HomeMy WebLinkAboutResolution No. 02-R256 i
RESOLUTION NO 02-R25
RESOLUTION OF THE BOARD OF DIRECTORS OF THE REDEVELOPMENT
AGENCY OF THE CITY OF AZUSA ADOPTING THE
INVESTMENT POLICY
WHEREAS the Redevelopment Agency of the City of Azusa receives taxes
and other revenues from a variety of sources and uses the funds to pay its bills on a
regular basis; and
WHEREAS the Agency Treasurer is charged with the duties of handling and
maintaining the cash that is taken in or otherwise received by the Agency; and
WHEREAS the balance of these funds fluctuates between $3,000,000 and
$20,000,000 or more; and
WHEREAS the Agency Treasurer is charged with the responsibility of
investing idle public funds, doing so on the basis of protecting the safety of the funds,
ensuring the liquidity of the investments, and maximizing earnings in that order of
importance and based on the "Prudent Investor Standards"; and
WHEREAS the State of California requires each City Redevelopment
Agency to adopt an investment policy for its jurisdiction.
NOW THEREFORE BE IT RESOLVED that the Board of Directors of the
Redevelopment Agency of the City of Azusa does hereby adopt its Investment Policy
attached hereto marked Exhibit A and instructs the Agency Treasurer to be guided by
it in carrying outAhe duties of his office for the benefit of the Redevelopment Agency.
AND APP"/ED this 16`h day of September, 2002
CHAIRMAN
1 HEREBY CERTIFY that the foregoing resolution was duly adopted by the
Board of Directors of the Redevelopment Agency of the City of Azusa at a regular
meeting thereof on the 16`h day of September, 2002 by the following vote of
Directors:
AYES: BOARD DIRECTORS: HARDISON, STANFORD, ROCHA, CHAGNON, MADRID
NOES: BOARD DIRECTORS: NONE
ABSENT: BOARD DIRECTORS: NONE
Redevelopment Agency, City of Azusa
Investment Policy
1. POLICY STATEMENT
All funds of the City of Azusa Redevelopment Agency shall be invested in accordance
with principles of sound treasury management and in accordance with the provisions of
the California Government Code Sections 53600 et seq., (the Municipal Code), and
guidelines established by the California Municipal Treasurer's Association, the California
Society of Municipal Finance Officers, and this Investment Policy ("Policy"). These
funds are defined and detailed in the City's Comprehensive Annual Financial Report
(CAFR) and includes any new funds created unless specifically excluded by the City
Council.
Specifically excluded funds are:
Funds deposited with the State Public Employees' Retirement System and;
Bond proceeds that are subject to covenants and restrictions as defined in the
Bond's indenture or are administered under the direct control of the Bond Trustee.
2. INVESTMENT POLICY OBJECTIVES
A. Overall Risk Profile
The objectives of the City of Azusa's Redevelopment Agency Investment Program are, in
order of priority:
1. Safety of principal of invested funds;
2. Maintenance of sufficient liquidity to meet cash flow needs; and
3. Attainment of the maximum yield possible consistent with the first two
objectives.
To achieve these objectives, The Agency shall consider the following when making an
investment:
1. Safety of Principal of Invested Funds
The Agency shall mitigate the risk to the principal of invested funds by
limiting credit and interest rate risks. Credit Risk is the risk of loss due to the
failure of a security's issuer or backer. Interest Rate Risk is the risk that the
market value of the Agency's portfolio will fall due to an increase in general
interest rates.
a) Credit risk will be mitigated by:
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(i) Limiting investments to the safest types of securities;
(ii) By pre -qualifying the financial institutions with which it will do
business; and
By diversifying the investment portfolio so that the potential
failure of any one issue or backer will not place an undue financial
burden on the Agency.
b) Interest rate risk will be mitigated by:
(i) Structuring the Agency's portfolio so that securities mature to meet
the City's cash requirements for ongoing obligations, thereby
avoiding the possible need to sell securities on the open market at a
loss prior to their maturity to meet those requirements; and
(ii) Investing primarily in shorter term securities.
2. LiquiditV
The Agency's investment portfolio shall be structured in a manner which
emphasizes that securities mature at the same time the cash is needed to
meet anticipated demands (Static Liquidity). Additionally, since all
possible cash demands cannot be anticipated, the portfolio should consist
of securities with active secondary markets (Dynamic Liquidity). The
maximum percentage of different investment instruments and maturities is
described in Section 11 of this Policy.
3. Yield
Yield on the Agency's investment portfolio is of secondary importance
compared to the safety and liquidity objectives described above.
Investments are limited to relatively low risk securities in anticipation of
earning a fair return relative to the risk being assumed. While it may
occasionally be necessary or strategically prudent for the City to sell a
security prior to maturity to either meet unanticipated cash needs or to
restructure the portfolio, this policy specifically prohibits trading securities
for the sole purpose of speculating on the future direction of interest rates.
B. Basic Investment Strateev
The Agency's investment portfolio shall be structured to provide that sufficient funds
from investments are available each month to meet the City's anticipated cash needs.
Subject to the objectives stated above, the choice in investment instruments and
maturities shall be based upon an analysis of future anticipated cash needs, existing and
anticipated revenues, interest rate trends and specific market opportunities. No
investment may have a maturity of more than five (5) years from its date of purchase
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without receiving prior Board of Directors approval. After approval by Board of
Directors, reserve funds associated with bond issues may have a maturity of more than
five (5) years, up to the earliest date the bonds may be redeemed or mature.
3.
This section of the Investment Policy identifies the types of investments in which the
Agency will invest its idle or surplus funds.
A. Standard of Prudence
The Agency operates its investment portfolio under the Prudent Investor Standard
(California Government Code Section 53600.3) which states, in essence, that
"when investing, reinvesting, purchasing, acquiring, exchanging, selling or
managing public funds, a trustee shall act with care, skill, prudence and diligence
under the circumstances then prevailing, including, but not limited to, the general
economic conditions and the anticipated need of the City, that a prudent person in
a like capacity and familiarity with those matters would use in the conduct of
funds of a like character and with like aims, to safeguard the principal and
maintain the liquidity needs of the Agency".
This standard shall be applied in the context of managing the overall portfolio.
Investment officers, acting in accordance with written procedures and this
investment policy and exercising the above standard of diligence shall be relieved
of personal responsibility for an individual security's credit risk or market price
changes, provided deviations from expectations are reported in a timely fashion
and appropriate action is taken to control adverse developments.
B. Eligible Securities
The Agency is provided a broad spectrum of eligible investments under California
Government Code Section 53600 et seq. The City may choose to restrict its
permitted investments to a smaller list of securities that more closely fits the
Agency's cash flow needs and requirements for liquidity. If a type of investment
is added to California State Code 53600, it will not be added to the City's
Authorized Investment List until this policy is amended and approved by the
Board of Directors. If a type of investment permitted by the Agency should be
removed from California State Code 53600, it will be deemed concurrently
removed from the Agency's Authorized Investment List.
The Agencv's Authorized Investment List
• Insured Certificates of Deposit (CD's) of California banks
and/or savings and loan associations, and/or savings banks
which mature in five years or less, provided that the City's
investments shall not exceed One Hundred Thousand
($100,000) per institution. If the investment exceeds the
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Investment Policy —Con't • •
insured $100,000, the funds are to be collateralized at 110% of
the deposit in government securities or 150% in mortgages.
• Local Agency Investment Fund (State Pool) Demand Deposits.
• Securities of the U.S. Government, and securities of which the
principal and interest is guaranteed by the full faith and credit
of the U.S. Government.
• Securities issued by agencies and instrumentalities of the U.S.
Government or issued by a government sponsored enterprise.
• Commercial Paper (limited to 30% of the portfolio) rated
AI/P1 or the equivalent by 2 nationally recognized rating
agencies with maturities not to exceed 181 days.
• Medium —Term Corporate Notes (limited to 20% of the
portfolio) that are rated "AA" or better by two nationally
recognized rating agencies.
• Passbook Savings or Money Market Demand Deposits, subject
to the restrictions and limitations set forth in Government Code
Section 53638.
• Repurchase Agreements (limited to 30% of the portfolio) with
approved banks and broker-dealers who have completed and
signed a Master Repurchase Agreement with the City.
• Money Market Mutual Funds (with a stated objective of
maintaining a $1 net asset value) that has been rated AAAm by
Moody's or any two nationally recognized rating agencies.
Please see Exhibit A for a more detailed description of the
authorized investments listed above.
A thorough investigation of any pool or fund is required prior to investing and on
a continual basis. The investigation will, at a minimum, obtain the following
information:
A description of eligible investment securities, and a written
statement of investment policies and objectives.
A description of interest calculations and how it is distributed, and
how gains and losses are distributed.
A description of how securities are safeguarded (including the
settlement process) and how often the securities are marked to
market and how often an audit is conducted.
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A description of who may invest in the program, how often, what
size deposits and withdrawals are permitted.
A schedule for receiving statements and portfolio listings.
Does the pool/fund maintain a reserve or retain earnings or is all
income after expenses distributed to participants?
A fee schedule which also discloses when and how fees are
assessed.
Is the pool or fund eligible for bond proceeds and/or will it accept
such proceeds?
The purpose of this investigation is to determine the suitability of a pool or fund
and evaluate the risk of placing funds with that pool or fund.
One of the purposes of this Investment Policy is to define what investments
are permitted. If a type of security is not specifically authorized by this
policy, it is not a permitted investment.
C. Qualification of Brokers, Dealers and Financial Institutions
The City Treasurer or their designees will establish and maintain a list of the
financial institutions and broker/dealers authorized to provide investment and
depository services to the City, will perform an annual review of the financial
condition and registrations of the qualified bidders, and require annual audited
financial statements to be on file for each approved company. The City shall
annually send a copy of the their current Investment Policy to all financial
institutions and broker/dealers approved to do business with the City. Receipt of
the Policy and Enabling Resolution, including confirmation that it has been
received and reviewed by the person(s) handling the City's account, shall be
acknowledged in writing within thirty (30) days.
All broker-dealers and financial institutions that desire to become qualified
bidders for investment transactions must submit a "Broker -Dealer Application"
and related documents relative to eligibility. This includes a current audited
financial statement, proof of state registration, proof of NASD registration and a
certification they have received and reviewed the City's Investment Policy and
agree to comply with the provisions outlined in the Investment Policy. The City
Treasurer or their designees may establish any additional criteria they deem
appropriate to evaluate and approve any financial services provider. The selection
process for broker-dealers shall be open to both "primary dealers" and
"secondary/regional dealers" that qualify under Securities and Exchange
Commission Rule 15c3-1 (Uniform Net Capital Rule). The provider must have an
office in California and the provider's representative must be experienced in
institutional trading practices and familiar with the California Government Code
as it relates to investments by a City.
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D. Collateralization Requirements
Uninsured Time Deposits with banks and savings and loans shall be collateralized
in the manner prescribed by state law for depositories accepting municipal
investment funds.
Repurchase Agreements shall be collateralized in accordance with terms specified
in the Master Repurchase Agreement. The valuation of collateral securing a
Repurchase Agreement will be verified weekly to ensure a minimum of 102% of
the value of the transaction is held by the Agency's depository agent.
E. Diversification
The Agency will diversify its investments by security type and investment. With
the exception of bond reserve funds, bond escrow funds, and any other specific
funds approved by the Investment Committee or the Board of Directors, the City
Treasurer or their designee and the City's Investment Committee will adopt a
strategy that combines current market conditions with the City's cash needs to
maintain the maximum degree of safety of principal and liquidity throughout
market and budgetary cycles. This strategy will include diversification by
investment type and maturity allocations and will be included in the regular
quarterly reports to Council. This strategy will be reviewed quarterly and can be
changed accordingly.
F. Confirmations
Receipts for confirmation of purchases or sales of authorized securities shall
include at a minimum the following information: trade date, settlement date,
description of the security, par value, interest rate, price, yield to maturity,
Agency's name, net amount due and third party custodial information.
G. GASB 3
The Governmental Accounting Standards Board (GASB) issued GASB #3 in
April 1986, and the local entity's investments must be categorized into one of
three levels of credit risk as follows:
a) Securities that are insured or registered, or for which the securities are
held by public units or its agent in the units;
b) Securities that are uninsured and unregistered and are held by the broker
or dealer or by its trust department or agent in the unit's name;
C) Securities that are uninsured and unregistered and are held by the broker
or dealer or by its trust department or agent, but not in the unit's name.
The carrying amount and market value of all types of investments must be
disclosed in total and for each type of investment. Government Accounting
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Standards Board #3 exempts mutual funds and LAIF investments from the
mandatory risk categorization.
4. SAFEKEEPING OF SECURITIES
A. Safekeeping Agreement
The Agency shall contract with a bank or banks for the safekeeping of securities
that are owned by the Agency as a part of its investment portfolio or transferred to
the City under the terms of a Repurchase Agreement.
All securities owned by the Agency shall be held in safekeeping by a third party
bank trust department acting as agent for the Agency under the terms of a custody
agreement executed by the bank and the Agency. All securities will be received
and delivered using standard delivery versus payment (DVP) procedures.
The third party bank trustee agreement must comply with Section 53608 of the
California Government Code. No outside broker/dealer or advisor may have
access to Agency funds, accounts or investments and any transfer of funds must
be approved by the Agency Treasurer.
B. Security Transfers
The authorization to release the Agency's securities or funds will be telephoned to
the appropriate bank representative by a finance department member other than
the person who initiated the transaction. A written confirmation outlining details
for the transaction and confirming the telephoned instructions will be sent to the
bank within five (5) working days.
C. Verification of Securities
Securities transferred to the Agency as collateral securing time deposits or
repurchase agreements which are being held in safekeeping on behalf of the
Agency will be verified in writing and examined on a surprise basis during the
year by the Agency's independent auditors as a part of the Agency's annual
independent audit process.
5. STRUCTURE AND RESPONSIBILITIES
This section of the policy defines the overall structure and areas of responsibility within
the investment management program.
A. Responsibilities of the Agency Treasurer
The Agency Treasurer is charged with responsibility for maintaining custody of
all public funds and securities belonging to or under the control of the Agency,
and for the deposit and investment of those funds in accordance with principles of
sound treasury management applicable laws, ordinances and this Investment
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Investment Policy— Con't • •
Policy. This includes establishing written procedures for the operation of the
investment program consistent with this policy. The procedures should include
reference to safekeeping, master repurchase agreements, wire transfer agreements,
banking services contracts and depository agreements. Such procedures shall also
include explicit delegation of authority to persons responsible for investment
transactions. No person may engage in an investment transaction except as
provided under the terms of this policy and the procedures established by the
Treasurer and approved by the Investment Committee. Investment decisions that
involve borrowing in the amount of $100,000 or more must be included as a
separate discussion item on the Board of Director's agenda. Such items can no
longer be included on the Board of Director's consent calendar. (California
Government Code 53635.7)
B. Responsibilities of the Director of Finance
The Director of Finance is responsible for keeping the Agency fully advised as to
the financial condition of the Agency.
C. Responsibilities of the Board of Directors
The Board of Directors shall consider and adopt a written Investment Policy. As
provided in that policy, the Board shall receive, review and accept monthly
investment reports.
D. Responsibilities of the Investment Committee
There shall be an Investment Committee consisting of the Director of Finance, the
City Manager, the Agency Treasurer and their designees. The Committee shall
meet quarterly to discuss cash flow requirements, the monthly investment reports,
investment strategies, investment and banking procedures and significant
investment related work projects being undertaken in each department that will
affect the cash flow management of the City Treasurer. This will require timely
reports from the department heads to the Agency Treasurer concerning significant
future cash flow requirements. The Committee's meetings will be summarized in
minutes that are distributed to the Board of Directors. The Investment Committee,
with the approval of the Board, may retain an external investment manager on
behalf of the Agency. The investment manager will be required to act in
accordance with this investment policy.
E. Ethics and Conflicts of Interest
All City officers and employees involved in the investment process shall refrain
from personal business activity that could conflict with the proper execution of
the investment program, or that could impair their ability to make impartial
investment decisions. Those employees and investment officials shall disclose to
the appropriate City executive (City Manager, City Attorney, or the Director of
Finance) any material financial interests in financial institutions that conduct
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business within the City, and they shall further disclose any large personal
financial/investment positions that could be related to the performance of the
City's investments.
6. REPORTING
The Agency Treasurer shall prepare a monthly investment report, including a succinct
management summary that provides a clear picture of the status of the current investment
portfolio and transactions made over the past month. This management summary shall be
prepared in a manner that will allow the Director of Finance and the Board to ascertain
whether investment activities during the reporting period have deviated from the
Agency's Investment Policy.
The monthly report shall include the following:
A. A list of individual securities held at the end of the reporting month.
B. Unrealized gains or losses resulting from amortization or accretion of
principal versus market value changes by listing the cost and market value
of securities owned by the City.
C. A description of the current investment strategy and the assumptions upon
which it is based.
D. Dollar weighted yield to maturity of the City's investments.
E. Maturity schedule by type, of each of the City's investments.
F. Statement of compliance of the City's Investment Policy with California
Government Code Section 53601 et seq.
G. Statement as to ability to meet all scheduled expenditure requirements for
the next six months.
H. Market value, book value, par value and cost basis of all investments.
I. Investments "under the management of contracted parties, including
lending programs" (i.e. investments held by deferred compensation
administrators).
7. PERFORMANCE STANDARDS
The investment portfolio will be managed in accordance with the standards established
within this Investment Policy and should obtain a market rate of return throughout
budgetary and economic cycles. The Investment Committee will establish and
periodically review the Agency's portfolio benchmarks and performance. A benchmark
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will be selected that compares with the portfolio composition, structure and investment
strategy at that time.
8. REVIEW OF INVESTMENT POLICY
A. Policy Review
This Investment Policy shall be reviewed annually by the Board in accordance
with State law to ensure its consistency with respect to the overall objectives of
safety, liquidity and yield. Proposed amendments to the policy shall be prepared
by the Treasurer and reviewed by the Investment Committee and City Attorney
and then be forwarded to the Board for consideration. The Investment Committee
shall annually review the Investment Policy and any proposed amendments and
forward to the City Council for its consideration and adoption at a public meeting.
B. Internal Control and Review
The external auditors shall annually review the investments and general activities
associated with the investment program to ensure compliance with this
Investment Policy. This review will provide internal control by assuring
compliance with policies and procedures for the activities that are selected for
testing.
9. ADOPTION OF POLICY
This Policy was duly adopted by the City Council of the City of Azusa on July 16,
2001.
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EXHIBIT A
DESCRIPTION OF INVESTMENTS
The City of Azusa's investments may be placed in those securities as outlined below; the
allocation between the various investment instruments may change in order to give the
City the best combination of safety, liquidity and higher yield. Surplus funds of local
agencies may only be invested in certain eligible securities. The City limits its
investments to allowable securities under the State of California statutes (Government
Code Section 53601, et seq., Section 53356, et seq., and Section 53595, et seq.) and is
further limited to those listed below.
Certificates of Deposit
Certificates of deposit allow the City to select the exact amount and day of maturity as
well as the exact depository. Certificates of deposit are issued in any amount for periods
of time as short as fourteen days and as long as several years. At any given time, the City
may have certificates of deposit in numerous financial institutions in the future.
The Treasurer may at his discretion waive security for that portion of a deposit, which is
insured pursuant to federal law. Currently, the first $100,000 of a deposit is federally
insured by FSLIC or FDIC. It may be to the City's advantage to waive this collateral
requirement for the first $100,000 because the City may receive a higher interest rate. If
funds are to be collateralized, the collateral will be 110% of the deposit in government
securities or mortgages of 150%. At purchase, institutions must not show an operating
loss. Banks must have an equity to asset ratio of at least 6%. Savings and loan
associations and savings banks must have an equity to asset ratio of at least 3%.
Local A2ency Investment Fund
The Local Agency Investment Fund (LAIF) of the State of California offers high
liquidity because deposits can be wired to the City checking account within twenty-four
hours. Interest is computed on a daily basis.
This is a special fund in the State Treasury, which local agencies may use to deposit
funds for investment. There is no minimum investment period and the minimum
transaction is $5,000 in multiples of $1,000 above that, with a maximum of 520,000,000
for any City. It offers high liquidity because deposits can be converted to cash within
twenty-four hours and no interest is lost. All interest is distributed to those agencies
participating on a proportionate share determined by the amounts deposited and the
length of time they are deposited. Interest is paid quarterly by adding it to the principal.
The State charges participants a small fee to cover reasonable costs associated with
operating the investment pool, not to exceed one-quarter of one percent of the earnings.
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Investment Policy — Con't • •
The interest rates received are fairly stable because of the pooling of the State's surplus
cash with the surplus cash deposited by local governments. This creates a well -
diversified multi -billion dollar money pool.
U.S. Treasury Securities
U.S. Treasury securities are highly liquid and considered the safest of all investments
because they are back by the full faith and credit of the United States Government.
U.S. Treasury Bills are direct obligations of the United States Government.
They are issued weekly with maturity dates up to six months. They are issued and
traded on a discount basis and the interest is figured on a 360 -day basis using the
actual number of days to maturity. They are issued in the minimum amount of
510,000 and in multiples of $5,000 thereafter.
U.S. Treasury Notes are direct obligations of the United States Government.
They are issued throughout the year with maturities from 2 up to 30 years. Notes
are coupon securities paying a fixed amount every six months. The City will not
invest in notes having maturities longer then five years.
Federal Agency Securities
Federal Agency securities are highly liquid and considered to be virtually without credit
risk. Federal Agency issues are guaranteed indirectly by the United States Government.
All Agency obligations that are fixed-rate and meet the maturity restrictions of the State
Code and this policy qualify as legal investments and are acceptable as security for public
deposits. They usually provide higher yields than regular Treasury issues with all of the
same advantages. Examples are:
FNMA's (Federal National Mortgage Association) are used to assist the home
mortgage market by purchasing mortgages insured by the Federal Housing
Administration and the. Farmers Home Administration, as well as those
guaranteed by the Veterans Administration.
FHLB's (Federal Home Loan Bank Notes and Bonds) are issued by the Federal
Home Loan Bank System to help finance the housing industry. The notes and
bonds provide liquidity and home mortgage credit to savings and loan
associations, mutual savings banks, cooperative banks, insurance companies and
mortgage -lending institutions.
Other Federal Agency issues are Federal Home Loan Mortgage Corporation
(FHLMC), Federal Farm Credit Bank (FFCB), Small Business
Administration Notes (SBA's), Government National Mortgage Association
(GNMA's), Tennessee Valley Authority (TVA's) and the Student Loan
Marketing Association (SLMA's).
Negotiable Certificate of Deposit
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Negotiable certificates of deposit are high-grade instruments, paying a higher interest rate
than regular certificates of deposit. They are liquid because they can be traded in the
secondary market.
Negotiable Certificates of Deposit (NCD's) are unsecured obligations of the issuing
financial institution, bank or savings and loan, bought at face value with a promise to pay
face value plus accrued interest at maturity. The primary market issuance is in multiples
of $1 million. The secondary market usually trades in denominations of $500,000,
although smaller denominations are occasionally available. Local agencies may not
invest more than 30% of their surplus money in negotiable certificates of deposit. NCD's
will only be placed with the largest and most financially sound institutions.
Commercial Paper
Commercial paper allows the investment of large amounts of money on a short-term
basis at rates higher than passbook savings accounts. Commercial paper is a short-term
unsecured promissory note issued by a corporation to raise working capital. These
negotiable instruments are purchased at a discount to par value. As an example,
corporations such as American Express, International Business Machines (IBM) and
General Electric issue commercial paper.
Local agencies are permitted by state law to invest in commercial paper of "prime"
quality of the highest ranking or of the highest letter and numerical rating as provided by
Moody's Investor's Service, Inc. or Standard and Poor's Corporation (AI/p1 or A1+/p]).
Purchases of eligible commercial paper may not exceed 180 days maturity nor exceed
30% of the Citys surplus funds.
Medium -Term Corporate Notes
A City may invest in medium term corporate notes with a maximum maturity of five
years issued by a corporation organized and operating within the United States, a
depository institution licensed by the United States government or any state government
and operating within the United States. The California State Code (53601 et seq.) permits
cities to invest in corporations with a rating category of "A" or better, but the City will
limit its investments in corporate medium term notes to those issued by corporations that
have been rated "AA" or its equivalent by two nationally recognized ratings agencies.
Passbook Savings or Money Market Account
Passbook savings account allows us to transfer money from checking to savings and cam
interest on smaller amounts of money, which are not available for a longer-term
investment
The passbook savings account is similar to a CD, except not for a fixed term. The
interest rate is much lower than CD's, but the savings account provides daily liquidity and
funds can be deposited and withdrawn according to our daily needs.
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Mutual Funds
Mutual funds allow the City to maintain liquidity and receive money market rates.
Mutual Funds are referred to in the Government Code, Section 53601.L, as "shares of
beneficial interests issued by diversified management companies". The Mutual Fund
must be restricted by its prospectus to be a "Money market" mutual fund and be limited
to the same approved investments as LAIR These investments include U.S. Treasury and
Agency issues, Bankers Acceptances, Commercial Paper, Repurchase Agreements,
Certificates of Deposit, and Negotiable Certificates of Deposit. The quality rating and
percentage restrictions in each investment category applicable to LAIF also apply to any
Mutual Fund.
One of the stated objectives of the Mutual Fund must be to attempt to maintain a $1.00
Net Asset Value (NAV). A further restriction is that the purchase price of shares of any
mutual fund shall not include any sales commission. Investments in mutual funds shall
not exceed 15% of the City's surplus money.
Repurchase Agreements
Repurchase agreements are purchases of securities by the City under an agreement with a
term of one (1) year or less whereby the seller will "repurchase" the same securities on or
before a specified date or on demand of either party and for a specified amount. The
underlying securities must be delivered to the City's custodial account by book entry,
physical delivery or a third -party custodial agreement.
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