HomeMy WebLinkAbout1990-10-30 - AGENDA REPORTS - INVESTMENT POLICY (2)AGENDA REPORT
City Manager Approval
Item to be presentedA
Andrea Daroca
CONSENT CALENDAR
DATE: October 30, 1990
SUBJECT: City of Santa Clarita's Statement -of Investment Policy
DEPARTMENT: Finance Department /VIP
BACKGROUND
This item deals with the investment of temporarily idle or surplus funds of
the City of Santa Clarita in accordance with principles of sound treasury
management in accordance with the provisions of the California Government
Code Sections 53600, et seg., the Municipal Code, guidelines established by
the California Municipal Treasurer's Association and the California Society
of Municipal Finance Officers and this Investment Policy("Policy").
The City Council adopted the Treasurer's Investment Policy by Resolution No.
88-108 on September 22, 1988, and again on October 30, 1989. The treasurer
will annually present the policy to the Council to reaffirm. There are no
recommended amendments or changes to the Policy this year.
Because there will be temporarily idle city cash, this statement of policy
spells out the cash management process and investment of those funds. The
cash management system is designed to accurately monitor and forecast
expenditures and revenues, thus enabling the City to invest funds to the
fullest extent possible. The City will attempt to obtain the highest yield
obtainable as long as investments meet the criteria established for safety
and liquidity. The ultimate goal is to enhance theeconomic status of the
City while protecting its pooled cash. This policy affords the City a broad
spectrum of investment opportunities as long as the investment is deemed
prudent and is allowable under current legislation of the State of
California (Government Code Section 53500 et seg.)
RECOMMENDATION
Staff's recommendation is that the City Council reaffirm the attached
Treasurer's Statement of Investment Policy.
APPROWEP
Agenda Item:
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THE TREASURER OF
CITY OF SANTA CLARITA'S
INVESTMENT POLICY
I. STATEMENT OF OBJECTIVES
Temporarily idle or surplus funds of the City of Santa Clarita shall be
invested in accordance with principles of sound treasury management and
in accordance with the provisions of California Government Code
Sections 53600, et seg., the Municipal Code, guidelines established by
the California Municipal Treasurer's Association and the California
Society of Municipal Finance Officers, and this Investment Policy.
("Policy").
A. Overall Risk Profile
The three basic objectives of Santa Clarita's Investment Program
are, in order of priority:
1. Safety of invested funds;
2. Maintenance of sufficient liquidity to meet cash flow needs;
and
3. Attainment of the maximum yield possible consistent with the
first two objectives.
The achievement of these objectives shall be accomplished in the
manner described below:
1. Safety of Invested Funds
The City shall insure the safety of its invested idle funds
by limiting credit and interest rate risks. Credit risk is
the risk of loss due to the failure of the security issuer or
backer.
Interest rate risk is the risk that the market value
portfolio securities will fall due to an increase in general
interest rates.
a. Credit risk will be mitigated by:
i) Limiting investments to the safest types of
securities;
ii) By prequalifying the financial institutions with
which it will do business; and
iii) By diversifying the investment portfolio so that
the failure . of any one issued or backer will not
place an undue financial burden on the City.
b. Interest -rate risk will be mitigated by:
i) Structuring the City's portfolio so that securities
mature to meet the City's cash requirements for
ongoing operations, thereby avoiding the need to
sell securities on the open market prior to their
maturation to meet those specific needs; and
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ii) Investing primarily in shorter term securities.
C. The physical security or safekeeping of the City's
investments is also an important element of safety.
Detailed safekeeping requirements are defined in Section
III of this policy.
2. Liquidity
The City's investment portfolio shall be structured in a
manner which strives to achieve that securities mature at the
same time as cash is needed to meet anticipated demands.
(Static liquidity). Additionally, since all possible cash
demands cannot be anticipated, the portfolio should consist
largely -of securities with active secondary or resale markets
(dynamic liquidity). The specific percentage mix of
different investment instruments and maturities is described
in Section II of this Policy.
3. Yield
Yield on the City's investment portfolio is of secondary
importance compared to the safety and liquidity objectives
described above. Investments are limited to relatively low
risk securities in anticipation of earning a fair return
relative to the risk being assumed. While it may
occasionally be necessary or strategically prudent of the
City to sell a security prior to maturity to either meet
unanticipated cash needs or to. restructure the portfolio,
this policy specifically prohibits trading securities for the
sole purpose. of speculating on the future direction of
interest rates. Specifically, "when, as an if issued"
trading and open-ended portfolio restructuring transactions
are prohibited.
B. Time Frame for Investment Decisions
The City's investment portfolio shall be structured to provide
that sufficient funds from investments are available every month
to meet the City's anticipated cash needs. Subject to the safety
provisions outlined above, the choice in investment instruments
and maturities shall be based upon an analysis of anticipated cash
needs, existing and anticipated revenues, interest rate trends,
and specific market opportunities. No investment should have a
maturity of more than five (5) years from its date of purchase
without receiving prior City Council approval.
C. Definition of Idle or Surplus Funds
Idle or surplus funds for the purpose of this policy are all City
funds which are available for investment at any one time,
including the estimated checking account float, excepting those
minimum balances required by the City's banks to compensate them
for the cost of banking services. This policy also applies to the
idle or surplus funds of other entities for which the City of
Santa Clarita personnel provide financial management services.
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II. INVESTMENTS
•
This section of the Investment Policy identifies the types of
instruments in which the City will invest its idle funds.
A. Eligible Securities
The City of Santa Clarita operates its temporary pooled idle cash
investments under the.Prudent Man Rule* (Civil Code Section 2261,
et seg). See Exhibit A. This affords the .City a broad spectrum
of investment opportunities as long as the investment is deemed
prudent and is allowable under current legislation of the State of
California (Government Code Section 53600, et seg). (See Exhibit
B for definition of investments.)
• Insured Certificates of Deposit (CD's) of California banks
and/or savings and loan associations, and/or savings banks
which mature in 5 years or less, provided that the City's
investments shall not exceed One hundred Thousand Dollars
($100,000.00) per institution. If the investment exceeds the
insured $100,000.00, the funds are to be collateralized at
110% of the deposit in government securities or 150% in
mortgages.
• Local Agency Investment Fund (State Pool) Demand Deposits
• Securities of the U.S. Government, or its agencies
• Negotiable Certificates of Deposit placed with federal and
state savings and loan associations and federal and state
chartered banks with an office in the State of California
(limited to 30% of portfolio)
• Bankers Acceptances (limited to 40% of portfolio)
• Commercial paper (limited to 30% of portfolio)
• Passbook Savings or Money Market Demand Deposits
• Los Angeles County Treasurer's Investment Pool
• Money Market Mutual Fund (with $1 net asset value)
B. Qualification of Brokers. Dealers, and Financial Institutions
United States Treasury issue transactions will be conducted only
with primary dealers from the list of Government Security dealers
reporting to the Markets Reports Division of the Federal Reserve
Bank of New York (Exhibit C).
* The Prudent Man Rule states, in essence, that "in investing . property
for the benefit of another, a trustee shall exercise the judgment and care,
under the circumstances then prevailing, which men of prudence, discretion,
and intelligence exercise in the management of their own affairs ..."
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C. Collateralization Requirements
Uninsured Time Deposits with banks and savings and loans shall be
collateralized in the manner prescribed by law for depositories
accepting municipal investment funds.
D. Preformatted Wire Transfers
Wherever possible, the City will use preformatted wire transfers
to restrict the transfer of funds to preauthorized accounts only.
When transferring funds to an account not previously approved, the
bank is required to call back a second employee for confirmation
that the transfer is authorized.
E. Notice of Dealers
The City shall annually send a copy of the current edition of the
Policy and its enabling Resolution to all institutions which are
approved to handle City of Santa Clarita investments. Receipt of
the Policy and Resolution, including confirmation that it has been
received by persons handling the City's account, shall be
acknowledged in writing within thirty (30) days.
F. Diversification
Theportfolio should consist of a mix of various types of
securities, issues and maturities.
G. Confirmation
Receipts for confirmation of purchase of authorized securities
should include the following information: trade date, par value,
rate, price, yield, settlement date, description of securities
purchased, agency's name, -net amount due, third party custodial
information. These are minimum information requirements.
H. GASB 3
The Governmental Accounting Standards Board. issued. GASB 3 in
April, 1986, and the local entity's investments must be
categorized into three levels of credit risk as follows:
1. Securities. that are insured or registered, or for which the
securities are held by public units or its agent in the units;
2. Securities that are uninsured and unregistered and are held
by the broker's or dealer's trust department or agent in the
unit's name;
3. Securities that are uninsured and unregistered and are held
by the broker or dealer, or by its trust department or agent,
butnotin the unit's name.
The carrying amount and market value of all types of investments
must be disclosed in total and for each type of investment.
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Governmental Accounting Standards Board 3 exempts mutual funds and
LAIF investments from the mandatory risk categorization.
III. SAFEKEEPING OF SECURITIES
A. Safekeeping Agreement
The City shall contract with a bank or banks for the safekeeping
of securities which are owned by the City as a part of its
investment.portfolio or transferred to the City under the terms of
any repurchase agreements.
B. Handling of City—Owned Securities and Time Deposit Collateral
All securities owned by the City shall be held by its safekeeping
agent, except the collateral for time deposits in banks, savings
banks,_ and savings and loans. The collateral for time deposits in
savings and loans is held by the Federal Home Loan Bank. The
collateral for time deposits .in banks is held in the City's name
in the bank's trust department, (if a safekeeping agreement has
been executed) or, alternatively, in the San Francisco Federal
Reserve Bank.
C. Security Transfers
The authorization to release City's securities will be telephoned
to the appropriate bank by a Finance Department member other than
the person who initiated the transaction. A written confirmation
outlining details for the transaction and confirming the telephone
instructions will be sent to the bank within five (5) working days.
D. Verification of Security
Securities transferred to the City as collateral securing time
deposits which are being held in safekeeping for the City will be
verified in writing and examined on a surprise basis during the
year by the City's independent auditors as part of the City's
annual independent audit.
IV. STRUCTURE AND RESPONSIBILITY
This section of the Policy defines the overall structure of the
investment management program.
A. Responsibilities of the Finance Department
The Finance Department is charged with responsibility for
maintaining custody of all public funds and securities belonging
to or under the control of the City and for the deposit and
investment of those funds in accordance with principles of sound
treasury management and in accordance with applicable laws and
ordinances.
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B. Responsibilities of the Finance Director
The Finance Director is appointed by the City Manager and is
subject to his or her direction and supervision. The Finance
Director is charged with the responsibility for the conduct of all
Finance Department functions, including the custody and investment
of City funds, and the development of procedures to implement this
investment policy. The Finance Director is further responsible
for the duties and powers imposed by the general laws of the State
of California upon City Treasurer, City Assessors and City Tax
Collectors.
C. Responsibilities of the Citv Manaaer
The City Manager is responsible for directing and supervising the
Director of Finance. He or she is responsible further to keep the
City Council fully advised as to the financial condition of the
City.
D. Responsibilities of the City Council
The City Council shall consider and adopt a written investment
policy. As provided in that policy, the Council shall receive,
review, and accept monthly investment reports.
E. Responsibilities of the Investment Committee
There shall be -an Investment Committee consisting of the City
Manager, Assistant City Manager, the Director of Finance and City
Treasurer. The Committee shall meet bi—monthly to discuss cash
flow requirements, the monthly investment reports, investment
strategy, investment and banking procedures, and significant
investment related work . projects being undertaken in each
department which will affect the cash flow management of the City
Treasurer. This will require timely reports from the department
heads to the City Treasurer concerning significant future cash
flow requirements. The Committee's meetings will be summarized in
minutes that are distributed to the City Council.
V. REPORTING
The Director of Finance shall prepare a monthly investment report,
including a succinct management summary that provides a clear picture
of the status of the current investment portfolio and transactions made
over the past month. This management summary will be prepared in a
manner which will allow the City Manager and City Council to ascertain
whether investment activities during the reporting period have deviated
from the City's investment policy.
The monthly investment report will include the following:
A. A listing of individual securities held at the end of the
reporting month.
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B. Unrealized gain or loss resulting from appreciation or
depreciation by listing the cost and market value of securities
over one year in duration.
C. A description of the current investment strategy and the
assumptions upon which it is based.
D. Average rate of return on City's investments.
E. Maturity aging by type of investments.
VI. REVIEW OF INVESTMENT MANAGEMENT
A. Policy Review
This investment policy shall be reviewed annually by the City
Council in accordance with state law to insure its consistency
with respect to the overall objectives of safety, liquidity, and
yield. Proposed amendments to the Policy shall be prepared by the
Treasurer and after review by the Investment Committee and City
Attorney be forwarded to the City Council for consideration.
VII. AUTHORITY
This policy was duly adopted by authority of the City Council of the
City of Santa Clarita on the 30th day of October , 1990
Resolution No. 88-108.
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EXHIBIT AJ-
PRUDENT
J PRUDENT MAN RULE r:
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regard to the permanent disposition of their funds. considering the
-: probable income, as well as the probable safety of their upitaL
Within the limitations of the foregoing standard, and subject to any
express provisions' or limitations contained in any particular trust
instrumcit, a trustee is authorized to acquire every kind of property,
;;..,. real. personal or mixed, and every kind of investment, specifically
including, but not by way of limitation, corporate obligations of every
kind, and stocks. preferred or common. which men of prudence,
>.. discretion and intelligence acquire for their own account.
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(2) In the absence of express provisions to the contrary in the trust
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instrument. a trustee may continue to.hold property received into a
trust at its inception or subsequently added to it or acquired pursuant
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to proper authority if and as long. as the trustee, in the exercise of
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good . faith and of reasonable prudence, discretion and intelligence,
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may consider that retention is in the best interests of the trust. Such
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2261. [Investment of funds]
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t ' (1) In investing, reinvesting, purchasing, acquiring, exchanging, selling
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and managing property for the benefit of another, a trustee shall
exercise the judgment and care, under the circumstances then prevail-
ing, which men of prudence, discretion and intelligence exercise in the
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"""' • management of their own affairs, not in regard to speculation, but in
regard to the permanent disposition of their funds. considering the
-: probable income, as well as the probable safety of their upitaL
Within the limitations of the foregoing standard, and subject to any
express provisions' or limitations contained in any particular trust
instrumcit, a trustee is authorized to acquire every kind of property,
;;..,. real. personal or mixed, and every kind of investment, specifically
including, but not by way of limitation, corporate obligations of every
kind, and stocks. preferred or common. which men of prudence,
>.. discretion and intelligence acquire for their own account.
i
(2) In the absence of express provisions to the contrary in the trust
—
instrument. a trustee may continue to.hold property received into a
trust at its inception or subsequently added to it or acquired pursuant
to proper authority if and as long. as the trustee, in the exercise of
good . faith and of reasonable prudence, discretion and intelligence,
may consider that retention is in the best interests of the trust. Such
property may include stock in the trustee, if a corporation, and stock
in any corporation controlling, controlled by, or under common
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control with such trustee
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(3) In the absence of express provisions to the contrary in the trust:-
instrument. a deposit of trust funds at interest in any bank (including
the trust= if a bank) shall be a qualified investment to the extent
that such deposit is insured under any present -or future law of the
United States, or -to such greater extent as a court of competent
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jurisdiction may authorize Nothing in this section shall be construed
as limiting the right of trustees in proper cases to make deposits of
trust moneys in banks, subject, in the use of interest-bearing deCppooSrsits.
to such notice or other conditions respecting withdrawal as may be
by law or governmental regulation affecting such deposits.
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prescribed
(4) Nothing in this section shall abrogate or restrict the power of the
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appropriate court in proper uses to direct or permit the trustee to
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NIL CODE
BENEFIT OF THIRD PERS M f Sltl
dniate from the terms of the trust regarding the making or retention
of investments.
(5) The provisions of this section shall apptyito`aU truSts now existing
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or hereafter created. Where, in trusts now existing or hereafter
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.: created, the term "investments permissible by law for investment of
" oust funds, or authorized by law for investment of trust funds,"
= : "legal investments," or "authorized investments," or other words of
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similar import are used in defining the powers of the trustee relative
to investments, such language, in the absence of other controlling or
"modifying provisions of the trust instrument, slinU be construed as
authorizing any investment permitted by the terms of subdivision (I)
of this Secti
(6) T'he term "property" as used in this Lection includes life insur-
nsurance,
ance,endowment, and annuity contracts issued by legal reserve
companies authorized to do business in this state.
Enacted 11172; Amended Stau 1943 ch 111 1 1 p 2602; Suu 1967 cb 63111 p 2054, ch 1706
£ 1 p +265, Suu 1961 ch 161 1 I p 395. Suu 1969 eh 259 11 p 61L
Prior tj�. Field's Draft NY CC 111".
Amendmanac-
1943 Amendment Prior to 1943 the taction read: �A trustee mast invert moeep
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recei.ed b1 hem under the trust, as fast as he collers a cul5cient amount in wart
manna is to a£ord reasonable security and interest for the uma.^
1943 Amendment amended the section to read u at present uuyt for the ralfow*
".
Ameadmeats. . -
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1967 Amendment (1) Added the second sentence of subd (2}, (2) deleted '^livings
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bank or the savings depanmatt of any after -interest in ray- in subd (3); and
(3) deleted •the savinn department of after -(utcludinr in subd Q}
1965 Amendment: Added subd (6)
1969 Amendment Added -, and nock in any corporation coftroltinp controlled b),
_
or undo common control with such trustee- at the end of subd a}
Cron Refereacat
Liability of trustee in ecanecsioa with issue of sharev. Corp C 1411
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Investment of true funds receved by trust company: Fm C 11561.
tkposit of trust company funds naitinl investment or distribution: Fin C I IML
Refiltration or stack field is u= in aat»e of aomince of trust company: Fin C
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Common trust funds: as C 11514 —
Shares of uvinls and loan sssociatioes n legal iaveumcnit: Fm C;6407. -
Investment certificates issued by savinp and loan associatiaos as klal investments
Fm C; Gaon
Federal savings aid loan assecia6cns: Fin C 111:07.
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Natiaul menpit association obliptioos: Fm C 1127000 er love _
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Fum kmn bonds- Gov C 16510. t
Pension trust funds- Gov C 153216.5.
Investment of unearned premium rrcrve of tick inure: Ins C 112U :.:.:
^_....
Mortlagt participation certiliates and securities guaranteed by.tnortlale policies as '
kgal investments for trust funds: Ins C 11252L
=.
Cenifiates and transfers of shares oe other securities held ►y' advidaria: UCC
11102, t .. .
Eiubtishment of coenttsan trusts by Department of Mental Health. W ! 1 C 17231
Municipal water dmsria bonds. vt'at Utuod Act 147.
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DE_SCRIPTICN OF ]
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EXHIBIT B
The City of Santa Clarita's investments are placed in those securities as
outlined below; the balance between the various investment instruments may
change in order to give the City of Santa Clarita the best combination of
safety, liquidity and high yield. Surplus funds of local agencies may only
be invested in certain eligible securities. The City of Santa Clarita
invests only in those allowable securities under the State of California
statutes (Government Code Section 53601, et seg).
CERTIFICATES OF DEPOSIT
Certificates of deposit allow the City to select the enact amount and day
of maturity as well as the exact depository. Certificates of deposit are
issued in any amount for periods of time as short as fourteen days and as
long as several years. At any given time, the City may have certificates
of deposit in numerous financial institutions in the future.
The Treasurer may at her discretion waive security for that portion of a
deposit which is insured pursuant to federal law. Currently, the first
$100,000 of a deposit is federally insured by FSLIC or FDIC. It may be to
the City's advantage to waive this collateral requirement for the first
$100,000 because the City may receive a higher interest rate. If funds are
to be collateralized, the collateral will be 110% of the deposit in
government securities or mortgages of 1500. At purchase, institutions must
not show an operating loss. Banks must have an equity to asset ratio of at
least 6%. Savings and loan associations and savings banks must have an
equity to asset ratio of at least 3%.
11WOOMOL"ONNIMMA } It
Local Agency Investment Fund of the State of California offers high
liquidity because deposits can be wired to the City/Agency checking account
in twenty-four hours. Interest is computed on a daily basis.
This is a special fund in the State Treasury which local agencies may use
to deposit funds for investment. There is no minimum investment period and
the minimum transaction is $5,000, in multiples of $1,000 above that, with
a maximum of $5,000,000 for any agency. It offers high liquidity because
deposits can be converted to cash in twenty-four hours and no interest is
lost. All interest is distributed to those agencies participating on a
proportionate share determined by the amounts deposited and the length of
time they are deposited. Interest is paid, quarterly via a check or
warrant.
The State keeps an amount for reasonable costs of making the investments,
not to exceed one-quarter of one percent of the earnings.
The interest rates are fairly high because of the pooling of the State
surplus cash with the surplus cash deposited by local governments. This
creates a multi -billion dollar money pool and allows diversified
investments. In a high interest rate market, we do better than LAIF, but
in times of low interest rates, LAIF yields are higher.
U. S. TREASURY SECURITIES
U. S. Treasury securities are highly liquid in addition to being considered
the safest of all investments.
U. S. TREASURY BILLS are direct obligations of the United States
Government. They are issued weekly with maturity dates up to one
year. They are issued and traded on a discount basis and the interest
is figured on a 360 day basis, actual number of days. They are issued
in amounts of $10,000 and up, in multiples of $5,000. They are
highly liquid security.
U. S. TREASURY NOTES are direct obligations of the United States
Government. They are issued throughout the year with maturities of 2,
3, 4, 5, 7, 10 years. Notes are coupon securities paying interest
every six months. The City will not invest in notes having maturities
longer than five years.
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Federal Agency securities are highly liquid and considered riskless.
Federal Agency issues are guaranteed directly or indirectly by the United
States Government. All agency obligations qualify as legal investments and
are acceptable as security for public deposits. They usually provide
higher yields than regular Treasury issues with all of the same advantages.
Examples are:
FNMA's (Federal National Mortgage Association) are used to assist the
home mortgage market by purchasing mortgages insured by the Federal
Housing Administration and the Farmers Home Administration, as well as
those guaranteed by the Veterans Administration.
FHLB's (Federal Home Loan Bank Notes and Bonds) are issued by the
Federal Home Loan Bank System to help finance the housing industry.
The notes and bonds provide liquidity and home mortgage credit to
savings and loan associations, mutual savings banks, cooperative -_
banks, insurance companies and mortgage -lending institutions.
Some other federal agency issues are Federal Intermediate Credit Banks
Debentures (FICB), Federal Farm Credit Bank (FFCB), Federal Land Bank
Bonds (FLB), Small Business Administration notes (SBA's), Government
National Mortgage Association notes (GNMA's), Tennessee Valley
Authority notes (TVA's), and Student Loan Association notes (SALLIE
MAE's). These investments will occasionally be used.
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.� .ei��ilitTA�i«a�:�iii�FiieLiY. • • ps• �
Negotiable certificates of deposit are high grade instruments, paying a
higher interest rate than regular certificates of deposit. They are liquid
because they can be traded in the secondary market.
Negotiable Certificates of Deposit (NCR's) are unsecured obligations of the
financial institution, bank or savings and loan, bought at par value with
promise to pay face value plus accrued interest at maturity. The primary
market issuance is in multiples of $1 million, the secondary market usually
trades in denominations of $500,000 although smaller lots are occasionally
available. Local agencies may not invest more than 30% of their surplus
money in negotiable certificates of deposit. NCD's will only be.placed
with the largest and most financially sound institutions.
.
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Bankers Acceptances are frequently the highest in yield,- are safe
investments and are highly liquid.
Bankers acceptances are a short-term credit arrangement to enable
businesses to obtain funds to finance commercial transactions. They are
time drafts drawn on a bank by an exporter or importer to obtain funds to
pay for specific merchandise. By its acceptance, the bank becomes
primarily liable for the payment of the draft at its maturity. An
acceptance is a high grade negotiable instrument. Acceptances are
purchased -.in various denominations for 30, 60 or 90 days but.no longer than
270 days. The interest is calculated on a 360 day discount basis similar
to Treasury Bills. Local agencies may not 'invest more than forty -percent
of their surplus money in bankers acceptances.
ME, Im-o"In1my.100
Commercial paper allows the investment of large amounts of money for one to
seven days at rates higher than we can earn from our savings account.
Commercial paper is a short-term unsecured promissory note issued by a
corporation to raise working capital. These negotiable instruments are
purchased at a discount to par value. Commercial paper is issued by
corporations such as Shearson -American Express, International Business
Machines (IBM) and Pacific Gas and Electric Company, etc.
Local agencies are permitted by state law to invest in commercial paper of
"prime" quality of the highest ranking or of the highest letter and
numerical rating as provided by Moody's Investor's Service, Inc. or
Standard and Poor's Corporation. Purchases of eligible commercial paper
may not exceed 180 days maturity nor exceed thirty percent of the local
agency's surplus funds.
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Passbook savings account allows us to transfer money from checking to
savings and earn short-term on odd amounts of money which are not available
for longer investment.
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The savings account is similar to an inactive deposit except not for a
fixed term. The interest rate is much lower than CD's, but the savings
account allows flexibility. Funds can be deposited and withdrawn according
to daily needs. The City of Santa Clarita has one money market demand
account.
• erg •• ••• a!u
Los Angeles County Pooled Fund is similar to the State of California Local
Agency Investment Funds. The County fund provides protection, liquidity
• and higher than market rates for short-term securities.
The County Pooled Fund is similar to the State of California Local Agency
Investment Fund (LAIF). Los Angeles County has an existing pooled fund
with current assets of $3.5 billion serving school districts and other
special districts. This pooled fund is managed by the County Treasurer and
interest is competitive to money market rates. There are no restrictions
to number of transactions or dollar amount of deposits. The funds
deposited by a local agency in the County Pooled Fund cannot be attached by
the County.
All interest is distributed to those agencies participating on a
proportionate share determined by the amounts deposited and the length of
time they are deposited. Interest is paid quarterly via a check or
warrant. The County keeps an amount for reasonable administrative costs of
the pool. The Los Angeles County Treasurer has stated the range of
administrative costs is 14 to 18 basic points (approximately 0.14% to 0.18%
I'� of the pool fund averagedailybalance).
_, tl„ YP^" MUTUAL FUND — I y p, O -L XW
Mutual Fund is another authorized investment allowing the City to maintain
liquidity and receive money market rates.
Mutual Funds are referred to in the Government Code, Section 53601,L, as
"shares of beneficial interests issued by diversified management
companies". The Mutual Fund must be restricted by its by-laws to the same
investments as the local agency. These investments are Treasury issues,
Agency issues, Bankers Acceptance, Commercial Paper, Certificates of
Deposit, and Negotiable Certificates of Deposit. The .quality, rating and
percentage restrictions in each investment category applicable to the local
agency also applies to the Mutual Fund.
A further restriction is that the purchase price of shares of the mutual
funds shall not include any sales commission. Investments in mutual funds
shall not exceed fifteen percent of the local agency's surplus money.
• • EXHIBIT C
Bank of America NT & SA
Barclays de Zoete Wedd Securities Inc.
Bear. Stearns & Co., Inc.
BNY Securities. Inc.
ST Securities Corporation
Carrott McEntee & McGinley Incorporated
Chase Securities. Inc.
Chemical Securities. Inc.
Citicorp Securities Markets, Inc.
Continental Bank, National Association
CRT Government Securities, Ltd.
Daiwa Securities America Inc.
Dean Witter Reynolds Inc.
Dillon. Read & Co. Inc.
Discount Corporation of New York
Donaldson, Lufkin & Jenrette Securities
Corporation
The First Boston Corporation
First Chicago Capital Markets. Inc.
Fuji Securities Inc.
Goldman. Sachs & Co.
Greenwich Capital Markets, Inc.
Harris Government Securities Inc.
Kidder. Peabody & Co., Incorporated
Aubrey G. Lanston & Co., Inc.
Manufacturers Hanover Securities Corporation
Merrill Lynch Government Securities Inc.
Midland Montagu Securities Inc.
J. P. Morgan Securities, Inc.
Morgan Stanley & Co. Incorporated
The Nikko Securities Co. International, Inc.
Nomura Securities International, Inc.
Paine Webber Incorporated
Prudential-Bache Securities, Inc.
Salomon Brothers Inc.
Sanwa-BGK Securities Co.. L.P.
Security Pacific National Bank
Shearson Lehman Hutton Government Securities. Inc.
IV Elm!
Smith Barney, Harris Upham & Co.. Inc.
R E C E
SBC Government Securities Inc.
OCT I8 1990
UBS Securities Inc.
S.G. Warburg & Co.. Inc.
c�i RnA
Wertheim Schroder & Co. Incorporated
fc;,"," F9AN*
Yamaichi International (America), Inc.
i.
NOTE: This list has been compiled and made available for statistical purposes
only and has no significance with respect to other relationships between dealers
and the Federal Reserve Bank of New York. Qualifications for the, reporting list
is based on the achievement and maintenance of reasonable standards of activity.
Market Reports Division
Federal Reserve Bank of New York
June 28. 1990