HomeMy WebLinkAboutResolution 96-034 N.C.S. 02/05/1996RESOLUTION NO. 96.4 N.C.S.
of the City of Petaluma, California
1 A RESOLUTION OF THE CITY COUNCIL OF THE
2 CITY OF PETALUMA APPROVING TIIE
3 INVESTMENT POLICY FOR 1996
4
5 WHEREAS, the City Treasurer has annually rendered to the City Council a
6 .Statement of Investment Policy, and;
~.
8 WHEREAS, the City Treasurer has the responsibility to invest the pooled idle
9 cash of all of the City funds, and;
10
11 WHEREAS, the City Treasurer has developed a Statement of Investment Policy
12 and submitted said Policy to the City Council for review.
13
to NOW, THEREFORE BE IT RESOLVED that the City Council approves the
15 1996 Investment Policy as shown in Exhibit A attached.
Under the power and authority conferred upon this Council by the Charter of said City
REFERENCE: I hereby certify the foregoing Resolution wm introduced and adopted by the Approved as to
Councilof tha City o[ Petaluma at a (Regular) (:kpY)plliale~k7fkmeeting form
on the .....5Sh .............. aay of ......._.Eel2ruary.............................., Is9&.... by the -____
following vote: `,'(~
_......_ ..1~._........-'-- .._...
City Attorrie ~
AYES: Stomps, Maguire, Read, Shea, Vice Mayor Barlas, Mayor Hilligoss
NOES: None
ABSENT: Hamilt~
ATTEST : ................... .. .. ...... ......... ......................
City Clerkr~, CCrr,, -r~/ /• ~~/
6i LY' ~ 1 I 1. ~ 1 I ~ FiL._ R~44._n._.._...
CA 10-85 Rcs. No........._9.N-.J.Y...... N.C.S.
City of Petaluma 1996 Statement of Investment Policy
EXHIBIT A to Resolution approving Investment Policy
CITY OF`PETALUIGf~
1'996 STATEMENT OF INVESTMENT POLICY
PURPOSE
This Statement is;intended to provide guidelines for the prudent investment of the temporary idle
cash under the City Treasurer's control. 'The primary goals are-to protect the security of public
funds, provide funds when needed foruse and earn a reasonable rate of investment interest.
SCOPE
Under the City Charter Section 24, the City Treasurer is appointed by the City Manager with the
approval of the City Council. The City Treasurer is also the City Finance Duector.
The daily cash management, investment transactions and account reconciliation's are the primary
responsibilities of the City Treasurer.
This Investment Policy shall apply fo activities of the City with regard to the investment of
temporarily idle funds of all fund types, includine the following:
General Fund
SpeciaLRevenue Funds
Debt Service Funds
Capital Projects Funds
Enterprise Funds
Internal Service Funds
Trust and Agency Funds
This Policy shall. also apply to funds of the Petaluma Community Development Commission
(PCDC), Petaluma Public Financing Corporation and any otheeagency or trust funds under the
control of the City Treasurer.
In orderto provide flexibility and. efficiency in cash and investment management, the City uses a
general operating account and investment pool system. When the revenues are received from
taxes, fees and other sources, it,is recorded in the City's finance~syst`em to the appropriate fund
and account. The checks and cash fromsall funds are then deposited into an operating account.
The single operating account allows forv,more efficient-management of'daily transactions and
investrrients frompthe accounf. The.investmentearnings from all investments are allocated on a
quarterly proportibnally.back to each-fund that provided the cash forthe investment.
There are several restricted'fund sources',that are notincludgd in'the City's investment pool and
are invested separately. These; invested~fiinds will;receive:fhe interest earnings on a periodic basis
from the directinvestment source or sepazat_e investment pool:. Examples of these funds are"debt
reserves, trust accounts (Prince Trust):and'Tax and RevenuerAnticipation-Note.proceeds:
A(v- 3t}
City of Petaluma.
OBJECTIVE
1996 Statement of Investment Policy
The City's cash management system is designed So:monitor:;and:forecast expenditures and
revenues, thus enabling the.Cityto invest, fiinds to the fullestextent possible. The City attempts
to obtain the highest interest yield as long as investmentsmeetthe cnteria established for safety
and liquidity.
The City strives to maintain theaevel;of investment of all funds of 95% of available cash, through
daily and projected,cash flow determinations.
The basic premise underlying thelCity's investment philosopfiy is to insure that City funds aze
always safe and available when needed.
POLICY
The City of Petalumaoperatestits temporary pooled idle cash investments under State
Government Code Secuon 5360Q et seq., as amended. The following sections of the State
Government code require the following:
Section 53600.3 -Governing bodies ofiocal agencies or persons authorized to make
investment decisions on behalf of those local agencies•investing public funds pursuantto
this chapter are trustees and therefore fiduciaries subject to the prudent investor standard.
When investing, reinvesting, purchasing, acquiring, exchanging, selling, and managing
public funds, a trustee shall act with.care, skill; prudence, and diligence under the
circumstances then prevailing; that a prudent person acting in a like capacity and
familiarity with those matters would use in.the, conduct of funds of a like character and
with7ikeaims, to safeguard`the,p"rincipal grid maintain the liquidity needs of the agency.
Within the limitations;of this section and considering individiiaLinvestments as part to an
overall strategy, a trustee is authorized to acquire investments as authorized by law.
Section 53600.5 - WheminQesting, reinvesting, purchasing; acquiring, exchanging, selling
and managing public funds, the primary objecrive,of a trustee shall be to safeguard the
principal of the funds under its control. The secondary objective shall be to meet the
liquidity needs of the iiepositor. The third objective shall be to achieve a return on the
funds under its control,
The City generally investsin`the following;investments that are ;allowed by State Govenunent
Code Section 53635:
- I:ocal;Agency Investment-Pools (State LAIF orSonoma County Investment Pool)
-Certificates of Deposits placed with commercial
banks,and/or savings: and loan:companies
- Negotiable Certificates of Deposit
Bankers.Acceptances
- Securitiessof the U. S. Government or its Agencies
-=Repurchase:Agreements (for ovemightinvestment)
- Commercral,Paper
All of the above investmentsecurifies aze.eligible for City investment under State Government
Code Section 53635. The State Government Code also allows for additional types of investment
securities that are:pot commonly usedtiy the City. Attached is a description of the above listed
securities, Attachment;A; and a copy of the State Government Code, Attachment B.
This policy also,;provides that other inyestmentsecurities authorized by State Government Code
Section53635, as amended,.ace also eligible'foninvesfinent of City Funds.
RE~~•96°n34NCS
"City of Petaluma
1996 Statement of Investment Policy
Below is a summary of the current,statutory'limits imposed by the State Government Code on
certain investmehts:
Permitted Investments Investment-Limits Maturity Limits
Securities of the U.S. Govt. Unlimited 5 yeazs (1)
Certificates of Deposit Unlimited 5 yeazs (1)
Negotiable Certificates of Deposit 30% of portfolio 5 yeazs (I)
Bankers Acceptances 40% of portfolio 270 days (2)
Commercial Paper 30"/0 of portfolio 180 days
LAIF $20,000,000 n/a
Passbook Deposits n/a n/a
Repurchase Agreement n/a 1 year (3)
Reverse Repurchase Agreement n/a 92 days (3)
Mutual Funds 15% of portfolio n/a
Medium Term Commercial Notes 30% of portfolio 5 years
Mortgage Obligations 20% of portfolio 5 years
(1) May be extended with City Coiincil approval
(2) Limited to no more than 30°/; in any one Bank
(3) There are other limitations and spectfic City Council approval is required for each revetse
repurchase investment.
Safetv: It isthe primary duty and responsibility
of the Treasurer to protect,; preserve and maintain
cash and investments on behalf of the citizens of
the City.
2. ~uidity: An adequate percentage of the portfolio
is maintained in liquid short-term securities
which can be converted fo cash if necessary to meet
disbursement requirements. Since all cash
requirements cannot be anticipated, investments in
securities witfi active secondary or'resale mazkets
is preferred and emphasis on marketable securities with
low sensitivity to market'interesttate risk.
3. Yield`. Yield is, a consideration only after the basic
iequirementsofwfety and'Gquidity have been met:
SAFEKEEPING,
All.investment`securities'purchased directly by the City shallbe.held in safekeeping by an
institution designated as safekeeping agent or at the City in registered book or physical-form. The
primary agent`shalhissue asafekeeping receipt to the City listing the-specific instrument, rate,
matunty and other pertinent information.
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City, of Petaluma
COLLATERALIZATION
1996 Statement of Investment Policy
Deposit-type securities (i. e. CertificatesofDeposit) shall be,collateralized at the minimum State of
Califorrua collates[ pool requirements for any'amount exceeding FDIC or FSLIC coverage.
BROKERS
In selectingaecuritiesbvokers; the City Treasurer shall conduct;credit and capitalization analysis
to determine that firms aze adequately financed to conduct,pubGc business.
LOCAL INVESTMENT POOL POLICIES AND REPORTS
The City Treasurershall review and maintain current copies of the adopted investment policies of
the State and.'Sonoma County: The policies shall be reviewed for concurrence with the
investment policy of the City.
The City Treasurer shall submit the State required quarterly reports of the investment transactions
of the investment poolto the City Council as'part of the Gty Treasurer report.
INVESTMENT OF DEBT PROCEEDS
The City deposits selected.debt-proceeds, reserves and other debt related funds with the California
Arbitrage Management Program'(CA~\~IP). This is an investment"program authorized by City
Council Resolution 91-1b9. Irwas created by othercities asa Jomt Powers Authority (JPA) for
the investment of local agencyfunds which maybe subject to Federal arbitrage regulations. The
investmenfportfolio is managed by abroker on contract with the JPA. The mvestment type
securities are~regulated by the State Government Code and further limited by the specific debt
issuance resolutions and federal restrictions.
CITY INVESTMENT MONITORING AND REPORTING
The City Treasurer shall routinelymonitorthe entire investment portfolio and shall file. with the
City Council a,momhly Treasurer's Report wMch shall include aStatement of Investments and
other inforration as required.
Attachment C is an example of the monthly report for December, 1995. The City Treasurer
believes this reportexceeds the.recommended rmmmum requirements ofthe amended State Code
and' provides thesCity Council with additional information regazding bazilc accounts and
reconciliation with the City's Creneral Ledger.
)EiES®.96-034NCS
`~
City of Petaluma 1996 Statement of Investment Policy
ATTACF3NfENI' A
CITY, OE P-ETALUMA
1996 Statement of Investment Policy
SUIvL'~f?,RY OF TYPES OE,INVESTMENTS
AVAILABLE TO I,OCAI, GOVERNMENTS
LOCAL:AGENCY INVESTIvfENT POOLS
State'Investment Pool (LATE)
The Local Agency Investment fund (I:~) was created`by the:,State in 1976 to provide local
governments with access to a large investmenYpool that.can generate higher interest yields and
provide a Iugh degree of Gquidiry The deposits and withdrawals are done by electromc transfers
of funds (wise transfers) and begin earning interest on a daily basis.
Over 2,200aocal agencies participate in,th8 LAIF investment pool.. These agencies invest
approximately $8:9 billion which is added to $18.1 bilGonin State funds fora $27 billion
investment portfolio. The investment~portfolio is widely distributed over many types of
investment instruments and is not'adyecsely impacted by sudden hilts in the investment market.
In addition, the large portfolio and-wide distribution providesforgieater flexibility investments to
take advantage of chaneing interestrates.
Thereis-a limitation of $20 millionpet Agency subject to a maximum of 10 transactions per
month.
The security of LAIF investments isin two pans. The State Treasurer's and Controller's offices
aze responsible for the accounting, processing, and safe keeping of the City's funds throughthe
State Treasurer's investment procedure and policies. The State maintains insurance and bonds
covering employee honesty'and,errors. The City funds areable to be'withdrawn at any time and
are protected by Statelaw from seizure or impoundment by any State Officer.
Once the funds aze pooled with other local agencies, and invested, the security for the-funds
becomes the investment: Each investment is secured by Federal Insurance, the U. S. Goverrvnent
or Federal Agency, collateral of major banks, or major corporation collateral. The security
depends: on the type of investment.
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City of Petaluma 1996 Statement of Investment Policy
Sonoma County Investment Pool
The Sonoma County Treasurer maintains' aminvestment pool which the County, Schools, Special
Districts and•Gities'can participate... The investmeniportfolio is approximately $762,800,000.
This investment,pool operates in the wine manner as the State pool. The County Treasurer is
subject~to the same State Government Code regarding investments as the City. As with the State
investment fund,,the Cityfunds can be withdrawn at any time and are protected by State Law
from seizure or.impoundment by any County Officer.
Certificates of Deposits (CDl
Certificates of Deposits, sometimes known as "Jumbo Accounts" or"Fixed CD's" are savings
accounts with,Banksor Savings and lioans. These accounts are for a specific amount, a set
interest rate, and set maturity date. There is a substantial interest penalty tf the CD is withdrawn
prior to the maturity date.
The State law,requires Public Fund CD's to be collateralized bythe financial institution at 1.10%
with U. S. Govertunent notes/6onds or at.150% with qualityFirst Trust Deeds. This collateral can
be waived if Federal Insurance (FDIG£or banks or FSLIC for savings and loans) is available.
These federal aiencies will insure each account up to 5100,000.
The City generally waives the collateralization requirements forthe FDIC or FSLIC insurance.
The warver'of collateral is a wide,,spread practice and will generally generate higher interest rates
and provide the'; greatest security for the funds from the.Federal Insurance Agencies. For deposits
in excess of $100,000, the collateralization requirements are not waived.
Negotiable Certificate of Deposit (NCDI
This investment is similar to the Fixed CD's above. However, the.NCD can be sold through a
broker on a "secondary market"' prior to the maturity date: Normally, NCD's are issued in
$500,000 and 51,;000,000 amounts. The State Code limits NCD's to not more than 30% of the
local agency's portfolio and 5 year maximum term. The security:is the credit worthiness of the
issuer, as these deposits are uninsured and uncollateralized promrssory notes.
Banker's AcceQances (BAl
A Banker's Acceptance is
for repaytriept by a bank.
days) financingofexport,
funds), the bank is liable f
draft<
mds which has been drawn on and accepted
is generallyused for short term (30 and 180
ds: By accepting the draft (investment of City
y: This'bank liability makes the Banker's
ide litnits BA'sto nobmore than 270 days
addition, riot more than 30% of the local
e tocaL,agencyls portfolib..I
be placed in any one'bank:
U.S. Treasury Bills
Commonly referred to as T-Bills, these~are "short=term:marketable securities sold as obligations of
the U.S. Government. They are offeredin'three.,month, six month, Trine month and one-year
maturities. T-Bills'do not accrue interest but; are sold at a discount to pay face value at maturity.
RED®.96-~34NCS ~°
City of Petaluma 1996 Statement of Investment Policy
U:S. TreasurvNotes
These aze,macketable, interest-bearing;securities sold as.obligations of the U.S. Government with
.original maturities of one to ten years. Interest is'"paid semiannually.
U S. Treasury Bonds
These aze the same as U. S. Treasury Notes except they have original maturities often years or
longer.
Federal Agency Issues
Many'Federal Government sponsored Agencies aze authorized`to issue short term and' long term
obligations that'aze used to finance various programs such as,hbme oans, business loans, farm
loans; etc. 'Tliese,Agencies-were created bythe Federal Government in the 1930's and have since
become independenf;quasi-public agencies: The securityfor their issues is the guarantee of the
Agency to pay. TheFederal Government fias only an implied liability to the extent that the
.Agency has an open credit line to borrow from the U.S. Treasury., It is widely accepted that
Federal Agency issues areas secure as LT.S. Government notes.
There°isanactive secondary market available to sell these issues prior to maturity. The issues are
fairly liquid depending on the prevailing`maeket interest rates at the time of sale.
Some of the,more common a¢ency notes. are issued. by-the Federal National Mortgage Association
(Fannie Mae),.FederalHome Loan Banks,.Federal Home Loam Mortgage Corporation.(Freddie
Mac), and the Federal-Farm Credit Banks.
Reourchase Agreements and Reverse.Repurchase Agreements (Reaosl
A Repurchase~Agreement is a short ternYinvestment agreement fo loan City funds for a fixed
period in return for a fixed interesYrate;and secured collateral, such as U.S. Treasuries.or Agency
Notes. This type of investment is usually done for overnight br very short term (7 days)
investment of funds le8 in the general; operating account. Reverse Repurchase agreements is a
short term investment which is used to take advantage ofmarket interest rate chanties and
increase the size of the portfolio.. State law has been amended in .1996. to limitthe use of both
repurchaseand reverse repurchase:agreements. The City Council must approve each reverse
repurchase agreement.
Commercial"Pager (CPl
Commercial;Paper are unsecured promissory notes.of industrial corporations, utilities and bank
holding companies.. The notes are in bearer form starting at'$I00000. State law limits the City
to investmentsin United States corporattons havingassets:in excess of five hundred million
dollars with a "A" or higher rating. Cities:may not mvest,more than 30% of the portfolio and not
exceed a term of l'80 days.
City of Petaluma 1996 Statement of Investment Policy
ATTACHI~IENT B
GOVERNMENT CODE SECTION 53635
AS A1~NDED
53635. As far. as possible, all money belonging to, or in the
custody of, a local agency,. including money paid,to the treasurer or
other official'to pay the principal, interest, or penalties of bonds,
shall be deposited forsafekeeping iri state or national banks, savings
associations or federal associations, creditvnions, or federally
.insured industrial loan.companies in this state selected by the
treasurer or other official having the legal custody of the money; or,
unless otherwise duecfed by the legislative body pursuant to Section
53601, maybe invested in the investments set forth below. A local
agency purchasing orobtaining anysecurities described in this section,
in a negotiable, beazer; .registered, or nonregistered format, shall
require delivery of all the securities to the local agency, including
those purchased for the agency by financial advisors, consultants, or
managers using the agency's funds, by book entry, physical delivery, or
by third-party custodial agreement. The transfer of securities to the
counterparty bank's customer book entry account may be used for
book-entry delivery. For purposes of this section, "counterparty" means
the other party to the transaction. A counterparty bank's trust
department or separate safekeeping department may be used for the
physical delivery of the•security if the security is held in the name of
the local agency.
(a) Bonds issued by the local agency, including bonds payable solely
out of the revenues from arevenue-producing property owned, controlled,
or operated by the local agency or by a department, board, agency, or
authority of the local agency.
(b) United States Treasury notes, bonds, bills, or certificates of
indebtedness, or those for which the faith"'and credit of the United
States are pledged for the payment of principal and interest.
(c) Registered state warrants or treasury notes or bonds of this
state, including bonds payable sdlely out of the revenues from a
revenue-producing property owned, controlled, or operated by the state
or by a department, board, agency; or authority of the state.
(d) Bonds, notes, warrants, or other evidences of indebtedness of
any local agency within this state, including bonds payable solely out
of the revenues' from arevenue-producing property owned, controlled, or
operated bythe local;agency, or by a department, boazd, agency, or
authority of the local agency.
ICES®.9~-~34NCS ~
City of Petaluma
1996 Statement of Investment Policy
(e) Obligationsissued by banks for cooperatives; federal land
lianks, federal intermediate credit banks;.federal home loan banks, the
Federal Home Loan Bank, the Tennessee Valley Authority, or in
obligations; participations; of other instruments of, or issued by, or
fully guaranteed as to principal and interest by; the Federal National
Mortgage Association; or in guaranteed portions of Small Business
Administration notes; oc:in obligations,. participations, or other
ihstruments of, or issued by; a federal agency or a United States
government-sponsored enterprise.
(f) Bills of exchange: or time drafts drawnon and accepted by a
commercial bank, otherwise known as bankers acceptances, which are
eligible for purchase by the Federal-Reserve System. Purchases of
bankers acceptances may not exceed 270 days maturity or 40 percent of
the agency's surplus funds which may be invested pursuant to this
section. However, no more than 30 percent of the agency's surplus funds
.may be invested in the bankers acceptances of any one commercial bank
pursuant to this section.
This subdivision does not preclude a municipal utility district from
investing any surplus:money in its treasury in ally manner authorized by
the Municipal Utility District Act, Division 6 (commencing with Section
11501) ofthe,Public Utilities Code.
(g) Commercial:paper of "prime" quality o£the;highest ranking or of
the highest letter and numerical rating as provided`for by Moody's
Investors Service, Inc., or Standard and Poor's Corporation. Eligible
paper is further limited to issuing corporations that are organized and
operating within the United States and having total assets in excess of
five hundred million dollars ($500,000;000) and having an "A" or higher
rating for the issuer's debt, other than commercial paper, if any, as
provided for by Ivfoody's Investors Service, Ino., or Standard and Poor's
Corporation. Purchases of eligible commercial paper may not exceed 180
days maturity norrepresentmore. han 10 percent of the.outstanding
paper of an issuing corporation. Purchases of commercial. paper may not
exceed 15 percent of the agency's surplus money which may be invested
pursuant to this section. An additional 15 percent, or a total of 30
percent of the agency's'money or money in its custody, may be invested
pursuant to this subdivision. The additional 15 percent maybe so
invested only if the dollar=weighted average, maturity of the entire
amount does not.exceed 3,1 days:. "Dollar-weighted average maturity"
means the sum ofthe amounYOf each oufstanding commercial paper
investment multiplied;by tfie,number ofdaysao maturity, divided by the
totaLamotint of outstanding commercial'paper:
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-City of Petaluma
1996 Statement of Investment Policy
(h) Negotiable certificatas~ of deposit issued by a nationally or
state-chartered bank or a savings;association or federal association or
a state or federal credit union or bya.state-licensed branch of a
foreign bank. Purchases of negotiable certificates of deposit may not
exceed 30 percentof the agency's surplus money which may be.invested
pursuant to this'section. For purposes of this section, negotiable
certificates of deposit"do not come within Article 2 (commencing with
Section S.i630) of Chapter 4 ofPart 1 ofDivision 2 of Title 5; except
that the amount so invested shall be subjecrto the limitations of
Section 53638. For purposes of ibis section, the legislative body of a
local agency and the;treasurer orotherofficial,ofthe local agency
having;legal custody'of the money are prtihibited from depositing or
investing local agency'funds; or funds in the custody of the local
agency, in negotiable certificates of deposit issued by a state or
federal credit union ifa member of the legislative body of the local
:agency, oran employee ofthe administrative;officer, manager's office,
'budget office, auditor-controller's office, or treasurer's office of the
local agency also serves on the board of directors,.or any committee
appointed by the board. of directors, or the credit. committee or
supervisory committee of the state orfederal creditunion issuing the
.negotiable certificatesrof deposit.
(i) (T) Investments;in repurchase agreements or reverse repurchase
agreements of any securities authorized 6y this section, so long as the
agreements are subject to this subdivision, including the delivery
requirements specified'-in this section.
(2) Investments in repurchase agreements may be made, on any
investment authorized in this section, when the term of the agreement
does not exceed ope year., The mazket value of securities that underlay
a repurchase agreement shall be valued at 102 percent or greater of the
funds borrowed against those securities and the value shall be adjusted
no less than.quarterly:
(3) Reverse repurchase'agreements maybe utilized only when either
of the following conditions'aze met:
(A) The securitywas'owned;or specifically committed to purchase, by
the local agency, prior to:repurchase;agreement on December 31, 1994,
and was soldusing a reverse repurchase agreement on December 31, 1994.
RE50.96-034NCS jO
City ofPetaluma
1996 Statement of Investment Policy
(B) The+security to be sold on reverse repurchase agreement has.been
owned.and fully paid for by, the local agency for a. minimum of 30 days
prior to sale, the totaLof'all;reverse repurchase agreements orr
investments owned by the local agency not purchased or committed to
purchase, prior'to December 3;1, 1994, does not exceed,20 percent of the
base value of the portfolio, and the agreement does not exceed a term of
92 days, unless the agreement includes',a-written,cddicil guaranteeing a
niinimum earning or spread for the entire period between the sale of a
security using a reverse,repurchase agreement and the.final maturity
date of the same security.
(4) After December 31, ..1994, a reverse repurchase agreement may not
be entered.into with securities not sold on a reverse repurchase
agreement and purchased, or committed to purchase; prior to that date,
as a means of financing or.paying for the security sold on a reverse
repurchase agreement;;but may only be entered into with securities owned
and previously paid-for, fora minimum of 30 days prior to the
settlement of the reverse repurchase agreement, in order to supplement
the yield on securities owned and previously paid for'or to provide
funds for the immediate payment of a local agencyobligation. Funds
obtained or funds wihin the pool of an equivalent! amount to that
obtained from selling. asecurity to a counterparty:byway of a reverse
repurchase agreement, on securities originally purchased subsequent to
December 31, 1994,. shall not be used to purchase another security with a
maturitylongerthan;92 days fromthe initial settlement date of the
reverse repurchase agreement, unless the reverse repurchase agreement
includes a written.codicil guaranteeing,a minimum:earning or spread for
the entire period between the sale of a security using,a reverse
repurchase agreement and the final maturity date of the same security.
Reverse repurchase agreements specified in subparagraph (B) of paragraph
(3) may not be<entered into unless the percentage:restrictions specified
in that subparagraph are met; including the total of any reverse
repurchase agreements specified in subparagraph (A) of paragraph (3).
(5) •Investments imreverse.repurchase=agreements or similar
investments in which the local agency'sells securities prior to
purchase, may only be made upon prior approval of the governing body of
the local agerfcy:
(6) (A) "Repurchase:agreement"'means apurchase of securities by the
local agencypursuant to an agreement by which the counterparty seller
wilhrepurchase the securities on orbeforea',specified date-and for a
specified amount and the counterparty will deliver the underlying
securities to the local agency by book entry, physical delivery, or by
third party:custodial agreement. The transfer of underlying securities
to the counterparty bank's customer book-entry account maybe used for
book=entry delivery.
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City ofPetaluma
1996 Statement of Investment Policy
(B) "Securities;" for purpose of repurchase under this subdivision,
means securities,ofthe same issuer,. description, issue date, and
maturity.
(C) "Reverse repurchase;agreement" means a sale of securities by the
local agency pursuant to art°,agreement by which theaocal agency will
repurchase the securities on ar before a specified date, and includes
other compazable;agreements.
(D) Forpurposes' of this section;. the basevalue of the local
agency's pool portfolio shall be that dollaz amount obtained by totaling
all cash balances placed in the pool by all pool participants, excluding
any amounts obtained through selling securitiesby-way of reverse
repurchase agreements or other similaz borrowing methods.
(E) For purposes of this section, the spread-is the difference
between the cost of funds obtained using the reverse repurchase
,.agreement and,the'earnings obtained on the reinvestmentof the funds.
(F) Repurchase agreements and reverse repurchase agreements shall
only be made with primary dealers of the Federal Reserve Bank of New
York:
(j) Ivledium-term notes of a maximum of five years' maturity issued by
corporations organized and operating within the United States or by
depository institutions licensed by the United States or any state and
operating within the United States. Notes. eligible for investment under
this subdivision shall;be-rated in a rating cafegory'of "A" orits
equivalent or better by a nationally recognized rating service.
Purchases of medium-term,notes may not exceed ~0 percent ofthe agency's
surplus money which maybe invested pursuantfo this section.
{k) Shares of beneficial interest issued.by diversified management
companies investing inahe securities and.obligatibns as authorized by
subdivisions (a} to (k), inclusive; of this section and which,comply
with the::investment restrictions.of this article.and.Article 1
(commencing<with Section 53600). To,be.eligible for investment pursuant
td thissubdivision, thesecompanies shall either:: (1) attain the
highest ranking or the highesfaetter and numerical rating provided by
not less than two of thethree lazgest nationally recognized rating
services,. or (2) have an investment adviser registered with the
Securities and Exchange`Commi'ssionwhh notaess than five years'
experience investing'in'the securities and obligations as authorized by
subdivisions (a) to (m),:nclusive, of this sectiort and with assets
under management'in excess,of five hundred million dollars
($500,000,000). The purchase:price of shares of beneficial interest
purchased pursuant to this subdivision shall not include any commission
~~~~•96-~.34NCS ~a'
City ofPetaluma
1996 Statement of Investment Policy
thatahese companies may ciarge[and shall not exceed 1-5', percent of the
agency's surplus money which maybe invested pursuant to this section.
(l) Notes, bonds, or other, obligations which are at all times
secured by a valid first priority security interest insecurities of the
types lsted.by Section 53651 as eligible securities for the purpose of
securing local agency deposifs.having;arnarket value at least equal to
that required by Section,5~652'for the purpose:of securing local agency
deposits. The securifies serving as collateral'shalCbe placed by
delivery or book eptiy into the custody of a.trust company or the trust
department of a bank which is not affiliated withrthe issuer of the
secured obligation, and the security interestshall be perfected-in
accordance with'the requirements of the Uniform Commercial Code or
federal regulafionsapplicable to the types of securities in which the
security interest is granted.
(m) Any mortgage pass-through security, collateralized mortgage
obligation, mortgage-backed or other pay-through bond, equipment
lease-backed certificate, consumer receivable.pass-through certificate,
or consumer receivable=backed bond of a ma~rimum of five years maturity.
Securities elieible for investment under this subdivision shall be
issued by an;issuer having.an "A" or higher rating for the issuer's debt
as provided bya,nationally recognized rating service and rated in a
rating category of "AA" or its equivalent or better by a nationally
recognized rating service: Purchase of securities,authorized by this
subdivision may not exceed 20 percent of the agency's surplus money that
may be invested pursuant to 4his section.
9 (e 3 ~ 13
ATTACHI~TENT C
January 23, 1996
To: John L. Scharer, City Manager ~ ~(t~
From: David W. Spilman, Finance Director\(~r
Re: Treasurer's Report:for December, 1995
Attached is the Treasurer's~Report as of December 31, I995. The information in the report is
submitted to you on a monthly basis`in order to fully inform;you and the City Council on the
amount, types, and duration of the investments of City Funds by the Treasurer.
The report consists of four schedules:
Schedule 1 Summary.of Cash„Investments & Fiscal Agents Accounts
Schedule 2 Summary of Bank Bt Fiscal Agent Account Activity
Schedule 3 Summary of Investment Sources by Accounts
Schedule 4 Summary of Account Reconciliation to General Ledger
Below is a comparison of current investment activity to the same month the previous year.
December December
1994 1995
Monthly $ Invested $41,353,192 $52,897,387
Monthly Estimated Interest Rate 5.48% 5.84%
3-Month T-Bill Rate 5.56% 4;91%
Interest Received or.Accrued from Start of Fiscal Yeaz $472,948 $661,409
Also included are summary`graphs showing the investment-performance for the month.
CITY OF PETALUMA
TREASURER'S REPORT
DECEbIBER, 1995
CITY OF PETALUMA
PERCENTAGE-0F CASH INVESTED
-FISCAL YEAR 1996-86
J A 3 O N D J F M A M J
MoNTHs
FISCAL YEAR AVERAGE - 97x'
CITY OF'PETALUMA
AMOUNT OF CASH/INVESTMENTS
FISCAL YEAR 1996-96
60
a6
s0
M 7a
1 70 /r .
I 26 G
1
0 2D
16
10
S
0.
J A S O N 0 J F M A M J
MONTHS
®INVE9TE0 ®FISCAL AGENTS SIN POCOUNTS
FISCAL YEAR~AVERAGE- 537,884,748
CITY OF PETALUMA
INTEREST RATE OF OUTSTANDING~INVEST.
FISCAL YEAR ,1995-96
P
E
R.
C
E
N
T
lF
3
2
J A 7 O N 0 J F M n N +
MONTHS
'~. CITViNTEREST ~7.M0'T-BILL INTEREST
FY AVG - CITY-5.87x.- T-BILL-8.28x
CITY OF PETALUMA
CASH/INVESTMENTS,BY~TYPE - OEC,~-1995
YW 5000)
WP
sauce •la
PYuI Ae.nl GYP
etaoa - a
ff.axe - is
- r.a N.rYwt
is.ouo. -;as
YOIA
itsei ; As
seNm. cowlir Paal eLrA
ia.eos - n fa.aca -as
Fhtl Mem. Lwn
'F1.000. )1
PW Mew lMn YArI OuA
».eu-r~ me-as
TOTAL CASH/INVESTMENTS -.E41,897,387
ICES®.96-034NCS
CITY OF PETALUMA
LENGTH OF'•CURRENT INVEST TO MATURITY
A3 OF bECEMBER 3L 1995
2a
~ to
w 13-
1 id
1 12-'
I
o tD.
e
LIOUIO• GYP e0. CfY. YBIA 0•a0 a0•f0 e0-le0 tetraeeMCR ]M
NUMBER OF DAYS TO MATURITY
•IN0.UDE8 GBN IM ACDOUNTe AMO LAIF
~5
CITY OF PETALUIVLA
CITY TREASURER AND FINAINCE DIRECTOR REPORT
The Treasurer is regiired.to submit a monthly repon,ofthe City,cash and investments under the State Government
Code Section ~364G to the City Council. This report shows the cash transactions of the month and the available
cash and outstanding investmentsas`of the end of the tpon[h. All accounts and investment sources [ha[ aze under
[he control of the City Treasiuer,.directly or htough Fiscal Agents(I'mstees, aie listed below. All investments
aze made according to,[he Statement of~Investmentand Reporting Policv as presented to the Ciry Council on
February 6. 1995and.approved 6}' Resolution#95-32 NCS.
The transactions and 6alancescontained in these schedules are from [he various bank statements and investment
co~rma[ions. Theinformation is reconciled with the City's general ledger accounts. Schedule 4 summarizes the
bank account reconciliation to the geneml ledger accounts.
SCHEDULE 1-SUMMARY OF CASH, INVESTMENTS & FISCAL AGENTS AS OF DECEMBER 31, 1995
Bank of America Genera] Operating Account
Bank of America Payroll Account
Bank of America M.A.S.T.
Bank of America Police TrusrAccount
Bank afAmerica Thomas Lee Charity Trust Acct
699,830.23 38,942,341.40 39,642,671.68
19.311.33 19,314.33
801.03 801.03
6,100.72 6,100.72
173.84 173.84
Bank of America Fiscal Agent Accounts 2,228,325.38 2,223,325.38
Total Cash & Investments 726,220.20 38,942,841.40 2,228,325.38 41,897,386.98
Ciry Investments to
Demand Deposits-Ratio
2% 93% 5% 100%
Average Investment InteresrRate
(I) Includes Marina, Airport, Swim and Transit accounts
5.84%
q ~ - 3`f
i c~
CITY OF PETALUlV1A
CITY TREASURER A1~TD FINANCE DIRECTOR REPORT
SCHEDULE 2-SUbIMARY OF:BAIVK ACCOUNT ACTIVITY
Beginning Ending
:Balance Receipts Disbursements Balance
Depository City Accounts - .12/01/95' 12l3Il95'
Bank of America General Operating Account
Bank of America. Payrol Account
Bank ofAmcrica M. A.S.T. (1)
Bank of America Police Trust Account
Bank of America' Thomas Lee Charity Trust Acct
551,164. 10 17,470,261. 18 17,321,595. 30 699,830. 23
9,317. 33 886;554. 17 877,057. 67 19,314. 33
1:1,447. 97 11,526. 49 25,173. 43 801. 03
6,744. 26 13 .38 656 .92 6,100. 72
473. 34 0 .00 300 .00 173. 34
Total Activity of .all Accounts 532,643.00 13,363,355.52 13,221,733.32 726,220.20
__ Beginning Ending
Balance Receipts Disbursements Balance
Depository ~ Fiscal Agent/I'rtutee Accounu 12/01/95 I2/31/9S
Bank of America ..Fiscal Agent Accounts 2,139,143.46 39,198.37 16.95 2,228,325.33
(1) Includes Marina, Airport, Sssim and Transit accounts
.ICES®.gG-~l:~~NCS
17
CITY OF PETALUMA
CITY TREASURER AND FINANCE DIRECTORREPORT
SCFIEDULE 3-INVESTMENT SOURCES SUMMARY AS OF bECEMBER 31, 1995
'(~trrent
T;vpe of Securityby AccounVlnstitution Puctiase Maturity Itterest Estimated Investment .Market
- Date'?' Date Yield to Interest to ! Principal 1Value
Maturity Maturity ',
General Operating Account (We11s~Fargp;Bank)
Local Agency Investment Fund (LATE) O/D O/D' 5.760% N/A 17,937;541.74 17,937,541.74
Local Agency Investment Fund (LATE)-PCDC O/D O/D' 5.760% N/A 4,317,241.09 4,317,241.09
California Arbitrage Mgmt Program (CAMP) O/D O/D' SS60% N/A 1,305,312.04 1,305,312.04
Sonoma County hrvestnient'Pool- Ciry OiD O/D' 5.093% N/A .3,371,791.16 3;371,791.16
Sonoma CounR~ Imesmient-Poa(-PCDC O/D O/D' 5.093% N/A 130,457.46 liQ35 i.46
IvfBL4-TRAM 7-6-95 6-30-96 5.60% N/A 1,332,372.91 1,332,372.91
Fed Home Loan- Wells Fargo Securities 7-21-93 7-21-99 7.270% 363,500 1,000,000.00 1,001,940.00
Fed Nat Mort - Wclls. Fargo Securities 7-28-95 7-29-9 i 6.170% 246,300 2,000,000.00 2;009,400.00
S[udenfLoan -Wells Fargo Securities 7-23-95 7-29-98 6.690% 401,400 2,000,000.00 2,002;630.00
Fed Home Loan:- WeIIs Fargo Securities 7-23-95 7-28-93 6.050% 359,962 1,998,125.00 2,030,620.00
Fed Home Loan - We11s Fargo Securities 8-Z5-95 8-26-97 6.425% 123,500 1,000;000.00 1,002,190.00
Fed Home Loan -Wells Fargo Securities 12-14-95 L-14-93 6.020% 361,200 2,000,000.00 2,003,130,00
Total Invesltnenls All Accounts 1,361,362 38,942,831.40 38,994,666.40
' O/D (On Demand) Interest yield stated each mortth,forpooled investments is the rate as of 5.84%
the lasiday of the month, Infereston pooled investmentsfluctuates daily and the rate thatis
actually paid eachgiiartermay be different.
Lcertify that this report reflects all government agency pooled investmenu and is in conformity
with the InvestritenhPoliry of-.the City of Petaluma as stated in Resolutibn # 95-32, dated
February 6, 1995. A.copy ofthe Investment Policy is available for review at the office of the City
Treasurer. The investment portfolio sfiown above provides sufficient cash flow liquidity to.meet
estimated espehditures'over themest30 days:
SIGNED:
DP.VID W. SPII.MAN, C1TY TREASURER/FINANCE DIRECTOR
1/9/96 (SEC4)
CITY OF PETALUNIA
FINf1NCE DIRECTORS REPORT
SCHEDULE 4 -SUMMARY OF BANK ACCOUNTS RECONCILI~ITION TO GENERAL LEDGER CASH ACCOUNTS
Balance Deposits and Outstanding O[her Adjusted
Per Bari- 'Transfers ' Checks and Reconciling ', Balance.
Depository' AccoutitName ' 12/31795 ' In.Transit Tmnsfers Items'. 12!31/95
Bank of America General Operating 699,33013 75,895.63 (391,313.22) (1li,592.31)
Bank of America Payroll 19;31+93 (17,614.62) 1,699.71
Bank of America MAST 301.03 1,335.79 2,136.82
Bank of America Police Trust 6,100. i2 6,100.72
Bank of America Thomas Lee Charity Trust 17,.3+ 1T.3+
Total Cash Summary 726,220.20 77,231.42 (903,932.3+) 0.00 (105,431.22)
Deposits in transit are deposits which are prepared and recorded by the City as of the last day of the month and
which are taken to the bank and recorded by the bank a day or rivo after thelast day of the month.
Outstanding checks are checks which are written, recorded,and disbursed by the Cityas of the last day of the month
but which have not yet been presented to the bank for pa}`mcnt-and deduction.
Transfers are funds for which the City has authorized a withdrawaLfrom one City bank account and a deposit into
another City bank account by the last day of the month and the transaction has-not yet been recorded by the bank.
Adjusted balance is the balance which woiild show on each bank statemenhif all of the reconciling items had cleared
the bank as of the Iasaday of the mbnth. Tfiis adjusted balance agrees with the cash account balances in the City's
General Ledger as ofthe last day of the month.
BESO.Q6-p34NCS q
t