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HomeMy WebLinkAboutCC RESO 95-53RESOLUTION NO. 95-53 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NATIONAL CITY APPROVING THE CITY OF NATIONAL CITY INVESTMENT POLICY This Resolution was not adopted at the City Council Meeting of April 25, 1995. mNZZ DATE: April 26, 1995 � r Lori Anne Peoles City Clerk RESOLUTION NO. 9 5 - 5 3 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NATIONAL CITY APPROVING THE CITY OF NATIONAL CITY INVESTMENT POLICY WHEREAS, Policy Number 203 of the City Council P•licy Manual provides that the City's investment policy shall be reviewed annual to ensure its consistency with the overall objectives of preservation of principal, li. - idity, and return, and its relevance to current law and financial and economic trends; . nd WHEREAS, the City Treasurer and Director of F. . ance have prepared an Investment Policy, attached hereto as Exhibit "A" and incorp ated herein by reference as if set forth in full; and WHEREAS, said statement is intended to p -.vide guidelines for the prudent investment of the City's temporary idle cash and outli e e the policies for maximizing the efficiency of the City's cash management system; a WHEREAS, the investment goal i to enhance the economic condition of the City while insuring the safety of funds inv: ted. NOW, THEREFORE, BE IT SOLVED that the City Council of the City of National City does hereby approve the Investment Policy attached hereto as Exhibit 11 ♦ " PASSED and ADOP ►' D this 25th day of April, 1995. ATTEST: Lori Anne Peoples, ity Clerk APPROVED . TO FORM: George . Eiser, III City ttorney George H. Waters, Mayor CITY OF NATIONAL CITY INVESTMENT POLICY Page 1 I. OBJECTIVE Investments are the vehicles by which a local government earns a return on its idle cash. Investment returns are available for the general operation of the City and can effectively substitute for higher taxes. The objective of the City's investment program is to maximize the returns on investments while at the same time assuring the safety of invested funds and the availability of funds, when needed, to finance the City's operations. The purpose of this policy is to provide broad guidelines to the officers of this City charged with the responsibility for investment of temporarily idle surplus funds of the City. This Policy, the "Prudent Man Investment Rules" as contained in the California Civil Code, the "Code of Ethics on Professional Conduct" of the California Municipal Treasures Association, and other applicable State and Federal statutes shall govern the carrying out of that responsibility. The Finance Department, subject to review by the City Treasurer, shall be responsible for administering the City's investment program. In furtherance of this responsibility, the Director of Finance and the City Treasurer shall issue and administer detailed Investment Procedures to implement this Investment Policy. II. CRITERIA FOR SELECTING INVESTMENTS The criteria for selecting investments, and the order of priority should be: SAFETY - Safety (risk) involves the possibility losing some or all of the initial invested principal and/or loss of accrued interest. Achieving safety of principal dictates that only the highest quality securities should be considered for investments. LIOUIDITY - Regardless of the level and detail of advance financial planning, some uncertainty regarding the precise time of receipts and disbursements always remains. On occasion, investments may have to be sold prior to maturity in order to raise cash. Since this risk is ever present, investments must be selected with an eye toward liquidity, the ability to be converted into cash without significant risk of loss of expected earnings and/or principal. Ideally, the investment portfolio should be a mix of securities with maturity date so scheduled that the City will be able to pay bills when they are due without selling securities before they mature. EXHIBIT "A" CITY OF NATIONAL CITY INVESTMENT POLICY Page 2 YIELD - The yield of a security is the annual rate earned based on the actual earnings over the period that is held. While the City should attempt to maintain a fully invested position at the highest yield, the criteria for safety and liquidity should be met first. III. ELIGIBLE INVESTMENTS Investments may be made in securities which are permissible investments under the California Government Code, as they now read or may hereafter be amended, from money in the treasury not required for the immediate necessities of the City. The following are the criteria for eligible investments: 1. All investments of the City shall have the City of National City as the registered owner and shall be kept in the custody of the City or by a qualified safe keeping institution. 2. Investments shall be diversified among institutions, types of securities and maturates to maximize safety and yield with changing market conditions. 3. Investment of funds in local financial institutions shall be made only to the extent warranted by the offered yield, liquidity and safety compared to that available from other investments. 4. Investments should have a final maturity of 2 years to reduce any interest rate risk of the fund. 5. No derivatives will be allowed in the fund. 6. Permissible Investments as allowed in Government Codes 53601,53635,53637,53638,53652 and 43653 are as follows: GOVERNMENT OBLIGATIONS consisting of U.S. Treasury and Agency obligations which are issued at the federal level. U.S. Treasury obligations are bills, notes and bonds issued by the Treasury and are direct obligations of the Federal Government. Agency obligations are notes and bonds of Federal Agencies, Government Sponsored Enterprises and International Institutions. Agencies are not the direct obligation of the Treasury but involve federal sponsorship or guarantees. The maximum maturity shall be 2 years with a minimum credit requirement of AAA which all U.S. Treasuries and Agencies are currently rated. The maximum exposure shall be no more than 10% of the portfolio value. CITY OF NATIONAL CITY INVESTMENT POLICY Page 3 BANKER'S ACCEPTANCES is a draft or bill of exchange accepted by a bank or trust company and brokered to investors in the secondary market. The maximum maturity of an issue will be 270 days. Issuers must be at or above the following investment grade from the rating firms of Fitch - Fl, Moody's - P1 (A when applicable), Standard and Poor's - Al (A when applicable), The maximum exposure shall be no more than 5% of the portfolio value. COMMERCIAL PAPER are short-term, unsecured obligations issued by firms in the open market. Commercial paper (CP) is generally backed by a bank credit facility, guarantee/bond of indemnity or some other support agreement. The maximum maturity of an issue shall be 180 days. Issuers must be at or above the following investment grade from one of these rating firms: Fitch - F1, Moody's - P1 (A when applicable), Standard and Poor's - Al (A when applicable). NEGOTIABLE CERTIFICATES OF DEPOSIT are issued by FDIC insured commercial banks and thrift institutions against funds deposited for specified periods of time and earn either a fixed or variable interest rate. The maximum maturity of an issue will be no more than 1 year on new investments. Issuers must be at or above the following investment grade from the rating firms Fitch - CD, or AA, Moody's - P1 or Aa, Standard and Poor's - Al or AA. Issue is limited up to $100,000 with a total maximum exposure at 10% of the portfolio value. IV. NON-DISCRIMINATION The City shall not knowingly make any investment in any institution that practices or supports directly or indirectly through its actions discrimination on the basis of race, religion, color, creed, national or ethnic origin, age, sex, or physical disability. V. ALLOCATION OF INVESTMENT INCOME Investment income shall be allocated to the General Fund, unless otherwise directed by law. Any statutory allocations to restricted funds shall be made in proportion to the ratio of restricted fund balances to total pooled balances. CITY OF NATIONAL CITY INVESTMENT POLICY Page 4 VI. REPORTS The Chief Fiscal Officer/Treasurer is required to annually submit a written investment policy to the legislative body of the City in addition to a monthly Treasurer's Cash Investment Report which shows where all the funds of the City are deposited and invested presented with the following information: 1. Type of investment 2. Institution 3. Date of deposit 4. Date of maturity 5. Amount of deposit 5. Rate of interest 7. Interest received 8. Interest until maturity 9. Current market value Whenever possible, the person doing investing should never be the one who reconciles the bank statements. Third party safe keeping agreements between the City and a third party custodian (Bank or Brokerage) shall be made but the movement of the securities should be strictly controlled by the authorized individuals of the City while custody, the securities of funds cannot be used by the custodian. A written confirmation of investments shall be issued by the seller or purchaser of the security confirming the transaction. Items included in the confirmation are the name of the security (CUSIP number when applicable), interest rate or coupon, maturity date, purchase or selling price, accrued interest if applicable, settlement date and any additional information fully describing the security. Review of activities by outside independent auditors is required to make sure that there is conformity to the investment policy and that reconciliation of the treasurer's accounts has been performed. The auditors should confirm all investment holdings.