HomeMy WebLinkAboutCity Council - 6521 RESOLUTION NO. 6921
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 1993/94
WHEREAS, in 1984 California Government Code Sec. 53646 was 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 statute is mandatory for all local agencies; and
Pursuant to Title 5, Division 2, Chapter 4, Article I, commencing with
California Government Code Sec. 53600 et seq. , the City Treasurer declares the
annual statement of investment policy for the City of Huntington Beach to be
as follows:
I. 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 Sec. 2261 et seq.) which
states that "investments shall be made with judgment and care, under
circumstances then prevailing, which persons of prudence, discretion, and
-1-
intelligence exercise in the management of their own affairs, not for
speculation, but for investment, considering the probable safety of their
capital 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 Sec. 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 Sec.
53601.
The legislative body of a local agency having money in a sinking
fund of, or surplus money in, its treasury not required for the
immediate necessities of the local agency may invest any portion
of the money which it deems wise or expedient in the following;
provided, however, that where this section does not specify a
limitation on the term or remaining maturity at the time of the
investment, no investment shall be made in any security, other
than a security underlying a repurchase or reverse repurchase
agreement authorized by this section, which at the time of the
investment has a term remaining to maturity in excess of five
years, unless the legislative body has granted express authority
-2-
6521
to make that investment either specifically, or as a part of an
investment program approved by the legislative body no less than
three months prior to the investment.
The City may invest in the following:
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 15% of portfolio. Maximum term
180 days; plus additional 15% of portfolio if the
dollar-weighted average maturity of the entire amount does not
exceed 31 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 Nome 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)
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
-3-
6521
$15,000,000 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. The County of Orange Local Agency Investment Pool (COLAIF)
is a special fund of the County of Orange through which any
local city or agency may, with approval of their governing body
and the County Treasurer, deposit excess funds in the County
Treasury for reinvestment by the Treasurer. Investments with
COLAIF are secured by the full faith and credit of the County of
Orange and all investments are made in accordance with
Government Code Sec. 53635.
I. Repurchase Agreement
J. Reverse-Repurchase Agreements shall be utilized only with
specific council approval on each transaction.
K. Medium-Term Corporate Notes, maximum 30% of portfolio.
Maximum term five (5) years.
L. Mutual Funds, maximum 15% of portfolio.
M. 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
-4-
6521
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 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 objective of
-5-
6521
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
4
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 actively managed
portfolio. This 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 Sec. 53646(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 the 7th day of september 1993.
Mayor
ATTEST: APPROVED AS TO FORM:
Cg•� �
City Clerk City Attorney
REVIEWED AND APPROVED: INITIATED AND APPROVED:
City Adminis rator City Treasurer
-6-
6521
Res. No. 6521
STATE OF CALIFORNIA
COUNTY OF ORANGE ss:
CITY OF HUNTINGTON BEACH )
I, CONNIE BROCKWAY, 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 at least a majority of all the members of said City Council
at a regular meeting thereof held on the 7th day
of Se2tember , 1993 by the following vote:
AYES: Councilmembers:
Rnhi to l i 11 P, Bauer, MoUJtJ=Raf-t�rson, win _ el 1 , si Iva, T�i pzig
NOES: Councilmembers:
None . . . . . .
ABSENT: Councilmembers:
Su l l i ya-n
1 y er an ex-offici4yulerk
of the City Council of the- City
of Huntington Beach, California