HomeMy WebLinkAbout1990 Investment Policy - City Treasurer - Resolution 6186 - m
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REQUEST FOI, CITY COUNCIL ACTK
Date July 11, 1990
Submitted to: Mayor and City Council APPROVED BY CITY COUNCIL
Submitted by: Donald Watson - City Treasurer di� �_ /fie 19
Prepared by: Patricia Lovelace - Senior Deputy Treasurer
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Subject: City Treasurer Investment Policy Resolution for VU
Consistent with Council Policy? Yes [ ] New Policy or Exception
Statement of Issue, Recommendation,Analysis, Funding Source,Alternative Actions,Attachments:
Statement of Issue
Per California Government Code Section 53646 the Treasurer of the local agency
shall render an annual statement of investment policy to the legislative body for
acceptance.
Recommendation
The attached Resolution be adopted as the Investment Policy for the City
of Huntington Beach for the year 1990.
Analysis
The attached-Resolution for 1990 is similiar to prior Resolutions except it
acknowledges some changes in investment codes concerning maximum dollar amounts
allowed in the State of California Local Agency Investment Fund. As always, of
paramount importance in the selection of investments is safety, liquidity and yield.
Funding Source
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None. x
Alternative Actions
N J,
Do not approve Resolution. -a 'o
Attachment n
Resolution. c=
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RESOLUTION NO. 6186
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 1990
WHEREAS, in 1984 California Government Code §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 1,
51 commencing with California Government Code §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
r 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
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et . seq. ) which states that "investments shall be made with judgment
and care, under circumstances then prevailing, which persons of
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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 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 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 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 .
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The City may invest in the following :
1 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 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)
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
$10, 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 .
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H. Repurchase Agreement
-� I . Reverse-Repurchase Agreements shall be utilized only
with specific council approval on each transaction.
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
hs 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
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percentage-of-portfolio limitation be exceeded due to an incident
such as fluctuation in portfolio size, the affected securities may
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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 . Oualified 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 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
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the City Treasurer and staff .
r-1 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 the 16th day
of July 1990 .
.aow
Mayor '
ATTEST: APPROVED AS TO FORM:
City Clerk Q,ity. AttorneyQqZ--v�, .7_,'�c�b
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REVIEWED AND APPROVED: INITIATED AND APPROVED:
City Administrator City Treasurer
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Res. No. 6186
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 16tr, day
of July 1990 by the following vote:
AYES: Councilmembers:
MacAllister, Winchell, Green, Mays, Bannister, Silva, Erskine
NOES: Councilmembers:
None
ABSENT: Councilmembers:
None
City Clerk and ex-officw Clerk
of the City Council of the City
of Huntington Beach, California
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REQUEST FOR CITY COUNCIL ACTION - `�
Date June 18 , 1990
Submitted to: Mayor and City Council
y: y �C �� ,
Submitted b Donald L . Watson, City Treasurer ='
Prepared by: Donald L . Watson, City TreasurerC/='��G� ~
Subject: BANKING SERVICES SANWA BANK LActionsrAtta
OVED BY C Y IL
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Consistent with Council Policy? [X] Yes [ ] New Policy or ExceptLL�xx
Statement of Issue, Recommendation,Analysis, Funding Source,Alternative ments:
STATEMENT OF ISSUE :
Every three years a bid is required for banking services . Our present
contract is with Sanwa Bank and expires June 30 , 1990 .
RECOMMENDATION :
Approve Sanwa Bank to provide the City with banking services for the period
beginning July 1 , 1990 through June 30 , 1993 .
ANALYSIS :
A letter of solicitation was sent to all thirty -two banks and savings and
loans who have locations in the City of Huntington Beach . A general outline
of services required was included and they were asked to respond if they
wanted to bid . Four institutions responded and requested a bid package .
Those four were Sanwa Bank. Union Bank, First Interstate Bank, and Bank of
America . Of these four , only Sanwa Bank and Bank of America su.bmt.tedformal
responses . The formal responses were analyzed and a meeting was held with
each bidder to clarify any questions and to finalize the cost of required
and optional services .
The charge to the City will be based on actual volumes . The bids were based
on estimated monthly volumes . The bids were :
Sanwa B OF A
Required $5 , 285 . 00 $6 , 615 .00
Optional 764 . 00 756 .00
Total $6 ,049 . 00 $7 , 371 .00
The optional services include partial reconcilement , zero balance accounts
and on-line tracking . In addition, both provide credit card processing
services .
FUNDING SOURCE :
The cost of banking services will be offset through the use of compensating
balances . Both banks use the Treasury Bill for determining the earnings
credit rate .
ALTERNATE ACTION :
Award contract to the alternate bidder .
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