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HomeMy WebLinkAbout(1990, 10/22) - F-1 - RewrittenSTATEMENT OF INVESTMENT POLICY ON F -1 It is -h policy of the City to invest funds not required for immediate expendi ures. Investments will be in compliance with governing provisio of law and the policy contained herein. Primary investment goals are ecurity of principal, adequate liquidity maintenance, and high yield, in that order. Investments shall be placed in securities as outlined bel w. The balance between various investment instruments may change in ord to provide the City with the best combination of high yield, liquidi and a consideration for other factors, such as placement of an ppropriate percentage of available investment funds locally. INVESTMENT Investment authority h s been delegated to the Director of Finance, who is responsible for admi istration of the City's investment program. LIQUIDITY Sufficient funding to accomm ate at least an average of two week's warrants is to be maintained i immediately available investments, such as the State Local Agency Ines ent Fund, maturing certificates of deposit, or similar liquid instr ents. An analysis of cash flow must be conducted at least weekly to se ve as the basis for determining appropriate maturities for investme s. ACCEPTABLE INVESTMENT INSTRUMENTS The following are types of investments ma6S by the City and theguidelinesforinvestingineach. In all c ses, investments shall be made in the context of the "Prudent Man" rul which states, in part, that: investments shall be made with judgmen and care, under circumstances then prevailing, which person of prudence, discretion, and intelligence exercise in the anagement of their own affairs, not for speculation, but for inve tment, considering the probable safety of their capital as well as the probable income to be derived." Certificates of Deposit City funds will be invested only in fully collaterized cert icates of deposit with FDIC insured institutions. Government securitie having a market value of 110% of the total amount of investment are acc table as collateral. As an alternative, first trust deeds (seasoned at ast six months and with no more than 80% loan to property value ratio) ha ing a value of 150% of the total amount of investment are acceptable as F -1 • STATEMENT OF INVESTMENT POLICY - Page 2 collateral if approved by the Finance Director on a case by case basis. Non - collateralized CD investments may be made in amount less than 100,000 so long as they are fully insured by the FDIC No more than 108 of the City's investment portfolio/lahall be invested in certificates of deposit with any one institution. /Further, an institution must meet the following critria to be considered by the City: The institution must maintain at least $200 million in assets. The institution must have been in bus4lness at least three years. The institution must have a net worth to asset ratio of at least 48. The institution must be located {n California. The institution must have on f'le with the City an audited financial statement not more than one year old. CD's will not be placed for a period of longer than one year. Additionally, the issuer m st agree to early maturity under • emergency circumstances. Interest shall be paid the City on a monthly basis. The City shall invest only in the 10 largest banks, or the 10 largest savings and loans in Cali ornia. Ease of subsequent marketability shall be ascertained prior to '__itial investment. This is best done by examining currently quot d bids by primary dealers and the acceptability of the issuer by these ealers. No one issuer shall exceed more than 108 of the portfolio, nd maturity shall not exceed one year. Bankers Acceptances The City shall invest only in the 10 largest banks in California. Maximum maturity s 11 be six months. The City may indent in treasury notes, bills and bonds. Safekeeping documentation of these instruments in an acceptable an secure account in the City's name is required. Maximum maturity of these instruments shall be five years. e only securities of this type that are acceptable for the City's in stments are Federal Home Loan Bank notes, Federal National Mortgage Ass o iation notes, Federal Farm Credit Bank notes, and Federal Inter ediate Bank debentures. Security requirements are the same as those r U.S. Treasury issues. As a rule, maturities shall not exceed two year and they shall never exceed five years. Other federal agency securitie are not acceptable for City investments. The City shall only invest in commercial paper issued by large, exceptionally w 11- established firms with the highest Moody's or Standard & Poors atings (A1 /P1). Commercial paper shall be used solely as a short -term i estment not to exceed 180 days. Security requirements are th same as those listed above. Repos shall be used solely as a short term investment not to exceed 30 days, The institution fr which the City purchases a Repo must isolate and specifically identify t the City's safekeeping account adequate collateral of the type and m de specified under the Certificates of Deposit section above. The a of this collateral must be sufficient to compensate for fluctuatinet conditions. Repos will only be purchased through the 15 laranks in the United States, Passbook Savings Accounts Savings accounts may be used as a repo s'tory for similar purposes. Local Agency Investment Fund Investments in this fund are limited by State Medium Term Corporate Notes for customer deposits, or gulation to $10 million. Investments of this type will only be in corporatio rated in the top three note categories by two of the three largest nat onally- recognized rating services. Maximum term to maturity shall norms ly be two years, and it shall never exceed five years. No more than 108 f the City's investment funds shall be placed in securities of this 10% t-Y% e. Investment Management Agreements The City Such companies may employ must the have services of investment management comps es. a history of producing relatively high n t F 1 They must STATEMENT OF INVESTMENT POLICY - Page 3 Federal Agency Securities e only securities of this type that are acceptable for the City's in stments are Federal Home Loan Bank notes, Federal National Mortgage Ass o iation notes, Federal Farm Credit Bank notes, and Federal Inter ediate Bank debentures. Security requirements are the same as those r U.S. Treasury issues. As a rule, maturities shall not exceed two year and they shall never exceed five years. Other federal agency securitie are not acceptable for City investments. The City shall only invest in commercial paper issued by large, exceptionally w 11- established firms with the highest Moody's or Standard & Poors atings (A1 /P1). Commercial paper shall be used solely as a short -term i estment not to exceed 180 days. Security requirements are th same as those listed above. Repos shall be used solely as a short term investment not to exceed 30 days, The institution fr which the City purchases a Repo must isolate and specifically identify t the City's safekeeping account adequate collateral of the type and m de specified under the Certificates of Deposit section above. The a of this collateral must be sufficient to compensate for fluctuatinet conditions. Repos will only be purchased through the 15 laranks in the United States, Passbook Savings Accounts Savings accounts may be used as a repo s'tory for similar purposes. Local Agency Investment Fund Investments in this fund are limited by State Medium Term Corporate Notes for customer deposits, or gulation to $10 million. Investments of this type will only be in corporatio rated in the top three note categories by two of the three largest nat onally- recognized rating services. Maximum term to maturity shall norms ly be two years, and it shall never exceed five years. No more than 108 f the City's investment funds shall be placed in securities of this 10% t-Y% e. Investment Management Agreements The City Such companies may employ must the have services of investment management comps es. a history of producing relatively high n t returns. They must also be well established and exceptionally F -1 • STATEMENT OF INVESTMENT POLICY - Page 4 reputable. Members of the staffs of such companies who will have primary responsibility for managing the City's investments must have a working familiarity with the special requirements and constraints of investing municipal funds in general and and this C' y's funds in particular. They must contractually agree to coil rm to all provisions of governing law and the collateralization and o er to contained herein. REPORTING REQUIREMENTS The City Council shall receive a detailed onthly listing of all investments in the City portfolio. The eport must show the type of investment, institution, date of matur' y, amount of deposit /investment, rate of interest, and current market v lue. Adopted - April 6, 1959 Amended - November 9, 1970 Amended - February 11, 1974 Amended - February 9, 1981 Amended - October 27, 1986 Rewritten - October 22, 199