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HomeMy WebLinkAboutReso 182-05 AnnualInvestPolicy RESOLUTION NO. 182 - 05 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN * * * . « * * * * ADOPTING A REVISED POLlCY FOR CITY INVESTMENTS WHEREAS, it is prudent for the City to place investments of public funds in accordance with an adopted policy; and WHEREAS, the most recent investment policy was adopted by the City Council on October 19, 2004; and WHEREAS, the City's investment policy requires that it be reviewed by the City Council on an annual basis, at a public meeting; and WHEREAS, Staft'recommends that the policy be modified to include revisions in accordance with current State laws regulating investments that require the policy to reflect the following changes; I. For Bankers Acceptance, that no more than 30% is with anyone commercial bank, 2. For Purchases of Commercial Paper, that it be rated A-I by Standard and Poors, P-I by Moody's and F -I by Fitch, that it be no more than 25% of the total portfolio (no more than 10% with any one corporate issuer), and that it have a maturity of no more than 270 days, and; 3. That any revisions to the City investment policy be implemented by the second Council meeting in September. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Dublin does hereby adopt the Statement ofInvestment Policy, attached hereto as Exhibit A, and by reference made a part hereof BE IT FURTHER RESOLVED that this action shall supersede the content of Resolution 205-01, which previously set forth an investment policy. PASSED, APPROVED AND ADOPTED this 20'" day of September, 2005. AYES: NOES: ABSENT: Councilmembers Hildenbrand, McCormick, Oravetz and Zika, and Mayor Lockhart None None ABSTAIN: None ~ Mayor Janet Lockhart ATTE:1 ~ U'l....... ..........- Fawn Holman, City Clerk G:\CC-MTOS\2005,-qtr3\Sep1.\09-2o.0:5\f\1!IO t82-05 investft1cnt poli(,yDOC (Item 4.16) Page 1 of I Qt1{)lJ STATEMENT OF INVESTMENT POLlCY FOR THE CITY OF DUBLIN L INTRODUCTION The purpose of this document is to identifY various policies and procedures that enhance opportunities for a prudent and systematic investment poHcy, This documcnt also serves to organizc and formalize investment related activities. II. SCOPE It is intcnded that this policy cover all funds and investment activities undcr the direct authority of the City of Dublin, as set forth in the State Govcrnment Code, sections 53600 et seq.. Cash held by the City shall bc pooled in order to more effectively manage City cash resources. All pooled funds are accounted for in the City's Comprehensivc Annual Financial Report and include: Funds General Fund Special Rcvenuc Funds Capital Project Funds Internal Servicc Funds Enterprise Funds Agency Funds Excludcd funds are those held with a fiscal agent. They may have their own specific "permitted investments" as shown in their bond covenants. m. OBJECTIVES General: The overall obligation of thc City Treasurer is to maintain sufficient cash to pay existing debts. It shall be the policy of the City to invest the maximum amount of idle cash available to the City in order to generate interest earnings, which supplement other City revenuc sources. The investment program shall be subject to the following parameters, which are prescntcd in their order of importance: (1) Safety: The first priority for the investment program shall be the safety of thc principal amount invested. Speculation or risky investment media will be avoided, even though high interest rates might be offered. Protection and preservation of municipal investments on behalf of the citizens of the community are of primary importance. The following list provides examples of investments which demonstrate safety. . Treasury and Federal agcncy paper and repurchase agreements are the highest quality investment available in terms of safety and 1iquidity. The City shall not directly enter into repurchase agreements, although this investment tool may be used by authorized pooled investments which are managed by others (i.e. LAIF, CAMP, Mutual Funds, etc). . Certificates of deposit (negotiable and nonnegotiable) and savings accounts must be insured by FDIC, SATF, NCUI, or collatcralized at 110% of market value with U.S. Treasury and Agency Securities. 1 EXHIBIT A ~ PbLl' · Bankers acceptances must be secured by the inevocable primary obligation ofthc accepting domestic bank. · The Local Agency Investment Fund (LAlF) shall be considered as a proper investment for safety inasmuch as the State Treasurer of California is the State Elected Officcr rcsponsiblc for tbat investment portfolio. · The California Asset Management Program (CAMP) sbaJ] be considered as a proper investment for safety inasmuch as it is a profcssionally managed money markct portfolio rated AAAm by Standard and Poors and creatcd for California Public Agencies. · Commercial paper of "prime" quality !Tom a domestic corporation having total assets in excess of five hundred million dollars and ratings of A-I by Standard and Poors, P-I by Moody's and F-I by Fitch rating or higher shall be considered as a safe investment. Only money markd and mutual fund accounts that have 100% of thcir assets invested in Treasury Federal agency paper sbaJ] be considered safe. This list has been presented for descriptive purposes only and actual investments shaJ] be in accordance with authorized Sections of the Government Code. The following summary of maximum percentage limits and maturities allowcd by State Law is established for the City's investment portfolio: · Investmcnt T e U.S. Treasu fA enc Securities Certificates of d osit Bankers acceptanccs Maximum % of Portfolio 100% 30% 40% (30% in anyone commercial bank 100% 25% (10% in anyone cor orate issuer 100% 20% 20% (10% in anyone mutual fund 5 Years NlA NfA Maximum Maturity See Scction VI Below) 5 Years 5 Years 180 days LAIF f CAMP Commercial paper NfA 270 days CA Local A enc Bonds Mone Market FUl1ds U.S. Treasury Mutual Funds (2) Liquidity: An adequate perccntagc of the portfolio should be maintained in liquid short- tcrm investments that can be convertcd to cash if necessary to meet disbursement requirements. Since all cash requirements must be anticipated, investments in securities with active secondary or resale markets is highly recommended. Emphasis should be on marketable securities with low sensitivity to market risk Maturities of investments for which there is limited opportunity for resale (i.c. certificates of deposit held by banks and savings and loans) shall be staggered to maximize liquidity. 2 EXHIBIT A tft;b lð Many of the investmcnt cxamples identified in paragraph #1 above demonstrate the type of investments which demonstrate liquidity. (3) Yield: Yield should become a consideration only after the bask requirements of safety and liquidity have been met. The City intends to hold its investments to maturity in order to maximize its return on its investments and minimize its exposure to potential losses resuhing from temporary declincs in the market values of its investments. Ahbough thcrc may bc opportunities to resell securities, this type of regular trading is not considered consistent with the City's goals. (4) Diversification: The investment portfolio will be diversified to avoid incurring unreasonable and avoidable risks regarding specific security types or individual financial institutions. This shall also conform with applicable sections ofthe Government Code. (5) Prudence: The agency adheres to the guidance provided by California Civil Code Section 2261 related to the "prudent person rule." The cxercise of investment decisions in accordance with this policy shall bc made with judgment and care and shall consider the probable safety of the invested capital as weU as the probable income to be derived. (6) Public Trust: All participants in the investment process shaU act as custodians of the public trust. Investment officials shaU recognize that thc investment portfolio is subj ect to public review and evaluation. The overall program shall be designed and managcd with a degree of professionalism that is worthy of the public trust. Thus cmpIoyees and officials involved in the investment process shall refrain from personal business activity that conflicts with proper execution of the investment program, or impairs their abiJity to make impartial investment decisions. Additionally the City Treasurer and the Deputy Treasurcr shall file applicable financial disclosures as required by the Fair Political Practices Commission (FPPC). In a diversificd portfolio it must be recognized that occasional measured losses are inevitable, and must be considered within the context of the overall portfolio's investment return, provided that adcquate diversification has been implemented. N. DESIGNATION OF CITY TREASURER TO CARRY OUT INVESTMENT DUTIES As authorized in Govcrnment Code Section 53607, the City Treasurer and/or any duly appointed Deputy City Treasurer is/are hereby authorized to invcst, rcinvest, sell, or exchange monies witbin the City Treasury. The Administrative Services Director shall be designated as the City Treasurer and the City Manager and/or Finance Manager shall be designated as the Deputy City Treasurer. Quarterly reports of said transactions, if any, shall be provided to the City Council. V. INVESTMENT INSTRUMENTS Thc authorizcd investmcnts to be made by the City Treasurer shaU be in accordance with Sections 53601 and 53635 of the California Government Code as they may be amended. Reporting of all transactions shall occur as noted in Scction VIII below. The City Treasurer / Deputy City Treasurer shall not directly invest any monies in Repurchase Agreements or Rcverse Repurchase Agreemcnts unless this policy is amended by the City Council. In accordance with Govemment Code Section 53601.6 (including as it may be furthcr amended) no investment shall be made directly in any of the following instruments: inverse floaters, range notes, or interest only strips derived from a pool ofmortgagcs (i.e. Collateralized Mortgage Obligations). 3 EXHIBIT A 5~0 VI. TERM OF INVESTMENTS Maturities of investments will be selected based on liquidity requirements to minimize interest rate risk and maximize earnings. Current and expected yields will be analyzed and the portfolio will be invested accordingly. As specified in Govcrnmcnt Code Section 53601, the Citv Council must expressly authorize tbe . investment of funds that mature in excess of five years. Placement of such investments cannot occur until three months has lapsed from thc date of authorization. The selection of maturities by the Treasurer shall also take into consideration any other policies adopted by the City Council such as an adopted policy on the Use and Management of General Fund Reserves. VII. INTERNAL CONTROLS City Treasurer and City Staff shall devclop and impIemcnt such administrative procedures and internal controls which are considered prudent, given the size of the organization and the complexity of investments. The controls are designed to prevent losses of public funds arising rrom rraud, error or imprudcnt actions by employees and officers of the City. Existing procedures require all wire transfers involving investments to be fully documentcd and approved by the City Treasurer and Deputy City Trcasurer. Monthly rcconciliations to bank statements and the related general ledger accounts is conducted to ensure proper handling of all investment transactions. An independent analysis by au external auditor shaU be conducted periodically to review internal controls, account activity and compliance with policies and proccdures. VIII. REpORT INFORMATION The Treasurer shall report to the City Council on a quarterly basis within 30 days following t\ic cnd of the quarter specific information related to the City investments. At a minimum the report shall include the following: a) Type ofInvestmcnt b) Issuer c) Date of Maturity d) Par and dollar amount invested e) Current Market Value as of the date ofthc report f) Source of the market value information g) A statement of compliance with the investment policy h) A statement as to the ability of the City to meet its expenditure requirements for the next six months In accordance with the Governmental Accounting Standards Board (GASB) Statement No. 31, "Accounting and Financial Reporting for Certain Investments", as of June 30th of cach Fiscal Year the City will report all invcstments with maturity dates in excess of one year at market value in the Comprehensive Annual Financial Report. Any change in the value of the investments will be recognized on an annual basis, as a component of interest income. This reporting change shall bcgin to take effect for the year ending June 30, 1998. IX. SELECTION OF INSTITUTIONS 4 EXHIBIT A LP rt> lp In selecting the financial institutions for the depósit or investment of City of Dublin funds, the City Trcasurcr shall consider the credit worthincss of institutions which are utilized. A1J broker/dealers should be primary dealers regularly reporting to thc New York Federal Reserve Bank. Efforts shall be made to monitor the credit characteristics and financial history throughout thc period in which agency funds are deposited or invested. In the case of securities purchased by or on bebalf of the agency, a third party safekeeping account, who is in no way related to the company who sold the sccurities, shall be maintained in thc name ofthe City of Dublin. X. RISK TOLERANCE As noted, diversification shall be utilized to control risk. No individual investment transaction shall be undertaken which jcopardizes the total capital position of the overall portfolio. All transactions will be executed on a delivery versus payment basis. When practical, a competitive bid process will be used to place all invcstmcnt purchases. XL REVIEW OF INVESTMENT POLICY This policy shall be subject to revicw by the City Council on an annual basis, by the second Council meeting iu September. Any recommended modifications or amendments shall be presented by Staff to the City Council for their consideration and adoption. G:lInvestrnent.linvestment policy,doc 5 EXHIBIT A