HomeMy WebLinkAboutResolution 91-020 N.C.S. 01/22/1991a _.1+
~es®Illtl®Il N®. 91-20 N.C.S.
of the City of Petaluma, California
1 A RESOLUTION OF THE CITY COUNCIL OF THE
2 CITY OF PETALUMA APPROVING THE
3 INVESTMENT POLICY FOR 1991
4
5 WHEREAS, Government Code Section 53646 requires each City
6 Treasurer to annually render to the legislative body of the local agency a
7 Statement of Investment Policy, and;
8
9 WHEREAS, the City Treasurer has the responsibility to invest the
10 pooled idle cash of all of the City funds, and;
11
12 WHEREAS, the City Treasurer has developed a Statement of
13 Investment Policy and submitted said Policy to the City Council for review.
14
15 NOW, THEREFORE EE IT RESOLVED that the City Council
16 approves the 1991 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 was introduced and adopted by the Approved as to
Council of the City of Petaluma at a (Regular) (l~i~i~~$~) meeting /~%'
on the ..22nd ............. day of ..............s~da141d,1:y.............._............., 19.~~.., by the
following vote: ......----- - --~•-- ---• ...................
ty; ttorney
AYES: Read, Davis, Sobel, Nelson, Vice Mayor Cavanagh, Mayor Hilligoss
NOES: ~
ABSENT: oolsey
ATTEST: .-•- • ..............................................................................................
City Clerk
~~ ~
Mayor
Gbuncil File..._ ...............................
ca io-ss Hes. n,o......9.1-.2.0........... N.cs
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tv - _ . ~ ..
a.,
' .. ~ ,~.EXH-~B°IT A~~
_ 'CIT'Y,~OF PETALUIVIA
~- '"' 1991 STATEMENT O'F'INVESTMENT POLPCY'
P U RYPO"S E`.
This Statement is intended..topp.c.o~ide gu`idelin~es'for-the prudent investment.
of the tem;po.cary idle cash'under the City Treasu_rer'-s control. The ultimate
goal~is~t'o enhance the interest earnings°of fhe~ City while ~p;rotectng it,'s
pooped cash.. .. r
~S~PE` -
" This Investment Policy shall ap~ply to;.actiu,i:fies of the,Ci:ty with reggard to the
inves meat of te:mporarily`,dle~funds~of all fund~aypes, including the
following: ~..
General Fund H ~ . ~ ~ '
Special Revenue Funds ~ • ~ ~ •
' Debt S'e.rvice Funds ~ .' ~ -
- Capital ProJJec:ts Funds. ~_ , ~ z
, .. Enterprise, Funds ~ '
Internal Service Funds.,
v _ . ,. ., _
Trust and"Age_ncy Furids
The. Policy shall also ~ap~ly to;funds of the Petaluma Community
Development Co-rrimssion.. ,~_ ~ ~ '
. -. ~ -
,:
The cash. management and rnvesiment-transactions arse; the responsibility of
' the City Treasurer. '- " ~~~ ~ '
OBJECTIVE _ .. -
The. City"s cash management system is des`i~gned o monitdr ~and~forecast
ex p`enditures•"°and revenues, thus enab i.n the Ci y`to invest funds to the
. g.
fullest extent ossible. The Giry attempts to,~obtain the hi .hest interest
P ..
yield as Tong as investments meet the criteria a t~ablisfied~` 'or'safety an'd -
liquld'ity.
The- City strives to maint"ain. fhe. level of investm'en.t of all funds :of 95`% of ~ . '
' availab a .cash.; through daily and projected cash;flow de.terrnina`tions.
The'basic: rerni d d
._ tfiat moneP is al se underlying the City's ~nvestme'nt philosophy is to insure
_ y ' wayssafe :an" availa6ie w-hen,neede , ' ~ -.
POLICY ,
The 'City of Petaluma ope-rates i:ts tempor.a;ry pooled' idle cash investments ~ .
under' Government code Section -536:00, e;t seq. and C.ivi1 Code-Section 2261, ~ ..
- et secy., the (:Prudent °Man Rule"`). The "Prudent Mari Ruhe" obligate a.
- ~ fiducrary,to insure that:
- "...investment s~hal~l be made with the exercise of ~thatde.gr,e~e of j'udgm~ent~
- Arid care, under ci-reumstances~ then ~revail.ing;which persons'of prudence,
discre.ton and~intelligence exercis'e:r~n the management of their ow;n~affa'i'rs;'
not f:or speculation but for.. investme,n°t. considering the probable safety of -
theircapital as,we.ll as the`probable ncpme to be de,rved'`. - .' .
- Eligibae investment securi ies from. State Government Code Section 53635:
that are commonly used by the City acre:
~~ ~ - Local Agency Inyestrn-ent Fu~nd.(LA~IF) ~ ~ ',
. ` - Ce'rtifi~cates of Deposits placed with commercial :, -
banks and/o savirigs.and loan companies ~ '~
- Negotiable C:ert'ificates of Deposit
=Bankers Accepptances ~ -
- S~e.curi~ties of :the U.S. Government, or i'ts Agencies .
. ~ - Repurchase;Ag~re.ernents -
- ~.G~om~me_rci~a~l~Pap,er ~ , -
Attache.d is a descrp iori .of the above s'ecurites~and a copy of the
Government C:o,d;e~Section,53b3'S.
.~
Other mvestment's;ecurrti'es au,thorized,by State Go~,ernment Code Section
53635., as:amende.d, are also eligible for investment of City Funds. -
Below is,a summary-of the current~stat-utory limits imposed by:fhe
~. Government Code oq certain investments:
.-
PE'R.MITTED INV-ESTMENTS/D'EPOS'ITS~PERG~ENTAGES MAX..,
- MATiJRITY - ,- - ~ .
- . .. .
. .., .
' Securitie ,of the U 'S. G'o~:t..~- . ~ iJnlimited' _ . ~ _ 5 years
Neg tiables~ of ;D.eposit . ~ ..Unlimited, ~ 5 :years
- e Certificates of Deposit ~ 3Q% S years
~Ba~nkers Acceptances . ° . - ~ 40% 270 days ,
- Commercial Paper - , ~ ~ ~ 30% - 1:80 days
LAIF '~ ~ $1.0.;000,000., - n/a ..
Passbook Deposits ~ ~ n%`a ~ n/a
. Re:pu"r;chase. Ag~ree'ment ~ ~ ' , ~ . n%a 1 year
- Reverse .Repurc_ base Agreement ~ n/a ,1'year*~* .
Mutual Funds- - 15% ~ n/a
~- ~ 1Vle.dium Term Notes - 30% ~~ 5 years
' . * May b-e: eztended:with City :Council approval, ~ .
' ~ - * *Specific City Council: approval is requir.ed~ for each investment-.
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y..
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THE (~$JECTIVESFOR SELECTING INV.ESTMENT_S~AND~ORD R~O:F
PRI = 'RITY ARE:......- . .
. A. Sam It1 is th;e priri%ary~duty and responsibility _
of'tfie Treasurer to protect, preserve and maintain '
cash and' investments on.behalf of the ci~fzens of
the: community. ~ - ~ .
B. Li' i ~ i An adequate'percentage of t.he, portfolio
should be rn'aintained in hrquid,sh`ort=,t•erm securities
whieh,can be coriverted.to~cash if -necessa~ry~to meet '
~~ ~ disbursement requireme;n;ts. Since all cash
requir"ern`ents cannot be ant~ic'pated; roves rnents in
securities with active secondary or resale, markets `
is,preferred and em;phasi!s.on rriarketable securities with ;low
. sensitivity to ~rnarket ris°k.
C. Yi- Yeld;sfiould.become a consideration only-
. after the :basic, requirements of safety and liquidity .
have been met.
SAF'EKE~EPING. COLLATE~RALIZATION' AND BROKERS
A11'-investment securities purchased by t~he.Gity'shall be held in safekeeping
by~a~ninstitufion~d~es~ g~ned as prima:ry~agent or at the City. The,primary
~agert shall issue a safekeepin receipt to~the City listing the specific..
ns,tr.ument, rate, rriaturi"ty~'an~other pertinent information.
. Deposit-tyype securities (`.e.`Certificates of Deposit) shall be collateralized
through.th`e State of Californiacolhaferal p;ool,,rec)uirernentsfnr any amount
exceeding;FDIC~or FSLIC coverage, Dth~er se.curities,shal be
collateralized by fhe~actual security h,eld,in safekeeping by the primary
agent.
In sel'eciing.hr,okers~ and"dealers, the City TreasurerSh'all conduct
- compreher%sive cr.ed"hand capitali'zati`on analysis to determine that firms
are'ade`quateiyfinanced to~conduct public business,
. ,
~,.
MONITORING. AND REPO.RTI~N_G -
TheCity Treasurer shall rqutin:ely monitor the ~nves~tm~ent portf;oli~o ~a~nd -
shall file with the City Council a-monthly Treasur-er'`5'Rep:oit.which sliaT
include~a-Statement of I,nuestments and ot~he -
Government Code Sectron' S3G4~6: r;informati'on as r.equi~red by ~_
B`e.Iow is a lisf ~of the required e~lements,of the montfily reporting:
A. Type of Investment ~ - .
B,. I,nsti`tution . - - .
G. Date of Maturity . -.
D. Amourit, of depositor cost of th-e security
E. Cur.;rena;mark:et~~alue of s'ecur:i"ti`es witl~matur.tty in-
excess of'- f2 .months - - - .
F~. R3ate of inferest
'G.: Statement relat-ing`the report to~tfi:e Statement of~ -
Investment Policy
H.' St~atem,e~nt that.the~re;a're sufficient funds'to;meet -
. the next 3O d`ay's obligations '
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' • ;.CITY OF PETALUMA -
1-991 STATE'MwENT O'F''INVESTM'ENT POLICY ~ .
SLI.MMARY OF"TYPES g~F INUESTII%IENTS; -
AVAILABLE•TQ LQ:CAL G',OV'ERNIVI`EN:TS
LA~IF
` The Loc;a~l-A~gency'In~estrn:ent fund (LATE) was created:by°t'he State in 1976
to providee local~~overnmerits with access too a largge investmerit pool that can
enerate hi her interest, elds~and, rovide a hi h degree of liquidity. The
g _ g ,. y. p . g_
deposit's 'and withdrawals ar:e done by~ele.ct`ronic'°t~ransfers of funds (wire
transfers) and'begi.n'earnng in` 'eres~t~on a daily'basis::..~ '
Over 1;65.0 local agencies participate in the LAIF investment pool. These
agericies~~invesa approxima~tely~$'6 6 bi`llion`which is a`dded;to $13'.4 State
funds,for a $2.0:0 b.llion:i~nvestment p;.ortfolio. The. investmen,t'portfolio is
widely dis ributed over many types of investment ins"truments and is not
adv,e~rs~ely`impac~ted by sud;de~n shifts in the ipvestmena~ mar._k'et., hn addi~'ti~on,
• the large portfolio acid wide distribu:ti•on pr-ovdes•for,greater~:flexibility
investments to°take adyantage:`of changing interest rates..
... There is a~~limitati'on=of $10 mil'lionper Agency subject to a maximum of 10
transactions per month. ~. ~ ~ .
~~ The:securty of LAIF inve'siments is '~n two parts. The. State: Treasurer's'and -
• ~ Gontroller's.offices,•are r"esponslile for t'h'e; accounting, processing, and safe
keeping df the Gityty's'funds~through the State Treasurer's.inyestment
procedure anal policies. The S.tate,marntans~insurance and,bonds.eovering _
empl'oyee~;honesty and errors The Gity funds are able'~~to~be wifhd:rawn'at
any t'r-rrie and are proaected ,liy State aw from seizure; or impoundment by .
any-State Officer.
._ are=~ Doled with other local, agencies, and~invested; the
Once. the funds . pp
security for~the~funds becomes the investni'ent: Each~,nvestment is secured
by Federal Insurance, the'U S,•Crovernmen~t or`Fe,der-al.Agency, c,oll~ateral
of major banks; or. rn~ajor:corporation collateral. The~securaty depends on
the type of investment:: ~~ ~ •
• Certificates of 'Deposits ~ ,CD) '
C.ertificat;es of.Dep.osits;is'ome,times known as--"J.umbq Accounts"~or "Fixed `
_ CD's" a're: savings accountswiih Banks or Savings and Loans., These
accounts are°for.;a s~ecific:.arnou>nt`, a set.interest rate'.,"and~set ma~turity~date.
There is'a~substantia'1 mterest.penal`ty if°tle CD~is withdrawn prior to the
maturity'd'ate: _., _ . ~ - _
The State 'law r'ec~ures Public Fund .CD's to be: eollateralized• by the
financial institution at,11,0'%•w~th U".S. Government.notes/.'bonds or at 150a1c •. ~~
wi"th quality,First Trust De'eds::`This~collateral.,can bewaved if Federal
Insu~rance~:(FDIC forbanks or FS°LIC for sav-ings and=loans) is available.
These,:federal_ a~gencieswillwinsure.each account up ~to~.$100000. ~ .
The City. ;generally waives the collateralization requirements for the FDIC ~ '
. '
or FSLIC insurance. `The waiver of .coll,ateral. is a wrde spread, practice. and
will.generallygenera~te higher int.e'~res't ra;te;s.and.prov,ide the:greafest' _
sec_urity.f'or the funds from the Federal Insurance Agencie's•. ~ '
Neaoti'able Gertifcate:of Deposit ;NCD-~
Ths.i'nvestrrient:is similar to the Fixed°CD°s a~bov'e. However,'the.NCD can.
be_ scold ori~ a "`seconda_rryy market" prior to the maturity date. Normally, `.
NCD's are- issued in $SOO,000 a`rid $1.;000,0:00 anio~u~nts and,re.qure a
. cornbina,ton.of securities to protect the, ublic funds. The State Code limixs .
- ~ 0% `of ,the local agency.'s potfol'°o and.5 yeas
NCD's, to not. more than 3 Y ~ i ,
' maximum:term:.The's.ecurity rs`the credit wor-th_ iness.of the'~issuer, :as these:
deposits are uninsured and unc:ollateralized promrssory notes. ~~ .
B'anker's ~~-1cce~~tances ;BAI,
A Banker';s Acceptance.i : a t-ime d'raf't which has bieen draw;n~on and
accepted by a .bank. This financial' _nstr.ument i~s generally used for' sfior~t; -
t•e'r.m (30 and 180 days) financingg of exppos, import,.or~st~orage of:go~od's~~ ~By ~ ~ _'~
acce.ptingthe draft,:;the bank is.liable forthe paymen ~at maturity,. This- ,
. bank liability makes the Banker's Acceptance a markexable roves"tme,nt.
The State .Code hmits,.BA's to not more than 270, days ma~furi:ty,.,and~ 40%.of .
` .the 1ocal~agency'-s portfolio. ~ .
_ U':S: Treasury B'il'ls - - v
Commonly referred,to as T-,Bills, the a are short-term marketable ~.
se.cu~rities sold as obl`igations of the U.S.. Government. They are offeied ~i:n:
three month, six mon'fh, and;one-year maturities: T-Bills do not accrue
interest:but pare s"ol'd at a dscoun to pay face v-a~lue at maturity,,
:U:S. Treasury Notes -
.. ~ _ . •eres1-meaning sec f o es sold•~as obligations of tl:e
These are marketable, rot
• U.S. Government w,rth .ori~gina atur t es o e to ten ye;ars,,.:I_nterest is
paid,. semi-.annually.- -. ~ ~ ~ `
~.S~Treasurv Bonds
These are the same, as U;S. Treasury Noe except t'h'ey have "or'i~ginal
maturities often years of longer.. ~ -
x -- _
. ,
..Federal Agency Issues.. ,
1Vlany Federal G~over-nmen sponsored A,ge~nces are ,authoized~ to issue,
short term an,d long,-termobligations that are used to finance var•i~ous '
. - ~ ,progr;ams':'such as home.loans, business loans, farm loans;: etc. These
A encies were created b . the~Federal Government in the _1930 s~ and
since become rode ende quasi-p.ubl`iragencre~s The securityfor. t have.
issues~is thee. uaran ee: of the A heir
. ~ gency,-°to pay The"Federal.Governmentha_s
only an implied liab ity to th'e extentahat the A"gency has an open credit ,
.,line `to borrow £rorn t'he U.S. Tr4easu_rryy. It'i~s widely accepted`that Federal.
Agency 'issues a're as secure as U.S. Governm"en notes.
~;, - -
There is a~n~active~secondary~ma~rke .ava~i`lab"le to sell..these issues prior to
maturity. 'Th'e issues are fairly hiquid, depending on "th'e pr.eva~iling marke ` - '
interest.rates at+ he time` of sale.. -
" Repurchase~Agreements~("~Reposl
= A Re-purcizase Agreement;is,a,con.tracf~ual arrangement~betw;een a financial
insti"tution, or dealer,°and. an.investor.. This ag~reernena..normallyy can`run for
one or more days.. Th_e investor puts upfunds. fo; a c-er;tain number of d"ays
at a stated~yield, In ~r:etur,n it takes a ggeven `block; of securities :as collateral.
At matu"rity, the securities are r-.epurchased by~ the fi,na'ncial institution with
inte~r,est. This is used;gen:er,allyfgr overnight inves'tm'ents.
" Commercial Paler (CP1
- _..
Commercial.~Paper'.are unsecured Promissory Notes of :industrial
corporations, utilities and ,bank holding
. companies. No es, ar,e in'beare:form starting at $1,000,OQ. State law 1'mits -
a.City t;o. investments;in i1}nited States: corporation"s havi=rig assets in'exeess
of five hundr.e.d million do la~r,s`with,a'"A" or higher rating. Cities may not .
inv„;estmore Hari "3Q% of, the portfolio and .not exceed a term of 180 days.
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CITY O~F PETA.LUIV~A
SUIi~~AARY OF,I`IVV~E$TAl~ENT.ACTIVITY
;~ 198J=90
.,
. ~ _I
,. ..
• CITY .OF PETALUMA • •
. PERCENTAQE.OFiCA3H.,l'NVESTED
' 'F SEAL YEAR 1899-80
~ •
~7`b• ~87Y, B/'6 'U7.$ 874 6r3`6 IBBV,. 'BA'6 BJ`b B~'-0 9rfYS; pj,k
. MONTHS ' ! .
FISCAL-YEAR AVERAGE -8811 ~
i i
~ -
CITY, OF PETAL'UMA
AMOUNT OF CASFi71NVESTMENTB
fISCAL YEAR 1898-60
_ i.i
s~ _ __.
.:_~
si
,• zp i-
' ~ e - ._ i ,.. - - - -
_- .
i +~ - -_ -
I t? - -
I ~o , ,, - - ~, i, 1
o ~ S'
~2. - ~~ ~
0 _
J '.~ _' ~ 8 O ~ N~ 0~ J, iF M A ~ AI J
MONTHS ~
i ,
' ®7NVE8TED ~IN.ACC.OUNT9
FISCAL YEAR,AVERAOE - $17;230;000 ~ '
i f
;CITY OF 'PETALUAAA,
AVQ INT.:RATE'OF OUTSTANDING INVEST.
FISCAL YEAR 1.989-90
I -
io ~
es
o -=- _-
B _ ~
E. '86 - ---.-_ _ -
E ~ '
N. 7.6 ". -.. -
T- ~ ~.
i
e.a ~
e
J A 8 O. N 0 ~' J F N A M J
MONTHS j
.I ~
'QITY AVOiNTERE9T.- ~ -~- ~-MO T WLL INTEREST
FY'AVERAOE`-'CITY - 6.9111LT-BILL -.8:0411 ~ ' • ' "
~ _.
CITY OF PETALUI~AA'
TREASURER'S REPORT
-DECEItiABER, 1990
C{TY OF -PETALUMA
AMOUNT OF CASH/INVEBTMENT8
F18CAL YEAR 1990-9]
M ~'
1 ~
~.
1
p
n
e
RAOPdTH8
®,erotlQOTEO ~ ql ACCOU11T8
fiecn TEAR ^~~E `•~tTe.~~;sso ,
I CITY OF ,PETALUMA
_J AVQ INT. RATE OF OUTSTAN~NO tNVE8T
• F18CAL YEAR 1990-91 ,
p
E i
R
C
-- E _
N' 7
T
CITY OF 'PETALUMA
LENGTH OF CURRENT GVVEBT'TO MATURITY
A3 OF DECEMBER 31. 1890
i
1.
1
s .
M
I
1
0
n
•
LIOUID• 0 TO 90 90 TO'~00 YO T0,160 /60 .TO 966 OVER 966
NUMBER OF~DAYS TO'MATURITY
•INGLUDE6 GBH IN ACCOUN T9 AND LAIF.
FY Pa
J A 8 O N O J E M A M J
• 'MONTHS
-~ CITY M6'INTEREBT~ ~ 3-M0 TILL INTEREST
'ERAGE -CITY - 8.18%/T-BILL - 7:41%
CITY OF :PETALUKAA
CASH/ItdVEBTMENTB 9Y TYPE -DEC 19.90
(IN. $000)_
f~2~.3%
LAIF .... ..
52528 61 IAUrfER'S ACI:cFTAfJ C~_
52b22 ~eg
Rf: NO
~ZS~i~.l3% -
~_PRT OF ~_...__... .
5300 2y> COMr~E:.Fi.~n~ R:.FEF
3~~2~:5 tE`~
TOTAL CASH/INVESTMENTS- 518645;ZH9 .