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RESOLUTION NO. 5857
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
HUNTINGTON BEACH ACKNOWLEDGING THE RECEIPT AND
FILING OF THE ANNUAL STATEMENT OF INVESTMENT
POLICY FOR THE YEAR 1988
WHEREAS, in 1984 California Government Code § 53646 amended
to require the treasurer of a local agency to render an annual
statement of investment policy to the legislative body, and a
monthly report containing specified information regarding
investments and deposits to the chief executive officer and
legislative body; and
Such amendment is mandatory for all local agencies; and
Pursuant to Title 5, Division 2, Chapter 4, Article 1 ,
commencing with California Government Code S 53600 et. seq. , the
City Treasurer declares the annual statement of investment
policy for the City of Huntington Beach to be as follows:
1. Practices and Policy Statement - The investment
practices and policies of the City of Huntington Beach are based
upon state law and prudent money management . The primary goals
of these practices are:
A. To assure compliance with all Federal , State and
local laws governing the investment of monies
under the control of the City Treasurer .
B. To protect the principal monies entrusted to this
office.
C . To generate the maximum amount of investment
income within the parameters of prudent risk
management .
The City of Huntington Beach operates its pooled idle cash
investments under the Prudent Man Rule (California Civil Code §
2261 et . seq. ) which states that "investments shall be made with
judgment and care, under circumstances then prevailing, which
persons of prudence, discretion, and intelligence exercise in
the management of their own affairs, not for speculation, but
for investment, considering the probable safety of their capital
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as well as the probable income to be derived. " This affords a
broad spectrum of investment opportunities as long as the
investment is deemed prudent and is permissible under currently
effective state legislation and other imposed legal
restrictions . The City Treasurer will strive to maintain the
level of investment of idle funds as close as possible to 100
percent . Consistent with this aim, investments are made under
the terms and conditions of California Government Code § 53600
et. seq. Criteria for selecting investments and the absolute
order of priority are:
A. Safety;
B. Liquidity; and
C . Yield
2 . Types of Instruments - Under the provisions of the
City's investment policy and in accordance with the California
Government Code § 53601, the City may invest in the following
types of instruments:
A. Bankers acceptances, maximum 40% of portfolio.
Maximum term 270 days .
B. Negotiable certificates of deposit, maximum 30% of
portfolio. Maximum term five (5 ) years .
C. Commercial paper, maximum 30% of portfolio.
Maximum term 180 days .
D. Bonds issued by the City.
E . Obligations of the United States Treasury.
F . Federal Agency Obligations of:
Federal Intermediate Credit Bank (FICB 's)
Federal Land Bank (FLB's)
Federal Home Loan Bank (FHLB' s)
Federal National Mortgage Association (FNMA's)
Small Business Administration (SBA's)
Government National Mortgage Association
(GNMA' s)
Tennessee Valley Authorities (TVA's)
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Student Loan Association Notes (Sallie Mae ' s)
G. Obligations of the State of California or of any
local agency within the State of California:
The Local Agency Investment Fund (LAIF) is a
special fund of the California State Treasury
through which any local government may pool
investments . The City may invest up to $5 ,000,000
per agency in this fund. Currently the City has
established two ( 2) agency funds: The City of
Huntington Beach General Funds, and the City of
Huntington Beach Redevelopment Agency Funds .
Investments in LAIF are highly liquid and may be
converted to cash within 24 hours. Investments
with LAIF are secured by the full faith and credit
of the State of California .
H. Repurchase Agreements
I . Reverse-Repurchase Agreements
J. Medium-Term Corporate Notes, maximum 30% of
portfolio . Maximum term five (5 ) years .
K. Mutual Funds, maximum 15% of portfolio.
L . Time Deposits (non-negotiable certificates of
deposit ) .
3 . Collateral for Deposits - Under provisions of the
California Government Code, California banks and savings and
loan associations are required to secure a city 's deposits by
pledging government securities with a value of 110 percent of a
City 's deposit . California law also allows financial
institutions to secure City deposits by pledging first trust
deed mortgage notes having a value of 150% of City 's total
deposits .
The City Treasurer, at his discretion, may waive the
collateral requirement for deposits which are fully insured up
to $100,000 by the Federal Deposit Insurance Corporation or the
Federal Savings and Loan Insurance Corporation .
4. Unauthorized Investments - Investments not described
herein, including but not limited to, common stock, purchasing
on margin or other speculative issues deemed imprudent are
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prohibited from use in this portfolio.
5. Swapping of Securities - A swap is the movement from
one security to another and may be done for a variety of
reasons, such as to increase yield, lengthen or shorten
maturities, to take a profit, or to increase investment quality.
6 . Portfolio Adjustments - Should an investment
percentage-of-portfolio limitation be exceeded due to an
incident such as fluctuation in portfolio size, the affected
securities may be held to maturity to avoid losses . When no
loss is indicated, the Treasurer shall consider reconstructing
the portfolio basing his decision in part on the expected length
of time the portfolio will be unbalanced.
7 . Qualified Dealers - The City shall transact business
only with banks and savings and loans, and with registered
investment securities dealers . Investment staff shall
investigate dealers which wish to do business with the City in
order to determine if they are adequately capitalized and make
markets in securities appropriate to the City 's needs .
8 . Delegation of Authority - Within the City Treasurer 's
office, the responsibility for the day to day investment of the
City funds is delegated to the Senior Deputy City Treasurer in
the absence of the City Treasurer .
9 . Policy Review - This investment policy shall be
reviewed at least annually to ensure its consistency with the
overall objectives of preservation of principal, liquidity, and
return, and its relevance to current law and financial and
economic trends.
In accordance with this resolution of the City Council
of the City of Huntington Beach, the City Treasurer is
responsible for investing the unexpended cash in the City
Treasury, except for the employee ' s retirement funds, which are
administered separately and those funds which are managed
separately by trustees appointed under indenture agreements.
All financial assets of all other funds shall be administered in
accordance with the provisions of this policy.
The monies entrusted to the City Treasurer will be an
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actively managed portfolio. That is, the City Treasurer and
staff will observe, review, and react to changing conditions
that affect the portfolio . This shall be viewed as a full-time
responsibility by the City Treasurer and staff .
NOW, THEREFORE, BE IT RESOLVED by the City Council of the
City of Huntington Beach that the foregoing annual statement of
investment policy, as required by California Government Code §
5364 (a) , and submitted by the Huntington Beach City Treasurer,
is accepted and approved.
PASSED AND ADOPTED by the City Council of the City of
Huntington Beach at a regular meeting thereof held on 4th
day of April , 1988 .
Mayor
ATTEST: APVOVED AS TO FORM:
City Clerk Cfty Att ryley
City Treasurer City Administrator
rf
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Res. No. 5857
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss:
CITY OF HUNTINGTON BEACH )
I, ALICIA M. WENTWORTH, the duly elected, qualified City
Clerk of the City of Huntington Beach, and ex-officio Clerk of the
City Council of said City, do hereby certify that the whole number of
members of the City Council of the City of Huntington Beach is seven;
that the foregoing resolution was passed and adopted by the affirmative
vote of more than a majority of all the members of said City Council
at a regular meeting thereof held on the 4th day
of - April 19 88 by the following vote:
AYES Councilmen:
Kelly, Green, Finley, Erskine, Mays, Winchell, Bannister
NOES: Councilmen:
None
ABSENT: Councilmen:
None
City Clerk and ex-officio Clerk
of the City Council of. the City
of Huntington Beach, California
5857