HomeMy WebLinkAboutAgenda Packet - July 5, 1994 - CC • C'
49-121.111
END
TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS
FROM: ROY E. BRUCKNI /'IRECTOR OF COMMUNITY DEVELOPMENT
VIA: HENRY GARCIA, CITY ADMINISTRATORV
DATE: JULY 5, 1994
SUBJECT: ORDINANCE AMENDMENTS REGARDING TERM LIMITS FOR
COMMISSIONS
On June 27, 1994, the City Council held a joint workshop with the
Redevelopment Agency Board. One of the discussion items was the
method of appointing commission members, commissioner term limits,
as well as the need for establishment of expectations for the
performance of commission members. As a result of the discussion,
the City Council acted to:
1. Limit the terms of all Commission members to 2
consecutive terms.
2 . Establish a procedure where the City Council would
interview applicants for the various commissions.
3 . Direct Staff to amend the necessary ordinances to allow
the City Council with majority votes to appoint
commission members.
In response to these directives, the attached ordinance amendments
are offered for adoption. These are for the following advisory
bodies:
Planning Commission
Park and Recreation Commission
Cultural and Historical Landmark Commission
Architectural Barriers Commission
Personnel Board
Mobile Home Park Rental Review Board
Library Commission
Please note that two entities, the Mobile Home Rental Review Board,
and the Personnel Board, already contain requirements that at least
a portion of those bodies' membership be appointed by the City
Council. Therefore, no amendments other than the term limits are
proposed.
RECOMMENDED ACTION:
It is recommended that the City Council waive further reading and
adopt the attached ordinances. PC/V3\
40014
:474P,
ORDINANCE NO. s
AN ORDINANCE OF THE CITY COUNCIL
OF THE CITY OF AZUSA, AMENDING CHAPTER 2.04,
SECTIONS 2. 04.050 (C) , 2.04.050 (D) , AND 2.04.050 (E)
OF THE AZUSA MUNICIPAL CODE, PERTAINING TO THE APPOINTMENT
AND REMOVAL OF MEMBERS OF CITY COMMISSIONS AND BOARDS.
WHEREAS, the City Council of the City of Azusa conducted a
public workshop on June 27, 1994, and
WHEREAS, the City Council discussed the terms of commissioners
and improving the method by which commissioners are appointed, and
WHEREAS, it is the intention of the City Council to commence
the two consecutive term limit at the effective date of this
ordinance,
NOW, therefore, the City Council of the City of Azusa does
hereby ordain as follows:
SECTION 1: Section 2.04.050 (C) of the Azusa Municipal Code
is hereby amended to read as follows:
"2 .04.050 (C) Following the end of the filing period
described in subparagraph A, the City Council may
interview the candidates in a manner as it may establish
from time to time, and, with a majority vote, shall
appoint a person from the applications submitted and
interviews who, in their judgement, is best qualified to
fill the vacancy. "
SECTION 2: Section 2. 04.050 (D) of the Azusa Municipal Code
is hereby amended to read as follows:
"2. 04. 050 (D) Members of Boards and Commissions
appointed by a majority vote of the Council shall serve
at the pleasure of the Mayor and Council and may be
removed from office for any reason by a majority vote of
the Council. "
SECTION 3: Section 2. 04.050 (E) is hereby added to the Azusa
Municipal Code to read as follows:
"2. 04. 050 (E) Members of boards and commissions shall
serve for no more than two consecutive terms of office.
Incumbents whose terms are due to expire may reapply,
provided that if they have already served two consecutive
terms, they may serve only after the passage of one full
term. In the event that there are no applicants for the
position upon the expiration of the second year of
office, the incumbent may be reappointed to an additional
term. Commission or board members shall hold office
until their reappointment or until their successors have
been appointed and have qualified. If a vacancy shall
occur other than by expiration of term, it shall be
filled by appointment for the unexpired portion of the
term, pursuant to this section. "
SECTION 4: The City Clerk shall certify the adoption of this
ordinance and shall cause the same to be published as required by
law.
PASSED, APPROVED, AND ADOPTED this _th day of , 1994.
MAYOR
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) SS.
CITY OF AZUSA )
I, ADOLPH SOLIS, City Clerk of the City of Azusa, do hereby
certify that the foregoing Ordinance No. was regularly
introduced and placed upon its first reading at a regular meeting
of the City Council on the day of , 1994. That
thereafter, said Ordinance was duly adopted and passed at a regular
meeting of the City Council on the day of 1994, by the
following vote, to wit:
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSTAIN: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
CITY CLERK
APPROVED AS TO FORM:
CITY ATTORNEY
/11111:19?4
ORDINANCE NO. b
AN ORDINANCE OF THE CITY COUNCIL
OF THE CITY OF AZUSA, AMENDING CHAPTER 2 .12,
SECTIONS 2. 12 .010 AND 2.12.020, OF THE AZUSA MUNICIPAL
CODE, PERTAINING TO TERM LIMITS AND APPOINTMENTS
OF THE PLANNING COMMISSION.
WHEREAS, the City Council of the City of Azusa conducted a
public workshop on June 27, 1994, and
WHEREAS, the City Council discussed the terms of commissioners
and improving the method by which commissioners are appointed, and
WHEREAS, it is the intention of the City Council to commence
the two consecutive term limit at the effective date of this
ordinance,
NOW, therefore, the City Council of the City of Azusa does
hereby ordain as follows:
SECTION 1: Section 2. 12.010 of the Azusa Municipal Code is
hereby amended to read as follows:
"2.12.010 APPOINTMENT - MEMBERSHIP. The Planning
Commission shall consist of seven members, none of whom
shall be officers or employees of the City. Appointments
to the Commission and removal from office, shall be
pursuant to Section 2.04.050. The Director of Community
Development or his/her designee shall serve as advisor to
the Commission. "
SECTION 2: Section 2 . 12.020 of the Azusa Municipal Code is
hereby amended to read as follows:
"2.12.020 TERMS - VACANCY. The members of the Planning
Commission shall serve 4 year terms, except when
appointed pursuant to Section 2 .04. 050 (E) to fill an
unexpired term. Planning Commission members are
appointed and shall serve pursuant to Section 2.04. 050. "
SECTION 3: The City Clerk shall certify the adoption of this
ordinance and shall cause the same to be published as required by
law.
PASSED AND APPROVED this day of , 1994.
MAYOR
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) SS.
CITY OF AZUSA )
I, ADOLPH SOLIS, City Clerk of the City of Azusa, do hereby
certify that the foregoing Ordinance No. was regularly
introduced and placed upon its first reading at a regular meeting
of the City Council on the day of , 1994. That thereafter,
said Ordinance was duly adopted and passed at a regular meeting of
the City Council on the day of , 1994, by the following
vote, to wit:
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSTAIN: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
CITY CLERK
APPROVED AS TO FORM:
CITY ATTORNEY
s
62
ORDINANCE NO. le 6
AN ORDINANCE OF THE CITY COUNCIL
OF THE CITY OF AZUSA, AMENDING CHAPTER 2. 16,
SECTIONS 2 . 16.020 AND 2.16. 030, OF THE AZUSA MUNICIPAL
CODE, PERTAINING TO APPOINTMENTS AND TERM LIMITS OF
THE PARK AND RECREATION COMMISSION.
WHEREAS, the City Council of the City of Azusa conducted a
public workshop on June 27, 1994, and
WHEREAS, the City Council discussed the terms of commissioners
and improving the method by which commissioners are appointed, and
WHEREAS, it is the intention of the City Council to commence
the two consecutive term limit at the effective date of this
ordinance,
NOW, therefore, the City Council of the City of Azusa does
hereby ordain as follows:
SECTION 1: Section 2 . 16. 020 of the Azusa Municipal Code is
hereby amended to read as follows:
"2 .16. 020 APPOINTMENT. The Park and Recreation
Commission shall consist of seven members each appointed
for a three year term of office. Four members shall be
appointed by a majority vote of the City Council pursuant
to Section 2.04. 050. In addition, two members shall be
recommended by the governing board of the Azusa Unified
School District, and shall be appointed by a majority
vote of the City Council. One member shall be selected
by the above six appointees. With the exception of the
member appointed by the appointees, Commission members
may be removed from office pursuant to 2 . 04. 050. "
SECTION 2: Section 2 .16.030 of the Azusa Municipal Code is
hereby amended to read as follows:
"2 . 16. 030 TERMS. Members of the Commission shall serve
three year terms in accordance with Section 2 .04. 050. "
SECTION 3: The City Clerk shall certify the adoption of this
ordinance and shall cause the same to be published as required by
law.
PASSED AND APPROVED this day of , 1994.
MAYOR
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) SS.
CITY OF AZUSA )
I, ADOLPH SOLIS, City Clerk of the City of Azusa, do hereby
certify that the foregoing Ordinance No. was regularly
introduced and placed upon its first reading at a regular meeting
of the City Council on the day of , 1994. That thereafter,
said Ordinance was duly adopted and passed at a regular meeting of
the City Council on the day of , 1994, by the following
vote, to wit:
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSTAIN: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
CITY CLERK
APPROVED AS TO FORM:
CITY ATTORNEY
/1114:7?( .ORDINANCE NO.
AN ORDINANCE OF THE CITY COUNCIL
OF THE CITY OF AZUSA, AMENDING CHAPTER 2.18,
SECTION 2.18.020, OF THE AZUSA MUNICIPAL CODE,
PERTAINING TO TERM LIMITS AND APPOINTMENTS OF
MEMBERS OF THE CULTURAL AND HISTORICAL LANDMARK COMMISSION.
WHEREAS, the City Council of the City of Azusa conducted a
public workshop on June 27, 1994, and
WHEREAS, the City Council discussed the terms of commissioners
and improving the method by which commissioners are appointed,
WHEREAS, it is the intention of the City Council to commence
the two consecutive term limit at the effective date of this
ordinance,
NOW, therefore, the City Council of the City of Azusa does
hereby ordain as follows:
SECTION 1: Section 2 . 18. 020 of the Azusa Municipal Code is
hereby amended to read as follows:
"2. 18. 020 APPOINTMENT. The Cultural and Historical
Landmark Commission shall consist of eleven members, none
of whom shall be officers or employees of the City. The
members of the Commission shall serve 4 year terms,
except when appointed pursuant to Section 2 .04. 050 (E) to
fill an unexpired term. All members shall be appointed
by a majority vote of the City Council and shall serve
pursuant to Section 2.04.050. Members of the Commission
may be removed from office pursuant to Section 2. 04.050. "
SECTION 2: The City Clerk shall certify the adoption of this
ordinance and shall cause the same to be published as required by
law.
PASSED AND APPROVED this day of , 1994.
MAYOR
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) SS.
CITY OF AZUSA )
I, ADOLPH SOLIS, City Clerk of the City of Azusa, do hereby
certify that the foregoing Ordinance No. was regularly
introduced and placed upon its first reading at a regular meeting
of the City Council on the day of , 1994. That thereafter,
said Ordinance was duly adopted and passed at a regular meeting of
the City Council on the day of , 1994, by the following
vote, to wit:
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSTAIN: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
CITY CLERK
APPROVED AS TO FORM:
CITY ATTORNEY
ORDINANCE NO. 4,04•PgQe
AN ORDINANCE OF THE CITY COUNCIL
OF THE CITY OF AZUSA, AMENDING CHAPTER 2 . 19,
SECTION 2. 19.020, OF THE AZUSA MUNICIPAL CODE,
PERTAINING TO THE APPOINTMENT OF MEMBERS OF THE
ARCHITECTURAL BARRIERS COMMISSION.
WHEREAS, the City Council of the City of Azusa conducted a
public workshop on June 27, 1994, and
WHEREAS, the City Council discussed the terms of commissioners
and improving the method by which commissioners are appointed, and
WHEREAS, it is the intention of the City Council to commence
the two consecutive term limit at the effective date of this
ordinance,
NOW, therefore, the City Council of the City of Azusa does
hereby ordain as follows:
SECTION 1: Section 2. 19. 020 of the Azusa Municipal Code is
hereby amended to read as follows:
"2 . 19.020 APPOINTMENT. The Architectural Barriers
Commission shall consist of five members, none of whom
shall be officers or employees of the City. The members
of the Commission shall serve 4 year terms, except when
appointed pursuant to Section 2.04.050 (E) to fill an
unexpired term. One of the persons appointed shall be
handicap/disabled.
All members shall be appointed by a majority vote of the
City Council and shall serve pursuant to Section
2.04. 050. Members of the Commission may be removed
pursuant to Section 2. 04.050. The Director of Community
Development, or his/her designee shall serve as advisor
to the Commission. "
SECTION 2: The City Clerk shall certify the adoption of this
ordinance and shall cause the same to be published as required by
law.
PASSED AND APPROVED this day of , 1994.
MAYOR
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) SS.
CITY OF AZUSA )
I, ADOLPH SOLIS, City Clerk of the City of Azusa, do hereby
certify that the foregoing Ordinance No. was regularly
introduced and placed upon its first reading at a regular meeting
of the City Council on the day of , 1994. That thereafter,
said Ordinance was duly adopted and passed at a regular meeting of
the City Council on the day of , 1994, by the following
vote, to wit:
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSTAIN: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
CITY CLERK
APPROVED AS TO FORM:
CITY ATTORNEY
ORDINANCE NO.
AN ORDINANCE OF THE CITY COUNCIL
OF THE CITY OF AZUSA, AMENDING CHAPTER 2 .28,
SECTION 2 .28.020, OF THE AZUSA MUNICIPAL CODE,
PERTAINING TO TERM LIMITS FOR
PERSONNEL BOARD MEMBERS.
WHEREAS, the City Council of the City of Azusa conducted a
public workshop on June 27, 1994, and
WHEREAS, the City Council discussed the terms of commissioners
and improving the method by which commissioners are appointed, and
WHEREAS, it is the intention of the City Council to commence
the two consecutive term limit at the effective date of this
ordinance,
NOW, therefore, the City Council of the City of Azusa does
hereby ordain as follows:
SECTION 1: Section 2 .28.020 of the Azusa Municipal Code is
hereby amended to read as follows:
"2.28.020 TERMS - VACANCIES. The terms of office shall
be for three years in accordance with Section 2.04.050. "
SECTION 2: The City Clerk shall certify the adoption of this
ordinance and shall cause the same to be published as required by
law.
PASSED AND APPROVED this day of , 1994.
MAYOR
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) SS.
CITY OF AZUSA )
I, ADOLPH SOLIS, City Clerk of the City of Azusa, do hereby
certify that the foregoing Ordinance No. was regularly
introduced and placed upon its first reading at a regular meeting
of the City Council on the day of , 1994. That thereafter,
said Ordinance was duly adopted and passed at a regular meeting of
the City Council on the day of , 1994, by the following
vote, to wit:
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSTAIN: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
CITY CLERK
APPROVED AS TO FORM:
CITY ATTORNEY
ORDINANCE NO. /1141116171115
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF AZUSA,
AMENDING CHAPTER 5.56, SECTION 5.56.030(c) ,
OF THE AZUSA MUNICIPAL CODE, PERTAINING TO
TERM LIMITS OF THE MOBILE HOME PARK RENTAL REVIEW BOARD
WHEREAS, the City Council of the City of Azusa conducted a
public workshop on June 27, 1994, and
WHEREAS, the City Council discussed the terms of commissioners
and improving the method by which commissioners are appointed, and
WHEREAS, it is the intention of the City Council to commence
the two consecutive term limit at the effective date of this
ordinance,
NOW, therefore, the City Council of the City of Azusa does
hereby ordain as follows:
SECTION 1: Section 5.56. 030(c) of the Azusa Municipal Code is
hereby amended to add the following sentence at the conclusion
thereof:
"Board members shall serve no longer than 2 consecutive
terms pursuant to Section 2.04.050. "
SECTION 2: The City Clerk shall certify as to the adoption of
this ordinance.
PASSED AND APPROVED this day of , 1994.
MAYOR
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) SS.
CITY OF AZUSA )
I, ADOLPH SOLIS, City Clerk of the City of Azusa, do hereby
certify that the foregoing Ordinance No. was regularly
introduced and placed upon its first reading at a regular meeting
of the City Council on the day of , 1994. That thereafter,
said Ordinance was duly adopted and passed at a regular meeting of
the City Council on the day of , 1994, by the following
vote, to wit:
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
ABSTAIN: COUNCIL MEMBERS:
CITY CLERK
APPROVED AS TO FORM:
CITY ATTORNEY
ORDINANCE NO. 40.1?
AN ORDINANCE OF THE CITY COUNCIL
OF THE CITY OF AZUSA, AMENDING CHAPTER 2.76,
SECTION 2.76. 015, OF THE AZUSA MUNICIPAL CODE,
PERTAINING TO APPOINTMENTS AND LIMITS OF TERMS OF THE
LIBRARY COMMISSION MEMBERS.
WHEREAS, the City Council of the City of Azusa conducted a
public workshop on June 27, 1994, and
WHEREAS, the City Council discussed the terms of commissioners
and improving the method by which commissioners are appointed, and
WHEREAS, it is the intention of the City Council to commence
the two consecutive term limit at the effective date of this
ordinance,
NOW, therefore, the City Council of the City of Azusa does
hereby ordain as follows:
SECTION 1: Section 2.76. 015 of the Azusa Municipal Code is
hereby amended to read as follows:
"2.76.015 CITY LIBRARY COMMISSION - COMPOSITION -
APPOINTMENT, TERM OF MEMBERS. The City Library
Commission shall consist of five members, none of whom
shall be officers or employees of the City. The terms of
office shall be three years. Expiration dates of the
terms shall be staggered in such a manner that one seat
shall be available upon adoption of this ordinance, two
seats shall expire the following fiscal year, and the
remaining two seats shall expire the fiscal year
thereafter. Appointments to the Commission and removal
from office shall be pursuant to Section 2 .04. 050. "
SECTION 2: The City Clerk shall certify the adoption of this
ordinance and shall cause the same to be published as required by
law.
PASSED AND APPROVED this day of , 1994.
MAYOR
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) SS.
CITY OF AZUSA )
I, ADOLPH SOLIS, City Clerk of the City of Azusa, do hereby
certify that the foregoing Ordinance No. was regularly
introduced and placed upon its first reading at a regular meeting
of the City Council on the day of , 1994. That thereafter,
said Ordinance was duly adopted and passed at a regular meeting of
the City Council on the day of , 1994, by the following
vote, to wit:
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSTAIN: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
CITY CLERK
APPROVED AS TO FORM:
CITY ATTORNEY
' it`d✓ �'.��.\ .
-gyp
Finance Department • 213 E. Foothill Blvd. • P.O. Box 1395 • Azusa, CA 91702-1395
(818)334-5125
TO: CHAIRMAN AND DIRECTORS OF THE REDEVELOPMENT
AGENCY OF THE CITY OF AZUSA
FROM: ROBERT E. TALLEY, AGENCY T
VIA: HENRY GARCIA, EXECUTIVE DIRECTOR
DATE: JULY 5, 1994
SUBJECT: REDEVELOPMENT AGENCY OF THE CITY OF AZUSA
INVESTMENT POLICY
Background
State law requires that the investment policy for each Agency be re -adopted every year, with
changes that may be necessary or desirable. The Redevelopment Agency Board of Directors last
re -adopted its Investment Policy on July 5, 1993. No changes are recommended in the Agency's
Investment Policy this year.
Recommendation
Staff recommends that the Board of Directors adopt the attached draft Resolution re -adopting the
Investment Policy of the Redevelopment Agency of the City of Azusa.
Attachment:
GJC:pap
lJ-
RESOLUTION NO
RESOLUTION OF THE BOARD OF DIRECTORS OF THE REDEVELOPMENT
AGENCY OF THE CITY OF AZUSA RE -ADOPTING ITS 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 Man Rule"; 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 re -adopt its Investment Policy
attached hereto as Exhibit A and instsructs the Agency Treasurer to be guided by it in carrying
out the duties of his office for the benefit of the Redevelopment Agency.
ADOPTED AND APPROVED this day of JULY, 1993.
I 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 day of JULY, 1994 by the following vote of Directors:
AYES: BOARD DIRECTORS:
NOES: BOARD DIRECTORS:
ABSENT: BOARD DIRECTORS:
THE REDEVELOPMENT AGENCY OF THE CITY OF AZUSA
INVESTMENT POLICY
_ - I. STATEMENT OF OBJECTIVES
Temporarily idle or surplus funds of The Redevelopment Agency of the City of Azusa
shall be invested in accordance with principles of sound treasury management and in
accordance with the provisions of California Government Code Sections 53600, et seq.,
the Municipal Code, guidelines established by the California Municipal Treasurer's
Association and the California Society of Municipal Finance Officers, and this Investment
Policy ("Policy")
A. Overall Risk Profile
The basic objectives of the Agency's Investment Program are, in order of
priority:
1. Safety 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.
The achievement of these objectives shall be accomplished in the manner
described below:
1. Safety of Invested Funds
The Agency shall ensure the safety of its invested idle fund by limiting
credit and interest rate risks. Credit risk is the risk of loss due to the
failure of the security issuer or backer.
Interest rate risk is the risk that the market value portfolio securities will
fall due to an increase in general interest rates.
a) Credit risk will be mitigated by:
(i) limiting investments to the safest types of securities;
(ii) by prequalifying the financial institutions with which it will
do business; and
(iii) by diversifying the investment portfolio so that the 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 Agency's cash requirements for ongoing
operations, thereby avoiding the need to sell securities on
the open market prior to their maturation to meet those
specific needs; and
(ii) investing primarily in shorter. term securities. -
c) The physical security or safekeeping of the Agency's investments
is also an important element of. safety. Detailed safekeeping
requirements are.defined in Section III of this policy.
2. Liguidi1y
-" —" The Agency's investment portfolio shall be structured in a manner which
strives to achieve that securities mature at the same time as cash is needed
to meet anticipated demands (Static Liquidity). Additionally, since all
_ possible cash demands cannot be anticipated, the portfolio should consist
largely of securities with active secondary or resale markets (Dynamic
Liquidity). The specific percentage mix of different investment
instruments and maturities is described in Section II 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 of the Agency 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.
Specifically, "when" and "if issued" trading and open-ended portfolio
restructuring transactions are prohibited.`
F
B. Time Frame for Investment Decision
The Agency's investment portfolio shall be structured to provide that sufficient
funds from investments are available every, month to meet the Agency's
anticipated cash needs. Subject to the safety provisions outlined above, the choice
in investment instruments and maturities shall be based upon an analysis of
anticipated cash needs, existing and anticipated revenues, interest rate trends and
specific market opportunities. No investment should have a maturity of more
than five (5) years from its date of purchase without receiving prior Executive
Board approval.
C. Definition of Idle or Surplus Funds
Idle or surplus funds for the purpose of this policy are all Agency funds which
are available for investment at any one time, including the estimated checking
account float, excepting those minimum balances required by the Agency's banks
to compensate them for the cost of banking services. This policy also applies to
the idle or surplus funds of other entities for which the Redevelopment Agency
personnel provided financial management services.
This section of the Investment Policy identifies the types of instruments in which the
Agency will invest its idle funds.
A. Elieible Securities
The Agency operates its temporary pooled idle cash investments under the
Prudent Man Rule - V (Civil Code Section 2261, et seq). See Exhibit A. This
affords the Agency a broad spectrum of investment opportunities as long as the
investment is deemed prudent and is allowable under current legislation of the
State of California (Government Code Section 53600, et seq). (See Exhibit B for
definition of investments.)
* 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 Agency's investments shall not exceed One
Hundred Thousand Dollars ($100,000) per institution. If the investment
exceeds the insured $100,000, the funds are to be collateralized at 110%
of the deposit in government securities or 150% in mortgages.
'/ The Prudent Man Rule states, in essence, that "in investing exercise the judgment and
care, under the circumstances then prevailing, which men of prudence, discretion and
intelligence exercise in the management of their own affairs ...."
' Local Agency Investment Fund (State Pool) Demand Deposits
* Securities of the U.S. Government, or its agencies
Negotiable Certificates of Deposit placed with Federal and State savings
and loan associations and Federal and State chartered banks with an office
in the State of California (limited to 30% of portfolio)
* Bankers Acceptance (limited to 40% of portfolio) (not collateralized;
emergency use only)
* Commercial Paper (limited to 30% of portfolio) (not collateralized;
emergency use only)
* Passbook Savings or Money -Market Demand Deposits
* Repurchase Agreements (limited to 30% of portfolio)
* Los Angeles County Treasurer's Investment Pool
* Money Market Mutual Fund (with $1 net asset value)
B. Qualification of Brokers. Dealers and
Financial Institutions
United States Treasury issue transactions will be conducted only with primary
dealers from the list of Government Security dealers reporting to the Markets
Reports Division of the Federal Reserve Bank of New York (Exhibit Q.
C. Collateralization Requirements
Uninsured Time Deposits with banks and savings and loans shall be collateralized
in the manner prescribed by law for depositories accepting municipal investment
funds.
D. Pre -formatted Wire Transfers
Wherever possible, the Agency will use pre -formatted wire transfers, to restrict
the transfer of funds to pre -authorized accounts only. When transferring funds
to an account not previously approved, the bank is required to call back a second
employee for confirmation that the transfer is authorized.
The Agency shall annually send a copy of the current edition of the Policy and
its enabling Resolution to all institutions which are approved to handle the
nt
Redevelopment Agency investments. . Receipt of the Policy and Resolution,
including confirmation that it has beenreceived by persons handling the Agency's
account, shall be acknowledged in writing within thirty (30) days.
-F. Diversification
The portfolio should consist of a mix of various types of securities, issues and
maturities.
G. - Confirmation
Receipts for confirmation of purchase of authorized securities should include the
following information: trade date, par value, rate, price, yield, settlement date,
description -of securities purchase, agency's name, net amount due; third party
custodial information. These are minimum information requirements.
H. GASB
The Governmental Accounting Standards Board issued GASB 3 in April 1986,
and the local entity's investments must be categorized into 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's
or dealer's 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.
Governmental Accounting Standards Board 3 exempts mutual funds and LAIF
investments from the mandatory risk categorization.
A. Safekeeping Agreement
The Agency shall contract with a bank or banks for the safekeeping of securities
which are owned by the Agency as a part of its investment portfolio or
transferred to the Agency under the terms of any repurchase agreements.
B., Handling of Agency -Owned Securities and Time
Deposit Collateral
All securities owned by the Agency shall be held by its safekeeping agent, except
the collateral. for time deposits in banks, savings banks, and savings and loans is
held by the Federal Home Loan Bank. The collateral for time deposits in banks
is held in the Agency's name in the.bank's trust department, (if a safekeeping
agreement has been executed) or, alternatively, in the San Francisco Federal
Reserve Bank.
C. Security Transfers
The authorization to release Agency's securities will be telephoned to the
appropriate bank 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.
D. Verification -of Securi
Securities transferred to the Agency as collateral securing time deposits which are
being held in safekeeping for the Agency will be verified in writing and examined
on a surprise basis during the year by the Agency's independent auditors as part
of the Agency's annual independent audit.
This section of the Policy defines the overall structure of 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 and in accordance with applicable laws and
ordinances.
B. Responsibilities of the Executive Director
The Executive Director is responsible for keeping the Executive Board fully
advised as to the financial condition of the Agency.
C. Responsibilities of the Executive Board
_..__ -.. The Executive Board 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 Executive Director, the
Director of Finance and Agency Treasurer. The Committee shall meet quarterly
to discuss cash flow requirements, the monthly investment reports, investment
strategy, investment and banking procedures and significant investment related
work projects being undertaken in each department which will affect the cash
-__- flow management of the -Agency 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 Executive Board.
V
The AgencyTreasurer 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 which will allow the Executive Director and the Executive
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 gain or loss resulting from appreciation or depreciation by listing the
cost and market value of securities over one year in duration.
C. A description of the current investment strategy and the assumptions upon which
it is based.
D. Average rate of return on the Agency's investments.
E. Maturity aging by type of investments.
VI REVIEW OF INVESTMENT MANAGEMENT
Policy Review
This investment policy shall be reviewed annually by the Executive 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 after review by the Investment Committee and City Attorney be forwarded
to the Executive Board for consideration.
VII AUTHORITY
This policy was duly adopted by authority of the Executive Board of the Redevelopment
Agency of the City of Azusa on the 19th day of February, 1991.
February 4, 1992
EvHIHIT A
PRUDENT YAN RULE
§ 2261 ` TRUSTS FOR THIRD PERSONS
Div. 3
§ 2261. Investments
(a) Degree of care, skill, prudence and diligence. (1) Subject to
paragraph (2), when investing, reinvesting, purchasing, acquiring, ex-
changing, selling and managing property for the benefit of another, a
trustee shall act with the care, skill, prudence, and diligence under the
circumstances then prevailing, specifically including, but not by way of
limitation, the general economic conditions and the anticipated needs of
the trust and its beneficiaries, that a prudent person acting in a like
capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims, to attain the goals of
the trustor as determined from the trust instrument. Within the limits -
tions of the foregoing andconsidering individual investments as part of
an overall investment strategy, a trustee is authorized to acquire every
kind of property, real, personal or mixed, and every kind of investment.
(2) The trustor may expand or restrict the standards set forth in
paragraph (1) by express provisions in a trust instrument. Any trustee
acting for the benefit of another under that instrument shall not be liable
to anyone whose interests arise from that trust for the trustee's good
faith reliance on those express provisions.
(b) Retention of property. In the absence of express provisions to
the contrary in any trust instrument, a trustee may without liability
continue to hold property received into a trust at its inception or
subsequently added to it or acquired pursuant to proper authority if and
as long as the trustee, in the exercise of good faith and of reasonable
prudence, discretion and intelligence, may consider that retention is in
the best interests of the trust or in furtherance of the goals of the
trustor as determined from any trust instrument. Such property may
include stock in the trustee, if a corporation, and stock in any corporation
controlling, controlled by, or under common control with such trustee.
(c) Deposit of funds. In the absence of express provisions. to the
contrary in any trust instrument, a deposit of trust funds at interest in
any bank (including the trustee, if a bank) shall be a qualified investment
to the extent that such deposit is insured under any present or future
law of the United States, is collateralized pursuant to any present or
future law of this state or the United States, or to such greater extent as
a court of competent jurisdiction may authorize. Nothing in this section
shall be construed as limiting the right of trustees in proper cases to
make deposits of trust moneys in banks, subject, in the case of interest-
bearing deposits, to such notice or other conditions respecting withdraw-
al as may be prescribed by law or governmental regulation affecting
such deposits.
(d) Deviations from terms of trust: court order. Nothing in this
section shall abrogate or restrict the power of the appropriate court in
320
OBLIGATIONS OF TRUSTEES ..
Pt. 4
§ 2261
proper cases to direct or permit the trustee to devinte from the terms of
the trust regarding the making or retention of investments.
(e) Application of section; construction of investment authoriza-
tions. The provisions of this section shall apply to all trusts now
existing or hereafter created. The terms "investments permissible by
law for investment of trust funds," "authorized by law for investment of
trust funds," "legal investments," "authorized investments," "invest-
ments acquired using the judgment and care which men of prudence,
discretion and intelligence exercise in the management of their own
affairs, not in regard to speculation, but in regard to the permanent
disposition of their funds, considering the probable income, as well as the
probable safety of their capital," and other words of similar import used
in defining the powers of the trustee relative to investments, in the
absence of other controlling or modifying provisions of the trust instru-
ment,. shall be construed as authorizing any investment permitted, and
imposing the standard of prudence required, by the terms of subdivision
(a) of this section.
(f) Property defined. The term "property" as used in this section
includes life insurance ;-endown @fit, -and annuity contracts issued by legal
reserve companies authorized to do business in this state.
(Enacted 1872. Amended by Stats.1943, e. 811, p. 2602, § 1; Stats.1967, c. 688, p.
2054, § 1; Stats.1967, c. 1706, p. 4265, § 1; Stats.1968, c. 161, p. 385, § 1;
Stats.1969, c. 259, p. 611, § 1; Stats.1984, c. 1372, 4 1.)
Historical Note
The section, as originally enacted in 1872,
provided:
"A trustee must invest money received
by him under the trust, as fast as lie col.
lects a sufficient amount, in such manner as
to afford reasonable security and interest
for the some."
The 1943 amendment rewrote the section
to read:
"11) In investing, reinvesting, purchasing,
acquiring, exchanging, selling and manag-
ing property for the benefit of another, a
trustee shall exercise the judgment and
care, tinder the circumstances then prevnil-
ing, which men of prudence, discretion and
intelligence exercise in the management of
their own affairs. not in regard to specula-
tion. but in regard to the permanent disposi-
tion of their funds, considering the probable
income, as well as the probable safety of
their capital. Within the limitations of the
foregoing standard, and subject to any ex-
press provisions or limitations contained in
any particular trust inmtrument, a trustee is
authorized to acquire every kind of proper-
ty, real, personal or mixed, and every kind
of investment, specifically including, but
not by way of limitation, corporate obliga-
tions of every kind, and stocks, preferred or
common, which men of prudence, discretion
and intelligence acquire for their own ac-
count.
121 Iu the absence of express provisions
to the contrary in the trust instrument, a
trustee may continue to hold property re-
ceived into a trust at its inception or subse-
quently added to it or acquired pursuant to
proper authority if and as long as the trus-
tee, in the exercise of good faith and of
reasonable prudence, discretion and intelli-
gence, may consider that retention is in the
best interests of the trust
"(3) In the absence of express provisions
to the contrary in the trust instrument, a
deposit of trust funds at interest in any
savings bank or the savings department of
any bank (including the savings department
of the trustee, if a bunk) shall be a qualified
investment to the extent that much deposit
321
§ 2261
is insured under any present or future law
of the United States, or to such greater
extent as a court of competent jurisdiction
may authorize. Nothing in this section
shall be construed as limiting the right of
trustees in proper cases In make deposits of
trust moneys in banks, subject, in the case
of interest-bearing deposits, to such notice
or other conditions respecting withdrawal
as may be prescribed by Inv or governmen-
tal regulation affecting such deposits.
"(4) Nothing in this section shall abmo
_ . .. gnte or restrict the power of the nppropri-
.. : ale court in proper cases to direct or permit
- - the trustee to deviate from the terms of the
trust regarding the makingor retentionof
investments.
"(.5) The previsions of this section shall
apply to all trusts now existing or hereafter
created. Where; in trusts now existingor
hereafter created, the term 'investments
permissible by law for investment of trust
funds; or'authorized by law for investment
of trust funds,' 'legal investments,' or 'au-
--- thorized investments,' or other words of
similar import are used in defining the pow-
ers of the trustee relative to investments,
such language, in the absence of other con-
trolling or modifying provisions of the trust
instrument, shali be construed As authoriz-
ing any investment permitted by the terms
of subdivision (1) of this section."
The 1967 amendment by c. 1706 added the
concluding sentence to subd. (2). linter
amended, see 1969 amendment): And delet-
ed references to savings banks and to the
savings department of banks from subd. (3).
Effect of Amendment of section by two or
more acts at the same session of Lite legisla.
ture, see Government Code § 9605.
The 1968 Amendment added subd. (6).
The 190 Amendmentd i d th w i
TRUSTS FOR THIRD PERSONS
Div, 3
income, as well As the probnble safety of
their capital. Within the limitations of the
foregoing standard, and subject to any ex.
press provisions or limitations contained in
any particular trust instrument, a trustee is
authorized to acquire every kind of proper-
ty, real, personal or mixed. and every kind
of investment, specifically including, but
not by way of limitation, corporate obliga-
tions of every kind, and stocks, preferred or
common, which men of prudence, discretion
and intelligence acquire for their own ac-
count.
"(2) In the absence of express provisions
to the contrary in the trust instrument, a
_ trustee may continue to hold property re-
ceived into a trust at it, inception or subse-
quently added to it or acquired pursuant to
proper authority if and As long As the true-
- tee. in the exercise of good faith and of
reasonable prudence, discretion and intelli-
gence, may consider that retention is in the
best interests of the trust. Such property
may include stock in the trustee, if a corpo-
ration, and stock in any corporation control-
ling, controlled by, or under common con-
trol with such trustee.
"M In the absence of express previsions
to the contrary in the trust instrument, a
deposit of trust funds at interest in any
bank (including the trustee, if a bank) shall
be a qualified investment to the extent that
such deposit is insured under any present or
future law of the United States, or to such
greater extent Asa court of competent jur-
isdiction may authorize. Nothing in this
section shnll be construed as limiting the
right of trustees in proper cases to make
deposits of trust moneys in banks, subject,
in the case of interest-bearing deposits, to
such notice or other conditinns respecting
withdrawal as may be prescribed by law or
governmental regulation affecting such de -
a r e e t on s posits.
and stack in any corporation controlling"(41 Nothing in this section shall abro-
controlled by, or under common controi gate or restrict the power of the appropri-
with such trustee" to the end of solid. (2). ate court in proper cases to direct or permit
The 1984 amendment rewrote the section the trustee to deviate (roan the terms of the
which as amended in 1969 had read: trust regarding the making or retention of
investments.
"M In investing, reinvesting, purchasing, "(5) The provisions of this section shall
acquiring, exchanging, selling and mmnag- opply to all trusts now existing nr hereafter
ing property for lite benefit of another, a created. Where, in trusts now existing or
trustee shall exercise the judgment and hereafter created, the term 'investments
care. under the circumstances then prevail- permissible by law rnr investment of trust
ing, which men of prudence, discretion and funds,' or 'aulhurized by law for investment
intelligence exercise in the management of of trust funds,' 'legal investments,' or 'nu -
their own Affairs, not in regard to speculn- thorized investments.' nr other words of
tion, but in regard to the permanent disponi- similar import are used in defining the pow -
tion of their funds, considering the probable ers of the trustee relative to investments,
322
OBLIGATIONS OF TRUSTEES
PL 4
such language, in the absence of other con-
trolling or modifying provisions of the trust
instrument, shall be construed as authnriz-'
ing any investment permitted by the terms
of subdivision (1) of this section.
See West's California Code Forms, Civil.
§ 2261
"(6) The tern 'property' as used in this
section includes life insurance, endowment,
and annuity contracts issued by legal re-
serve companies authorized to do business
in this state."
Forms
Cross References
Common trust funds of trust companies, see Financial Code § 1564. -
Common trusts, establishment for investment of Inds of Deportment of Mental Health
held as trustee, see Welfare and Institutions Code 9 7286.
Corporate shares, liability of fiduciary for subscription price, see Corporations Code § 413.
Deposit of trust company funds awaiting investment, see Financial Code § 1562.
.Investments authorized, provisions not altering degree of care required, see § 2269.1.
Investments of trust company trust funds, see Financial Code § 1561.
Mortgage participation certificates and securities guaranteed by mortgage policies as legal
investments, see Insurance Code § 12528.
Registration of stock held in trust in name of nominee of trust company, see Financial Code
4 1563.
Savings accounts of savings associations as legal investments for funds of trustees, see
- Financial Code § 7000. - -
Trustee to manage proceeds of sale of property subject to life estate upon partition, see
Code of Civil Procedure § 873.840.
l.aw Review Commentaries
Application of SEC Rule X-1013-5 to pro -
vent nondisclosure in sale of corporate secu-
rities. (1951) 39 C.LR. 40l.
Beneficiary's other resources as affecting
necessity of invasion of trust corpus.
(1953) I U.C.LA.Law Rev. 119.
Common stock as a prudent trust mvest-
menL (1951) 39 C.L.R.:180.
Construction and application of the Uni-
form Principal and Income Act. (1839) 28
C.L.R. 34.
Delay causing estoppel to object to pur-
chase in breach of fiduciary duty. (1941) 14
So.Cal.LR.:155.
History of supervision of charitable
trusts and enrimrations in California. Wal
lace Hovland (11166) 1:1 U.C.L.A. Law Iter
lo'J.
Unbility of trustee for improper invest
ments. (19511 :11) C.I..R. 1180.
Planning for incompetency. Louis M
Brown (1904). 39 S. Our J. 288.
Planning for incompetency anti practice.
under the conservatorship law. Coorge E
Zillgitt (1964) 37 So.Cal.I.R. 181.
Prudence, information and trust invest-
ment low. John A. Humbach and Stephen
P. 1lresch (19711) 62 A.B.AJ. 131)9.
Prudent man investment of trust funds
during inflation. (1951) 30 C.L.R. 380.
Prudent man investment rule in the law
relating to trusts. (19431 18 S.Bar J. 283.
Representation of adverse parties in trust
administration. (1967) 55 C.L.R. 948.
Revolution in trust investment law.
(1976) tit A.B.A.J. 887.
Trust participation in partnership ven-
tures. (1961) 3 Stau.L.R. 4G7.Trustee'4 power: power to sell as includ-
ing (rower to option. Michael H. Dessent
(1970) 7 San Diego I,.Rev. V.
Trusts—Corporate executor/trustee.
(1:175) 2 Nest SLII.l„Rev. 295.Liability of the trustee for appreciation
of properly 11957) 4 U.C.LA. Law
Rev. 314.
Violation of duty by corporate trustee by
investing in its own stuck. (1949) 37 C.LR.
539, 552.
s War conditions as presenting new prob-
lems for investment of funds by trustees.
(1942) 17 S.Rmr J. 36.
323
§ 2261 TRUSTS FOR THIRD PERSONS
Div. 3
Library References
Trusts x215 to 217.5. - - - Probnte Court Practice, Goddard,
C.J.S. Trusts §§ 320, 322. 324 to 329, 331. 44 182.9, 1825, 2207, 2208.
Nolen of Decisions
Rnrrowing funds 7
were given inndequnte directions for con-
Chnrges ogninet trust for beneficiary 8
trolling trust property. Estate of Berges
Collecting Judgment.,, notes, rentai-etc.
x(1977) 142 Cal.Rptr. 635, 76 C.A.3d 106.
t0 - -
- in determining date of breach of trust by
Construction and application 1 ..
- trustee who negligently -failed to invest in.
Corporate trustees 6 -
come within reasonable time, factors to be
Court orders for deviation from. trust 23
considered include purpose of trust, amount
Declaration of trust 9 -.
of monev on hand and amount deemed nee -
Deposit of funds 1I - - -
essary io meet possible contingencies or
Discretion of trustee .1
emergencies in light of rule that trustee. in
Interest chnrgcs ngninel trustee 25
investing and managing property for bene•
Investing prnperty 12. 11
fit of another, should exercise such care
in general 12
under circumstances as prudent man would
Prudent investor standard 13
exercise in management of his own affairs.
-Linhilily. of trustee. 2-L -. _ •�� -
-Lynch v. Min' M. Redfield Foundation
Loaning properly 14
(1070) 88 Cal.Rptr. 86, 9 C.A.3d 2.93, 51
Mortgages 26
A.L.R.1d 1284.
Possession of property 15 -
Preserving property 16
Provision of former subd. (.5) of this sec -
"investments
Prudent investor standard. Investingro
prop.
tion, that where term permis-
- 13
Bible by law for investment of trust funds,"
ert-v
Record of trust funds 22
or other words of similar import are used in
Retention of property 1,
defining powers of trustee relative to in.
Selling
vestments, such langaa¢e, in absence of
tin wi( r
Speculating with property l9
other controllingor modifvin
g provisions of
Slmtdnrd of core 5
o
trust instrument shall he construed as nu -
Surrendering properly 20
thorixing any investment permitted by for -
Trust funds 2
mer subd. I of this section, establishing the
Use of funds in general 3
Prudent Man Ride of investment, is only
"aloe of use and occupation by trustee
nplilicable where testator limits investments
21
to statutory approved investments, and has
no ripplicalinn where settlor himself speci-
fies particulnr investments that are prohib-
ited. Stanton v. Wells Fargo Bank FI Union
1. Construction and application
pV
Trust Co. (1057) 3IU P.2d 1010. 150 C.A.2d
This section tines not supersede trustee's
763,
general duly to maximize trust assets con.
sistent with safety and other relevant con-
2. Trust funds
sideration; a staiutorih• authorized invest-
Land acquired by irrigation district be.
meat mny or cony not be the prudent coupe
cause of delinquencies in assessments in
of conduct for the trustee to pursue MaL-
trust property, held for the tines rind pur-
ter of Pelton (1982) 183 Cal.Rptr. 188, 132
loses of Gen.Laws 19.11. Act 3954, govern.
C.A.3d 496.
ing irrigation districts, and proceeds of
Where testatnr'n will after ranking a spe.
lease thereof hive the same chnrtcter.
cific bequest of cash and any automobile to
Provident rand Gtrp, v- Zumwalt (1919) 85
designated individual- begnenthed to his
P.2d 116. 12 C.2d 365.
brother and sister as trustees the sun of
$Mn for each of their respective children
3. Use of funds in general
with provision thnt each trust terminates
Probate court's factual findings were in -
when the child attains IA years of age,
adequate to permit court of appeal in deter.
trusts were valid over contention of beneri-
mine whether hank/conservator breached
ciary that the purposes or terms of trust
its riducimy duty by keeping approximately
could net be ascertained and that trustees
;264.000 in estste's assets in bank's 5'147-
'A%324
324
OBLIGATIONS OF TRUSTEES
Pt. 4
§ 2261
Note 7
passbook account for 17 months, during
Provision of testamentary trust that "all
which substitution of conservators was be.
discretions conferred upon the Trustee shall
ing arranged, at a time when amounts in
be ubsolule," viewed as an exculpatory
excess of $100,000 were Burning 91/1,3, brier-
clause, was subject to rule of strict con -
est in 30 -day accounts at vurious hanks; a
struction. Id.
remand for further prucecdings was re-
Absolute discretion conferred by provi-
quired. Matter of Pelton (1982) 183 Cal.
sion of testamentary trust that "all discre-
Rptr. 188, 132 C.A.3d 490.
lions conferred upon the Trustee shall be
Trustee, who is directed by terms of trust
absolute" was specifically limited by re -
to pay income to beneficiary during desig-
quirement that trustee by "subject always
nated period and on expiration of that peri-
to the discharge of its fiduciary obligu-
od to pay principal to another beneficiary,
tions." Id.
owes duty to former beneficiary to take
rare not merely to preserve trust property
5.. Standard of care
but to make it produclive.so that reasonable
. _Standard imposed upon trustees. is that
income will be available for him, and trus-
they exercise that
judgment and care which
tee is under duty to latter beneficiary to .,
men of prudence, discretion
andintelligence
take care to preserve trust property for
. would exercise in management of their own
him. In re Rissinger's Estate 11903) 28
affairs. 6latler of Collins' Estate (1977)
Cal.Rptr. 217, 212 C.A.2d 8:11. ..
Iml Cul.ltplr. 644. 72 C.A.31 863.
Manner in which charter city effectuates
Trustee is under a duly to beneficiary to
purposes of tidelands trust, including man.
distribute risk of loan by rensonalie diversi-
ner in which it conducts negotiations for
fication of investments unless under circum -
leasing of lands, is municipal affair. Siker
stances it is prudent oat to do so. Id.
v. City of Los Angeles (1962) 17 Gd.11ptr.
A: trustee with absolute discretion may
.379..36fi..P.2d.651_ 57,. C.2d_39.. certiorari,,.;;,;
denied 82 S.CL 1113, 3119 U.S. 873, 8
not neglect its trust or abdicate its judg-
LEd.2d 2711.
ment. Id.
Under trust principles and applicable pro-
. Record contained no evidence that di-
visions of the Health and Safely Code, it is
fendant trustees satisfied even the lesser
not legally proper to use endowment care
standard of cure for which they contended
funds of private cemeteries to purchase in-
in claiming that trust instrument conferred
terment plots located in the cemetery, for
on thorn an "absolute discretion" so as to
which the fund was established. or to loan
require them to refrain to act arbitrarily
such funds to the cemetery, its subsidiary,
and to use their best judgment. Id.
or Wilhite. on the security of a trust deed
on such interment plats, or to invest such
S. Corporate trustees
funds in the stock of such cemetery, its
subsidiary, or affiliate. 28 Ops.Alty.Cen. -
321.
4. Discretion of trustee
A trustee occupies o fiduciary• position
with duty to exercise its independent judg-
ment and may not automatically accede to
demands of trust beneficiary. Morse v.
Cracker Nnl. Itank (198:11 lim (::d.Rptr. 8:19,
142 C.A.3d 228.
An abs. -lute discretion dues not permit a
trustee to neglect Ilia trust or abdicate Ilia
judgment. Matter of Collins' Estate (1'777)
139 Cal.itptr. 644, 72 C.A.3d 663.
Absnlule discretion given defendant trus-
tees of tesuuncutary trust of which plain-
tiffs were beneficiaries was specifically liar
itel by requirement in trust instrument that
trustees be subject alw:tya to discharge of
their fiduciary obligatinos. Id.
Different types of investments for "cor-
porate trustees" and for "amateur trus-
tees" are nut authorized under prudent in-
vestor standard; difference. rather, is that
Corporate trustee is held In a greater stan-
dard of care Lased on his presumed exper-
tise. Matter of Cullins' Estate (1977) 139
CaLRplr. 64.1, TL C.A.341 66:1.
7. Burrowing funds
Under this section, though trustees are
not ordinarily liable for interest on moneys
coming into their hands unless they have
improperly failed to invest them, they are
Out justified in borrowing more money than
they need, and charging trual with interest
nn sums borrowed. and, where they have
idle money nn head, it is their duly to upl-ly
it an as reale i
charges. Purdy v. Johnsen 119171 16:1 P-
893. 174 C. 521.
325
§ 2261
Note 8
8. Charges against trust fur beneficiary
Fact that testamentary trustee had violat-
ed her duties as such by commingling trust
funds with her oven, omitting to invest
them, and negligently railing to keep any
records which would enable her to render a
true account had n bearing, in absence of
vouchers or receipts, on question of wheth-
er charges against trust estate ror board,
clothes, laundry. etc.. for beneficiary for 15
years were established by sntisfaclory evi-
dence. In re McCabe's Estate (1948) 220
P.2d 614, 98 C.A.2d 503. -
9. Declnrallon of trust
TRUSTS FOR THIRD PERSONS
Div. 3
fault Purdy v. Johnson (1917) 163 P. 893,
174 C. 521.
Where testamentary trustees rented land
of trust. but their accounts in beneficiary's
action against them showed that only fart
of rent was collected. trustees were bound
to account for balance, unless they could
show some good reason for failure to col-
lect Id.
Even if trust instrument permitted a type
- - of investment generally frowned on under
.- prudent -investor rule, it did not authorize --
defendant trustees to make that investment
blindly. Matter of Collins' Estate (1977)
139 Cnl.Rptr. 644. 72 C.A.3d 663. 12. Investing property—In general
While the declaration of trust may have Rule that trustee has duty to invest, al.
possibly enlarged the prudent -investor stun- though generalh• pertaining to investment
dard as for as the type of instrument wait of principal, applies likewise to investment
concerned, it could not be construed as per- of accumulated income. Lynch v. John M.
mitting deviations from that standard in Redfield Foundation (1970) 88 Cal.Rptr. 86,
investigating the soundness of a specific 9 C.AM 293, 51 A.L.R.3d 1284.
investment. Id. Objections of trust beneficiary that tms-
- tee. which had been given absolute disere.
10. Collecting judgments, notes, rent,,- tion in managing trust property, had negli-
etc. gently and carelessly failed to properly ad -
One holding judgment as trustee for cor-
poration and another was required as such
trustee and as secrelnry of the corporation
to use his best efforts to collect the judg-
ment in full by execution sale of stock
owned hr judgment debtor. Darden V.
Reese 11949) 2Uo P.2d 81, 88 C.A.2d 904.
Where trust instrument provided that
trustor and son should occupy a dwelling nn
land constituting the corpus of the trust
during trustor's lifetime nod that the land
should be sold on trustor's death and pro-
ceeds of the sale distributed in a specified
manner, and nn trustor's death trustee re-
covered. but did an( collect, judgment in
ejectment against the son, trustee was
properly charged with the stipulated vnlue
of the properly nn date trust was In be
terminated, the rental of the house former-
ly occupied by the son, nod the judgment
rendered in the ejectment action. Johns v.
Peterson 111142) 126 P.2d 90:1, 52 C.A.2d 720.
It. Deposit of funds
Generally fiducinr-v in personally liable
for money deposited by him in book which
becomes insolvent, unless evidence shows
thnt he was not negligent in so doing, nod,
in absence of order of court, deposit of
trust funds in bank is not warranted as an
investment. Allen v. Rainey (1935) 41 P.2d
374, 4 C.A.2d 558. -
minister or manage trust and that as a
proximate result beneficiary hnd been de-
prived of reasonable return and had sus-
tailled loss of some $50.060 from sale of
asset, were sufficient to raise issues of
abuse of discretion and failure to exercise
judgment which trustee should be required
to meet Coberlv v. Superior Court for Los
Angeles Cnuuty (1965) 42 Cal.Rptr. 64, 231
C.A.2d 685.
Rule that it is duly of a trustee to invest
trust funds so that they will he productive
of income is designed for trusts intended to
be productive of income or other gain, but
the ode is not applicable in the case of a
trust not designed far income purposes but
for other purposes, such is holding and
preservation of property for use by others.
Higgins Y. City of Sunta hionien (1964) 41
Cal.ltptr. 9, 391; P.2d 41. 62 (:.2d 2-1.
The capacity of co -trustees to seek court's
instructions as to interpretation of trust
It wns duly of testamentary trustees to instrument, and to ablain permission to de -
collect promissory notes distributed to vinte from terms thereof regarding making
them, and they were liable to benefucinry or retention of investments, did not cnnnti-
fur amount of notes, with interest, unless Lute exercise of a "power" within content -
their failure to collect wait not due to their illation of 4 Boo requiring that all unite in
326
OBLIGATIONS OF TRUSTEES
Pt. 4
execution of a power vested in several per-
sons, and 4 2268 requiring all co -trustees to
unite in any act to bind trust property, and
hence one trustee could appeal from deci-
sion allowing deviation from trust require-
ments as to investments, though other trus-
tee did not wish to appeal. Stanton v., Preis
(1956) 291 P.2d 118, 1:18 C.A.2d 63.
§ 2261
Note 13
in order to avoid charge of negligently man-
aging such funds. Id.
In determining whether golf club mort-
gages were proper investments for trust
funds, appraised value of really and chase.
ter, financial standing, and past perform-
ance of officers and members of clubs could
be considered. Id.
Under will and decree of distribution giv- The fact that mortgage participation Ger-
ing testamentary trustees right to invest in tificates purchased by trustee depreciates in
stocks of corporations of which testatrix value standing alone does not warrant equi-
was a stockholder on her death if trustees ty court in opening, surcharging, or falsify.
---- obtained written consent of beneficiaries; - ing trustee's accounts, approved by court.
-- -" -"trustees were not required to obtain such " Ormerod v. Security -First Nat. Bank oCl.us
consent to purchase stocks of corporations Angeles (1)37) lig P.2d 4119, 21 C.A.2d 362.
of which testatrix was not a stockholder. -. - In an action against trustees to have de -
in re Fowler's Estate (1947)-18'L P.2d 575, Glared void a purchase made by them, evi-
56 C.A.2d 451. de nce that one of them understood the aro-
That trustees held an investment in "stock
of bank which thereafter failed did not
show mismanagement of trust. In re
Knox' Estate (1942) 126 P.2d 108, 52 C.A.2d
338.
Under will directing testamentary trus-
tees to accumulate in gash or negotiable
securities the sum of $15,0110 and to pay
income therefrom to beneficiary, a note se-
cured by mortgage on Illinois realty was
not improper investment, as against conten-
tion that. under Illinois haw, mortgage was
not negotiable security, where negotiability
of note was not affected under Illinois law
by the mortgage, and word "negotiable" in
will was employed to keep trust funds in
comparatively liquid stale. Id.
In investing trust funds, trustee should
consider aggregate value of trust estate,
nature of other investments of funds of
trust, and advisability of diversifying in-
vestments lit order to insure against ad-
verse conditions in tiny particular field.
Day v. First Trust St Savings Ilank ul Pasa-
dena 119411 118 P.2d fit, 47 C.A.2d 470.
priety of The purchase Was first to be sub-
mitted to the beneficiary is admissible. Rett
Jacket Tribe No. 28 Y. Gibson (1886) 12 P.
127, 70 C. 128.
,.A California domiciled. state. or national
bunk having a trust department which is
the trustee under an instrument which di-
rects the investment of the corpus in United
Slates government obligations, may not in.
vest such curpus in a mutual fund, the
portfolio of which is limited to short -tern
United Stales lrensnry obligations. 67 Ops.
Atty.Gen. 212, 5-23-34.
Where only the interest un the corpus of
funds given in trust to the director of edu-
cation is to he used for educational pur-
lases the director of education nit behalf of
estate and in his official capacity should
invest tine trust funds, collect (lie interest
alit] apply the interest as specified by the
trustor. I 0 lis. Atty.Gen. 90.
13. — Prudent investor standard, In-
vesting property
Prudent investor standard does not apply
Whether trustee lens uctsl properly in where settlor himself specifies trustee is
making investment depends on ciMenstanc- not limited by what law provides are limper
es at time investment is made and not rat invesln eats. Mutter of Collins' Estate
subsequent events, ld. 11977) 139 Cal.ltplr. 644. 72 C.A.3d 66:1.
A financial institution with broad general Although California does lint limit tros-
knowledge of cumnauily needs and trends, tee's authority to a list of authorised invest -
Of character and worth of citizens with meats, relying instead on prodet investor
whom institution has dell, and specific ode, that rule nevertheless encompasses
knowledge of property values in conununi- certain guidelines that mast be followed by
ty, cam consider such positive general trustee. Id.
knowledge in investing trust funds, and is Provision in trust inslmmelil to purchase
not restricted to letter upon letter and line every kind of pmperty and make every kind
upon line conformity with prescribed ritual of investmnnl "irrespective of whether said
in estinating value of proposed investment investments are in accordauce with file laws
327
§2261
TRUSTS FOR THIRD PERSONS
Note 13
Div. 3
then enforced in the State of California
the same time make the estate prnriuctive.
pertaining to the investment of trust funds
Day v. First Trust k Savings Bank of Pasa-
by corporate trustee,," did not authorize
dean (1941) 118 P.2d 51, 47 C.A.2d 470.
trustees to make improper investments in
A trustee must use due care and skill and
violation of prudent investor standard. Id.
the caution of a prudent man in making
Different types of investmenLv are not
investmen L,, and, in absence of provision in
authorized for "corporate trustees" as dis-
trust or statute• he can make those invest•
tinguished from amateurs; difference, ralh•
ments which n prurient man would make in
er. is that corporate trustees are held to a
investing in properly outside of ordinary
_ greater standard of care based on their
business risk, and with a view to safety of
_ presumed expertise. Id. .__-principal
and to securing of an income ren-
Defendant truatees failed to follow "pro- ._-.
sonabde in amount and payable with "go-
dent investor" sL,ndard with respect to ad-
parity. Id.
ministration of testamentary trust of which-
Evidence warranted denial of liability of
- - -- plaintiffs were beneficiaries where they In.
trustee for depreciation of trust nsset, dur-
vested two thirds of trust principal in a
ing economic depression, on ground that
single investment. invested in real property _
_ trustee was not negligent in investment of
-secured only by n second deed of trust, and
funds, but exercised care of ordinarily-pru-
made that investment without adequate in-
dent person. Id.
vestigntion of either borrowers or collater-
- The liability of a director of education
al Id
acting as official trustee for bequests of
Investment by nonprofit cemetery corpo•
-- - - ration of nearly 80% of iL, endowment fund
"funds to be used for educational purposes is
in note and first deed of trust on one parcel
to make such investments as n prudent man
Mould make of his own property having
of real property could be found to be a
primarily in view the preservation of the
violation of prudent investors rule with re•
esL,te anti the regularity and amount of
sped to investment of trust funds and cem-
income. 1 Ops.Atty.Gen. 90.
etery hoard, department of pm(es,ional and
vocatimmi %Wndards. was authorii'.ed to or-
H. Canning property
der that sum lent be reinvested. Mandel v.
Cemetery Bd., Dept. of Professional and
Evidence that the land mortgaged to se-
Vocational Standards 119001 8 Cal.Rptr. 342,
cure a Iran made by a trustee was and
185 C.A.2d 58:1.
land• which it was practical]'- impossible to
This section hrondens list of legal invest.
irrigate. and that the trustee made the loan
mends for trustees of endowment care
upon the statements of one man, whom she
funds. but also places trustees under man.
knew• and a written report by three strong•
date of prudent investors ode in regnrd to
ers• two of whom were the former owners
all of their financial transactions. Id.
of the hind who had conveyed it to a dummy
An essential part of prudent. Investors
for tine purpose of securing the loan there•
the [rant court's finding that
rule with respect to investment of trust
on, sustained
the trustee was negligent in making the
funds is the requirement llmt investment,
loan, and was therefore bound to make
be diversified. Id.
goad the loss. ht re Hamon's Estate (1923)
Under provisions of this section embndv-
212 P. 999, 60 C.A. ISJ.
ing "prudent man rule" in setting forth
duty of trustee in connection with invest-
Where an agent or trustee is instructed
ment of trust funds, and under general law
to "lunn out" (ands held by him, it means
applicable to trustees, trustee, even where
that he i, to invest them for his principal's
given brand discretionary power of invent-
account, anti to make an accounting to the
ment, must exercise it., independent discre-
principal of such investment and he is not
tion and judgment in nderence to invest-
authorized to borrow the funds for his own
ment of trust funds. In re Talhot's Estate
purposes. In re Armstrong's Estate (18831
(1950) 296 P.2d 848, 141 C.A.2d 3011, 58
I Cut. 157• affirmed t0 P. 335. 69 C. 239.
A.GR.2d 658.
Where trustee loaned out the funds of
A trustee. is neither expneled In bury his
beneficiary without advising her of the risk
lalenL, nor to exercise infallible judgment in
to which pie was subjecting her runts nor of
investment of funds, but he must exercise
his mingling the fund., with his own indis-
skill and judgment of reasonably prudent
criminately he was liable for the, loss result-
business man in preserving estate and at
ing therefrom and his account as special
328
OBLIGATIONS OF TRUSTEES
Pt. 4
administrator for the beneficiary should be
charged with the loss sustained. Id.
15. Possession of properly
In action for declaratory relief with re-
spect to the scope of joint will by which
husband and wife converted property into
community property, court had broad flow-
ers and could. prior to distribution, interpret
will on question of whether widow upon
distribution, would be entitled as against
trustees to possession of any of property
involved. Chase v. Leiter (1950) 215 P.2d
756, 96 C.A.2d 439.
16. Preserving properly
.. Executor serves in fiduciary capacity and.
has powers and obligations similar to trus-
tee except that primary duty is to preserve
§ 2261
Note 18
Talbot's Estate (1956) 296 P.2d 848, 141
C.A.2d :189, 58 A.L.R.2d 058.
Where trustee has a broad power of sale,
right of income beneficiary is simply to
insist Unit trustee shall exercise its indepen-
dent judgment, and income beneficiury hits
no legal right to compel retention of any
stocks and is not legally hurt by reason of
the trustee's failure to keep certain stocks.
Id.
Where trustee who owned as trustee all
the stock of corporation, which by the sale
of its real estate supplied assets for distri-
bution to trustee in trust, dissolved the cor-
poration, trustee had title to real estate and
had power and duty to carry out purpose of
trustur by selling lands and receiving pro-
ceeds from sales into the trust. Stubbs v.
Jones (195:1) 263 P.2d 1110. 121 C.A.2d 218.
estate until distribution, rather than invest A testamentary trustee, using diligence
funds. in re Slingsby's Estate (19:11) 297 P. and discretion in selling foreign government
931, 112 C.A. 767: In re Brenhart's Estate bonds included in test assets and receiving
(1931) 2007 P. 9:11. 112 C.A. 700; In re highest prices obtainable therefor, was
Smiths Estate (1931) 297 P. 92'7, 112 C.A. properly allowed credit nn accounting for
688. loss suntadned in sale thereof for less than
17..�. Retention, dfproperly '
Usually trust is created to preserve pro
erty intact and to earn income for hent
ciury, and ordinarily trustee is directed t
administer funds in order to substitute sup
-.
lewdly superior..judgmeul-of trustee fu
that of beneficiary. Day v. First Trust
Savings Rank of Pasadena (1941) 118 P.2
51, 47 C.A.2d 470:
An honest trustee is not liable to mak
good the loss sustained by retaining u
authorized security' in as falling market, if
slid so honestly and truthfully, in the bell
that it was best course to lake in interest
all parties. Id.
18. Selling property
Where trustee hall broad power of sa
but, instead of exercising independent jud
mend ms to sale of common stocks, relied a
one beneficiary's unfulfilled assurance lh
Latter wrndd secure from other heneficinri
written consents to the sale, and trust
sold stocks which thereafter doubled in va
us. trustee was liable for reduction in vat
of objecting beneficiary's share of corp
i.e., reduction consisting of capital gai
taxes and expense of stock sales and fro
purchases, and for interest on amount
their value as fixed by court in settlement
of previous nccounts, in :absence of evidence
p. of negligence in making sale or showing
f1. that life beneficiaries of income, in contest -
0 ing previous account, sought to charge lrus-
w. tee with value of bonds ns cash on blind
r owing to estate because of his neglect to
& sell bonds. In re Bothwell's Estate (19441
01 151 P.2d '298, 115 C.A.2d ;198, rehearing de-
nied 151 P.2d 868, 65 C.A.2d 598.
e Assessment of damages against trustee
to for negligcnre in failing to sell trust realty
It as directed by trust instrument, thereby
of depriving life beneficiaries of incmne,
of should not he resorted b, by them when
another appropriate remedy, such as a ppor-
lioument of proceeds of subsequent stile
thereof bO ween principal and income. is
le available- Id.
g- In actino against trustee for accounting
to under contract authorizing trustee to man -
it age and sell parcels of really on such terms
es and at such limes as trustee. within his
ee discretion, should determine, evidence did
d- not show that trustee, in refusing offer to
Ute purchase property at price snbscgnently
us, shown to be adequate, did not exercise an
Its honest judgnwn6 and his estate was, there -
nil fore, not liable for damages fur such refus-
of til. Neel v. Barnard 111144) 150 1!211 177, 24
a L. C.2d 406.
such renucuoh, v..., .,a . ...................
for appreciation in value of stocks after sule In action against trustee by beneficiaries
or for loss of income on stocks. In re of trust for accounting and for damages.
329
§ 2261
Note 18
finding that trustee had no opportunity to
sell property involved at such prices as
would have liquidated plaintiffs' indebted.
ness as provided by contract creating trust
or on such terms as trustee properly fixed,
determined in effect, that a reasonable time
for sale of property had not elapsed. Id.
Even if offer was made to trustee for
purchase of realty which trustee held for
sale for benefit of beneficiaries of trust, it
would be presumed that trustee exercised
his judgment upon it and deemed price of
fered too low, and court could not tiny that
_.. he acted fraudulently or in. bad faith in
. declining to sell. Id. . .
A trustee can properly sell trust property
if such sale is necessnry or appropriate to
enable trustee to carry out purposes of
trust unless sale is forbidden in specific
TRUSTS FOR THIRD PERSONS
Div. 3
in value of stocks in the account. Weiner v.
Mullaney (1943) 140 P 2d 704, 59 C.A.2d
620.
Where beneficiary learned from broker in
January, 1938, that instructions to trustee
not to deal in stocks had been violated,
beneficiary was put upon inquiry at that
time and was charged with "notice" of all
that an inquiry would have disclosed. Id.
Where trustee failed to make full disclo-
sure of facts surrounding use of benefi-
ciary's shares in stock transactions contrary
to instructions, that it was no longer within
beneficiary's power to rescind transaction
when she finally learned the true situation
and her only recourse was to salvage what
stocks were left, such action on her part did
not amount to a "ratification" of trustee's
conduct Id. -
words by terms of trust or it appears from
Where trustee- was expressly instructed
terms of trust that property won to be
not to sell or deal in stocks for beneficiary,
retained in specie in trust. Church v.
his action in dealing in stock was a "brench
Church (1940) 10.5 P.2d 640, 40 C.A.2d 696.
of trust" for which he was liable. Id.
Where father of minor children took out
A is nut permitted to buy and sell
corporation
shares of stock in a family 'en oration iii"''
_trustee
�-
nods on speculation and the Ruchunlions in
his name ns trustee for children, and the
market value after purchase by the trustee
father had never executed any document in
are merely changes in the value of the
writing or declaration of trust restricting
assets of the trust estate. which are to be
his power, as trustee, to transfer shares,
wholly disregarded in any accounting be -
and evidence warranted finding that, aside
tween life tenant and remaindermen for
from trustee's certificates. There was no
"funds from the trust estate invested in in -
such agreement entered into concerning
come -bearing property. In re Cartenlaub's
shares, and it did not appear that any re-
Estate (1921) 198 P. 209. 185 C. 648, 16
striction on power of sale was contained in
A.L.R. 520.
certificates, it could not be said as matter of
law that the father did not have the right.
20. Surrendering property
as trustee, to transfer shares whenever, in
Evidence was sufficient to support find -
exercise of his discretion. it appeared to him
ing as to market value of bonds in action by
proper or necessary to do so. Id.
beneficiary against trustee for value of
Where money is bequeathed to a trustee
bonds deposited with trustee which trustee
to invest in land. with liberty to change the
without authority surrendered to bondhold
investment at his discretion. the superior
en.' protective committee. Martin v. Bank
court is without jurisdictiou to entertain a
of America Trust .rr Savings Assn (1935) 41
suit by the cestui que trust to order the
P.2d Wit. 4 C.A.2d 431.
trustee to sell the land subject to confirmn-
tion by the court, nor an application by an
21. value or use and Occup iliun by trus.
intervener in such a suit to confirm an
tee
alleged contract of sale to film by the trus-
tee, and to direct the execution of convey-
ance. Murphy v. Union Trust Co. of Son
Francisco (1907) 8!) P. 988, 5 C.A. 146.
A purchaser of land with notice of the
fncts entitling mother to the delivery to
him of a deed previously made out in his
favor, who obtains possession by force from
the cestui que trust, must account to him
19. Speculating with properly far the value of the use and occupation, and
A beneficiary who lenrocd that trustee the cestui que trust must pay the purchase
find disobeyed instructions not to speculate price into court for (lie benefit or the tr us -
in sleeks was required to net within a ma- tee. adding interest from the dale of the
satiable time thereafter and could not wait lender of the price, unless he chooses to
and hold trustee for subsequent decreases regard the interest as liquidating the value
330
OBLIGATIONS OF TRUSTEES
PL 4
of die use. Cannon v. Handley (1887) 13 P.
315, 72 C. 133.
22. Record of trust funds
A trustee or attorney handling funds of a
client cannot escape responsibility for trust
fund by failing to keep any record or data
from which an accounting might be made.
Bruns v. State Bar of California (1941) 117
P.2d 327, 18 C.2d 60.
23. Court orders for deviation from trust
Equity court order to sell really, contrary
to terms of express testamentary trust, and
reinvest proceeds, was unauthorized, in ab-
sence of present market value thereof and -
showing of character or security of proper
ty in which he proposed to reinvest pro-
ceeds. Security'
ecurity First Nat. Bank v, Easter
(19341 2'1 P.2d 422, 136 C.A. 691. -
§ 2261
Note 25
-:with rents, profitsandIncome which he
never received, but might and should have
received by exercise of due and reasonable
care and diligence. White v. Citizens Nat.
Trust & Savings Bank of Los Angeles
(1941) 116 P.2d 117, 46 C.A.2d 418.
. The nominal title holier of realty, incum-
bered by a trust deed, who upon taking title
to realty assumed obligations of trustee for
benefit of obligees whose claims were se-
cured by trust deed, differed from a mort-
gagor in possession and was liable for all
rents and profits received while in pnsses-
sio: of the realty even prior to sale thereof
under power of sale contained in trust deed.
.Buumahhn v. Harrison (1941) 115 P.2d 530,
46 C.A.2d 84.
25. Interest charges against trustee
Failure- of directors of charitable, non-
profit corporation to invest dividend income
21. Liability of trustee
deposited in corporation's checking account
If money paid far trust is lost or de-
over five-year period was breach of their
stroved without fault of trustee -payee, trus.
duty to invest funds as would a reasonable
tee -payee is not liable therefor and loss is
non so that funds would be productive of
=.borne by payor, truslorxbuneficiary_„ Pell-
income a:d were liable for interest on sums
erbridge v. Prudential Say. & Loan Assn
lost in consequence of such failure, nutwith.
(19781 145 Cal.Rplr. 87, 79 C.A.3d 509:
standing facts that bank had refused to
Defendant trustees were subject to being
honor drafts drawn on corporation's ac.
surcharged for imprudent investment of
count due to dispute among directors, that
directors served without compensation,
monies from testamentary trust in which
that, during period of inaction, corpus
plaintiffs were beneficiaries, not because--gaineJ
approximately 100;7 in value, and
they lacked prescience of what would hal-
that costly lawsuit would he necessary to
pen, but because they both lacked and ig.
settle directors' dispute and remove "block-
nored information about what wns happen.
ing" from bank account. Lynch v. John M.
ing at time. Matter of Collins' Estate
Redfield Foundation 119701 88 Cal.Rptr. 80,
(1977) 139 CaLRplr. 644, 72 C.A.3d 663.
9 C.A.3d 293, 51 A.L.R.Jd 1294.
Trustee who negligently breaches his
In action by beneficiary under two ex -
trust by failing to invest income within ret-
press trusts for an accounting by the re-
sonable time is liable pursuant to statute
spective trustees, where trustees had
for simple interest at rale of 77• per umnm•
waived delinquent interest an notes due the
Lynch v. John M. Redfield Foundation
trust, had not collected note from deceased
(1970) 88 Cul.ltplr. 86, 9 C.A.:Id 293, 61
maker, and had made loans which were
A.L.R.Jd 1284.
disapproved by the court. trial court's
One who engages services of trustee, car-
charge of 67. interest on amount thus sur-
porate or otherwise, contracts for exercise
charged, except for the unauthorized loan
of trustee's best judgment and for perform-
concerning which current savings bank fin-
ance of duties outlined in this section; and
terest rates compounded semiannually were
he has no right to receive any more than
charged, did not constitute an abase of dis-
that and no right to complain if those ser-
cretion. Douglas v. Weslfall (1952) 248
vices are rendered in good faith and with
P.2d 68, 113 C.A.2d 107.
reasonable prudence. discretion and intelli.
Where will created trust of specific lega-
gence. In re Bissinger's Estate (1963) 28
cy, with amoral thereof and accumulations
CaLlIptr. 217, 213 C.A.2d 831.
to be paid to beneficiary when she reached
Generally, trustee's violation of equitable
age of 26, when executor who was also
duty, whether fraudulently or through neg-
trustee had failed to transfer corpus to
ligence, mere oversight or forgetfulness, is
himselr an trustee or to invest same as
breach of trust, and trustee may be cdurged
required by this section, and estate was not
ho.un.uae—:2 331
2261 TRUSTS FOR THIRD PERSONS
Note 25
distributed prior to time for distribution to
beneficiary of trust, 7 per cent interest due
upon corpus for failure to invest would be
allotted 4 per cent against estate and the
remaining 3 per cent against trustee as
such. In re Prior's Estate (1062) 244 P.2d
697, Ill C.A.2d 464.
Where will created trust of specific lega-
cy, with amount thereof with accumulations
to be paid to beneficiary when site reached
age of 26. duties of trustee. who win also
executor commenced upon death or testa.
- tor, and failure of executor to transfer fund
.to himself astrustee could not absolve him
of his duties anti reslmnsibilities as trustee
Including duty to invest, and could not limit
linhility for interest to 4 per cent rate appli-
cable to executors. Id. "
26. Mortgages
Equity will sanction an investment se-
cured by a second mortgage in a rare case
but only .when security is adequate and
"obnus uof cireuinstancea justify trustee in
Div. 3
making such an investment. Matter of Col.
lins' Estate (1977) 139 Cal.Rplr. 644, 72
C.A.3d 663.
In buying a mortgage for trust invest.
ment. trustee should give careful attention
to valuation of property in order to make
certain that margin of security is adequate;
he must use every reasonable endeavor to
provide protection which will cover risks of
depreciation in property and changes in
price levels and must investigate status of
property and of mortgage as well as Rnan-
tini situation of mortgagor. Id.
-Provision of testamentary trust that "all
discmtions conferred upon the trustee shall
be absolute" did not authorize the trustees
to invest in a junior encumbrance without
ability to protect against the foreclosure of
a senior lien or to refrain from making a
business like investigation of the credit
worth of the borrower or insisting on an
appraisal of the security.given by..the bar.
rower. Id. - --
§ 2262. Interest on failure to invest
INTEREST. SIMPLE OR COMMUND. ON OMISSION TO INVF4r TRUST MONEYS. If a
- trustee omits to invest the trust moneys according to the last section, he
must pay simple interest thereon, if such omission is negligent merely,
and compound interest if it is willful.
(Enacted 1872.)
See West's California Code Forms, Civil.
Probate Court Practice.
45 1690, 1823.
In general I
Cirrumstnnces of the cuse 3
Compound interest 9
Conslruelinn with other laws 2
Dunllon of investment inactivity
Duration of liability for Interest
Good faith 4
Fruitless investments 7
Rale of interest A
Liability or trustee's estate IO
Forms
Library References
Goddard,
Notes a( Decisions
1. In general
Main characteristics of trust relationship
are that Imor retains beneficial Interest in
money paid, trustee payee may not use
q money for own purposes, in absence of
q agreement to contrary, trustee keeps mon-
ey separate from his oven funds, trustee has
duly to invest money and make it pmduc-
five and is entitled to reimbursement for all
expanses properly incurred in performance
of trust, and if money (mid is last without
332
CIVIL CODE
Lar Revision Commission Comment
1988 Repeal
§§ 2228 to 2290.9
Repeated
Former Section 2237 Is superseded by Probate Code
Former Section 2254, which stated a special application of
Sections, 15642(b) (grounds for removal of trustee), 16002
the parol evidence rule, b omitted because thin question Is,
(duty of lovdty), and Men (duty to avoid conflict of
Interest). (IB Cal.LRer.Comm. Reports SOI (1986)1.
governed by the general pool evidence rule. See Code
Cv.Proe. 11876; Prob.Cade
see also 113207 (proof of
Former Section 2134 is superseded by Probate Code
terms of oral trust of personal pmpeny). 118 Ca1.LRev.
Section 16400 (violation of duly is bresch of trust). The
Comm. Reports 501 (1996)1.
Debility for breach is governed by statute. See Prob.Code
The pen of subdivision (a) of former Section 2258 relating
If 16440 (measure of liability for breach of trust), 16441
to control or the trusltt l duties by the trust instrument is
(messere of liability for interest). 113 Cai.LRer.Comm.
fouled In Probate Code Section 16000 (duty to administer
Reports 501, 1790 (1986)1.
Ingest according to trust inatmment) without substantive
Former Section 2233 is superseded by Probnle Code
change. but the characterisation of the duty of the tmslee as
Section 16003 (duty of loyalty) and 16004 (duty to avoid
that of an employee is emitted. The pan of subdivision (a)
conflict of imere ). 118 GLLRev.Comm. Reports 301
relating to modification is superseded by Problem Code
(1986)1.
Section 15404 (modification by settlor and all beneficiaries)
Former Section 2236 Is superseded- by Probate Code
The first Jounce of subdivision (b) is continued in
Sections 16009 (duly to keep trust property separate) and
Probate Code Section 16001 (duty of trustee of revocable
16410 (measure of liability for breach of troll). See also
tmpl) without substantive change. The second sentence is
Pmb.Code 4 16420(e)(3) (redress of breach by payment of
restated in Probate Code Section 16452 (nonllability for
money). [IS CaLl-Rev.Comm. Report, 301 (1986)).
following Instructions under revocable trust) without sub -
Former Section 2237 Is superseded by Probate Code
sumlve change. The reference to a person having a vested
Sections 164A0(e) (measure of liability for breech of Inst)
or contingem Interest in the Imat b replaced by the refer•
and 16441 (measure of liability for interest). See aim
ence in Probate Code Section 16462 to the beneficiary. See
Prob.Code 116620(a)(3) (redress of breach by payment of
Prob.Code 124 ("benefrcinry * defined). The last pen of
money). 118 CsI.LRev.Comm. Reports 501 (1986)1.
the second sentence Feinting to fiduciary obligations of the
Subdivision (a) of former Section 2133 is superseded by
directing party o omitted es, unnecessary. See also Prob.
Probate Code Section 16410 (measure of liability for breach
Code I 10 (singular includes plural). [IS CALRer.Comm.
us
Of trust). Subdivision (b) is trollied in Pmbate Code
Reports 501 (1986)1.
Section 16462fe) (nonliability for following instrsselions on.
The pen of former Section 2239 relating to the effect of
der revocable trust) withal l substantive change See she
compensation no the standard of care is routed in Probate
Pmb.Code 116420(a)(3) (redrew of breach by payment of
Code Section 16041 without sub tantive change The "onl-
monry). [IS Csl.LRev.Comm. Reports Sol (1986)1.
nary care and diligence" standard of former Section 2239 in
Former Section 1239 is rotated in Probate Code Section
superseded by Probate Code Section 16040 (trustee's aterF
16402 limstee's liability to beneficiary for sets of emnalm)
Repo of sere in administering trust). (13 GLLRer.Camm.
with several changes. See the Comment to Prob.Code
Reports SOt (1956) [.
116402 118 C31.LRev.Comm. Repons 301 (1986)1.
Former Section 2260 is superseded by Probate Code
Pans of farmer Section 2240 am superseded by Probate
SmOcan, 13641 (liability of resigning trustee), 15660 (ap-
Code Sections 13620 (ectivns by connstm) and 16200
Pointment of trustee, to fill veeaney), 16" (duly to admin-
(powen subject to limitedons in trust). The authority to
later Imst). and t7200(b)(10) (petition for appointment of
make deposits is continued In Probate Cade Section 16239
trustee). [IS CaI.L.Rev.Comm. Repom 501 (1986)[.
(power to deposit securilio in depository) without substan.
The standard of care governing investments and manage•
tlm change. (18 GI.LRev.Comm. Reports 301 (1986)).
Ment of Inst prapeny provided by subdivision (a)(0 of
Former Section 2243 in superseded by Probate Code
former Section 2261 is restated in Probate Code Section
Section 18100 (protection m third person dealing with trust.
16040(6) without subsuntive change The authority to
roe). See else Pmb.Code 1 15003 (consimcdve and resulting
acquire "every kind of property" Is restated in Probate Code
nese uneffected). (18 GLLRev.Ccmm. Report,301
Sections 16223 (power to invest and 16226 (power to
(1986)1.
acquire property). See also Prob.Code If 62 ("property"
Former Section 2244 is superseded
pe by Probate Code
defined), 16200 (general powers of trustee include powers of
Section 181
e118 of property delivered to
prudent person). Subdivision (8x2) of former Section 2261
a on).(fiPP
third person). [IB GI.LRev.Comm. Reports 301
501
la restated in Probate Code Section 16040(c) without sub.
(1
(1966)1.
stantive chane See also Prob.Code 16000
8 • I (general
Former Section i) superseded Probate Code
duties of nmst" subject to corstrol by Iran, lnstmmem).
defe
defined). The provision refiling
io the
Section 32 title
The standard of care provided in the lest hof of the that
in
rating of title in the trustee u viol continued See the
a
#^tens of (b) is superseded by Probate Code
Comment to former Section 363. (19 GI.LRev.Comm.
40 (tvision
Sections 16040 (Imstec's standard of vire in administering
Reports 501 (1986) ).
Imst) and 16200 (esemise of powers subject to limiudam in
Farmer Section 2231 is su perseded by Probate Code
trust). See also Prob.Code 116220 (power to collect and
hold property) The authority to retain in nmtt at
Sections 15200-15207 (crcat(^n of wt,) 15600 (amepteme
Of treat by trustee), and 164I0(s7(I) (beneficiary may nom•
property
Its inception or Into acquired punuem to proper authority
Pet puatee to perform duties), jig CALRev.Comm. Ra
Is routed in Section 16009(b) u an esveptiun to the general
duty to dispose of improper investments. The second sen -
porta jet (1986) 1,
tense of subdivision (b) Is superseded by Probate Code
Former Section 2252 Is omitted as unnecessary. jig
Section 16220 (power to hold properly in which (main 6
CaLl-Rer.Comm. Reports 501 (1996)1.
Interoted). See oto Pmb.Code 162 ("property" defined).
Former Section 2253 is superseded generally by probate
Subdivision (c) Is superseded by Probale Code Sections
Code Sections 13200 (methods of costing lust) 0201
16200 (eaerolse of powers subject to limitations in trust) end
(intention to create torn), and 16000 (duly to administer
16223 (power to make deposits) See aim PteRCode
twat. [I8 GI.LR".Comm. Report, 301 (1986)1.
116201 (power of court to relieve treat" from rerlrinfens).
Additions or changes Indicated by underline: deletions by asterisks < a a
7
EXHIBIT B
DESCRIPTION OF INVESTMENTS
The Redevelopment Agency of the City of Azusa's investments are placed in those securities as
outlined below; the balance between the various investment instruments may change in order
to give the Redevelopment Agency the best combination of safety, liquidity and high yield.
Surplus funds of local agencies may only be invested in certain eligible securities. The Agency
invests only in those allowable securities under the State of California statutes (Government
Code Section 53601, et seq).
Certificates of Deposit
Certificates of deposit allow the Agency 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 Agency 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 Agency's advantage to waive this collateral requirement for the first
$100,000 because the Agency 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 Agency Investment Fund
Local Agency Investment Fund of the State of California offers high liquidity because deposits
can be wired to the City/Agency checking account in 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 $10,000,000 for any agency. It offers
high liquidity because deposits can be converted to cash in 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 via a check or warrant.
The State keeps an amount for reasonable costs of making the investments, not to exceed one-
quarter of one percent of the earnings.
1
_ The interest rates are fairly high because of the pooling of the State surplus cash with the surplus
cash deposited by local governments. This creates a multi -billion dollar money pool and allows
diversified investments. In a high interest rate market, we do better than LAIF. But in times
" of low interest rates, LAIF yields are higher.•
U.S. Treasury Securities
U.S. Treasury securities are highly liquid in addition to being considered the safest of all
investments.
U.S. Treasury Bills are direct obligations of the United States Government. They are
issued weekly with maturity dates up to one year. They are issued and traded on a
discount basis and the interest is figured on a 360 day basis, actual number of days.
They are issued in amounts of $10,000 and up, in multiples of $5,000. They are highly
liquid security.
U.S. Treasury Notes are direct obligations of the United States Government. They are
issued throughout the year with maturities of 2, 3, 4, 5, 6, 10 years. Notes are coupon
securities paying interest every six months. The Agency will not invest in notes having
maturities longer then five years.
°Federal Agency Securities -
Federal Agency securities are highly liquid and considered riskless. Federal Agency issues are
guaranteed directly or indirectly by the United States Government. All agency obligations
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.
Some other federal agency issues are Federal Intermediate Credit Banks Debentures
(FICB), Federal Farm Credit Bank (FFCB), Federal Land Bank Bonds (FLB), Small
Business Administration Notes (SBA's), Government National Mortgage Association
Notes (GNMA's), Tennessee Valley Authority Notes (TVA's) and Student Loan
Association Notes (SALLIE MAE's). These investments will occasionally be used.
F
Negotiable Certificate of Deposit
Negotiable certificates of deposit are high grade instruments,.paying a higher interest rate than
_.:. Jcgular-.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 financial institution,
bank or savings and loan, bought at par value with 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 lots 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.
Bankers Acceptances
_. Bankers Acceptances are frequently the highest in yield, are safe investments and are highly
liquid.
Bankers acceptances are a short-term credit arrangement to enable businesses to obtain funds to
finance commercial transactions. They are time drafts drawn on a bank by an exporter or
importer to obtain funds to pay for specific merchandise. By its acceptance, the bank becomes
primarily liable for the payment of the draft at its maturity. An acceptance is a high grade
negotiable instrument.
Acceptances are purchases in various denominations for 30, 60 or 90 days but no longer than
270 days. The interest is calculated on a 360 day discount basis similar to Treasury Bills.
Local agencies may not invest more than forty -percent of their surplus money in bankers
acceptances.
Commercial Paper
Commercial paper allows the investment of large amounts of money for one to seven days at
rates higher than we can earn from our savings account. 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. Commercial paper is issued by
corporations such as Shearson -American Express, International Business Machines (IBM) and
Pacific Gas and Electric Company, etc.
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. Purchases of eligible commercial
paper may not exceed 180 days maturity nor exceed thirty percent of the local agency's surplus
funds.
_- __ .Passbook Savings or Money Market Account
:. Passbook savings account allows us to transfer money from checking to savings and earn short-
term on odd amounts of money which are not available for longer investment.
-.-The savings account is similar to an inactive deposit except not for a fixed term. The interest
rate is much lower than CD's, but the savings account allows flexibility. Funds can be deposited
and withdrawn according to daily needs.
Las Angeles County Pooled Fund
Los Angeles County Pooled Fund is similar to the State of California Local Agency Investment
Funds. The County fund provides protection, liquidity and higher than market rates for short-
term securities.
The County Pooled Fund is similar to the State of California Local Agency Investment Fund
(IMF). Los Angeles County has an existing pooled fund with current assets of $3.5 billion
serving school districts and other special districts. This pooled fund is managed by the County
Treasurer and interest is competitive to money market rates. There are no restrictions to number
of transactions or dollar amount of deposits. The funds deposited by a local agency in the
County Pooled Fund cannot be attached by the County.
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 credited to the
account and reinvested. The County keeps an amount for reasonable administrative costs of the
pool. The Los Angeles County Treasurer has started the range of administrative costs is 14 to
18 basis points (approximately 0.14% to 0.18% of the pool fund average daily balance).
Mutual Fund
Mutual fund is another authorized investment allowing the Agency 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 by-laws to the same investments as the local agency. These investments are Treasury
issues, Agency issues, Bankers Acceptance, Commercial Paper, Certificates of Deposit, and
Negotiable Certificates of Deposit. The quality rating and percentage restrictions in each
investment category applicable to the local agency also applies to the Mutual Fund.
A further restriction is that the purchase price of shares of the mutual funds shall not include any
sales commission. Investments in mutual funds shall not exceed fifteen percent of the local
agency's surplus money.
4
ureha�e Aareemen
Another authorized investment for cities is repurchase agreements. Repurchase agreements are
purchases of securities by the Agency 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 Agency by book entry, physical delivery or a third -party custodial agreement. Transfer
of the underlying securities to the counter -party may be used for book entry delivery.
9
EXHIBIT C
LIST OF THE PRIMARY GOVERNMENT SECURITIES DEALERS
REPORTING TO THE MARKET REPORTS DIVISION OF THE
FEDERAL RESERVE BANK OF NEW YORK
Bank of America NT & SA
Bankers Truct Company
Bear, Stearns & Co., Inc.
Carroll McEntee & McGinley Incorporated
Chase Manhattan Government Securities, Inc.
Chemical Bank
Citibank, N.A.
Continental Illinois National Bank and Trust Company of Chicago
Daiwa Securities America, Inc.
Dean Witter Reynolds, Inc.
Discount Corporation of New York
Donaldson, Lufxin & Jenrette Securities Corporation
Drexel Burnham Lambert Government Securities, Inc.
The First Boston Corporation
First Interstate Capital Markets, Inc.
First National Bank of ChicagoGoldman, Sachs & Co.
Greenwich Capital Markets, Inc.
Harris Trust and Savings Bank
E.F. Hutton & Company, Inc.
Irving Securities, Inc.
Kidder, Peabody & Co., Incorporated
Kleinwort Benson Government Securities, Inc.
Aubrey G. Lanston & Co., Inc.
Manufacturers Hanover Trust Company
Merrill Lynch Government Securities, Inc.
Midland -Montagu Government Securities, Inc.
J.P. Morgan Securities, Inc.
Morgan Stanley & Co., Incorporated
Nomura Securities International, Inc.
Paine Webber Incorporated
Wm. E. Pollock Government Securities, Inc.
Prudential-Bache Securities, Inc.
Refco Partners
L.A. Rothschild, Unterberg, Towbin, Inc.
Salomon Brothers, Inc.
Security Pacific National Bank
NOTE: This list has been compiled and made available for statistical purposes only and has
no significance with respect to other relationships between dealers and the Federal Reserve
Bank of New York. Qualification for the reporting list is based on the achievement and
maintenance of reasonable standards of activity.
Market Reports Division
Federal Reserve Bank of New York
December 11, 1986
RESOLUTION NO 94-R33
RESOLUTION OF THE BOARD OF DIRECTORS OF THE REDEVELOPMENT
AGENCY OF THE CITY OF AZUSA RE -ADOPTING ITS 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 Man Rule"; 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 re -adopt its Investment Policy
attached hereto as Exhibit A and instsructs the Agency Treasurer to be guided by it in carrying
out the duties of his office for the benefit of the Redevelopment Agency. .
ADOPTED AND APPROVED this 5th day of JULY, 1993.
CHAIRMAN
I 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 5th day of JULY, 1994 by the following vote of Directors:
AYES: BOARD DIRECTORS: HARDISON, MADRID, NARANJO, BEEBE
NOES: BOARD DIRECTORS: ALEXANDER
ABSENT: BOARD DIRECTORS: NONE