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
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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