Cost Plus
Description Accrued Interes"t Rurch.:~: ~ Amortized Cost Fair Value Accrued Interest
United States Tre~su
Bills $ 1,389.;526,715.72 $ 1,422,135,902.13 $ 1,420;350,830.48 NA
Noses $ 2,347;392;850.95 $ 2,34.7';392,850.95 $ 2,330,850,750.00 $ 25,809,4.52.75
Federal Agenc
Bonds $ 2,821.,859,587.83 $ 2,821;591,182.95. 2,803,044,984.20 $ 33,453,016.41
Floaters $ 100,000,000.00. $ 100;000,000.00, $ 10Q,000,000.00 $ 912,465.00
MBS $ 449,497,798.39 $ 449,497,198.39 $ 427,355,487.74 $ 2,435,877.67
GNMA $ 1.,497,373.43 $ 1:,497,373.43 $ 1,666,825.70 $ 14;749.71
'SBA ~ $ 255,168,104.73 $ 255,1:68,1'04.73 $ 254,839,239:37 $ 2,259,106.00
FHLMC PC $ 14,589,871.70: $ 14,589,871.70 $ 15,361,745.24 $ 234.,209.98
Discount Notes $ 4,441,225,663.92 $ 4,533,752,293.58 $ 4,531,237,376:08 NA
.Bankers Acce tances $ - $ - $ - NA
C_ orporate:
Bonds $ 1,021,775,497.48 $ 1.,020;810,162.61 ~ $ 1.,011,097,212.75 $ 18,610,634.19
Floaters $ 1,`346,977,889.08 $ 1,346,859,144.35 $ 1,350,1"34,563.00 $ 9,044,801.77
CDs $ '.4;508:;233,842.08 4,505,607,046.23: $ '4,498,047,209.22 $ ~ 82,307,645.27
Bank Notes $ 1,913,161,212.40 $ 1,912,992,584.80 $ 1;91.0,657,120.27 $ 37,759,116.66
Re urchase A reement $ - $ - $ - NA
Time Deposits. $ 2,799,895,00.0.00 $ 2,799,895,000.00 . $ 2;799,895,000:00 NA
AB 55 & GF Loaris $ 2,333,498.;378..10 $ _ 2,333,498,378.1D $ 2,333,498,378.10_ NA
Commercial Pa er $ 8;770,108,843.47 $ 8,836,109,419.44. $ 8,840,416,606.54 NA
Reverse Repurchase (466,81;0,,844.64) $ (466,810,844.64) $ (466,810,844.:64) $ (1;435,466,89)
TOTAL $ 34,047,597,184.64 $ 34,23'4,585;668:75 $ 34,161,642,484.05 211,405,608.52
Fair Value Including Accrued Interest $ 34,373,048,092.57
Repurchase Agreements, Tirne Deposits., AB 55 & General Fund loans, and
Reverse Repurchase agreements are carried at portfolio book value (carrying cost).
The value of each participating dollar equals the fairvalue divided by the amortized cost (.997869313).
As an example: if an agency has~an account balance of $20,000,000.00, then the agency would report its
. participation in the LAIF valued at $19,957,386.26 or $20,OOO,OOQ.00 x .9.97869313.
Portfolio as of 12-31-99 Pooled Money Investment Account
PAR V~?LlJES MATURING ~Y ®ATE AIVD TYPE
11~aturities in tVlillions of Dollars
6 V. , .psi, Ca4~S!~ M. . F. a
1 day 31 'days 61 days 91 days. 121 ~~y~s 151 ~fa~s 1.81 days 211 days 271 s~a~s 1 year. 2 yea~S : 3 ~.~rh 4 Y~;~r~
1 l
,
_ to to to to t~ tQ to , to ~ to i' a ~ to :•to to.: to •
• s ,
ITEM 30 days 60 days 90 days 120 days 150.days 180.days 210 days 270.days 1_ye;r~ ~ 2 years 3 years ' 4 y$ars 5'yeaC/out
TREASURY• $ 170 ~ $ 590 $ 160 $ 150 $ 56S $ 1,250 $ 925
'REPO
TDs $ 568 $ 722 $ 483. $ 251 $ .288 $ 69 $ 74 $ 193 $ 161
AGENCY $ 997 $ 921 $ .820 $ 504 $ 635 $ 581 $ 415 $ 2,391 $ 472 $ 16 $ 442
..BAs
CP $ 2,308 $ 3,082 $ 2,145 $ 63.0 $ 55Q, _
CDs + BNs $ 1,443 $ •830 ~ $ 447 $ 684 $ 1,200 $ 1,275 $ . 55 $ 3.00 15
C:ORP BND $ 39 $ 50 $ 27 $ 235 $ 67 $ _ 26 $ 5 $ 30 $ 150 $ 1,047 $ 609 $ 50 $ 30
TOTAL
$ 32,132 $ 5,525 $ 6,195 3,922 $ .2,464 $ 2,890• $ 2,516 $ 134 $ 638 $ 4,242 $ 2,4.59 $ 609 $ 66
$ 472
PERCENT 17.2% 19.3% 12.2% 7.7% 9.0% 7:8% 0.4% 2.0% 13.2% 7.6% 1.9% 0.2% 1.5%
Note: Floating Rate Securities are represented at coupon change date.
Note: Mortgages are represented at current book value.
Note: Figures are rounded to the nearest million.
Note: Does not include A655 and General Fund loans