Res 87-067RESOLUTION NO. 87-067
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF POWAY, CALIFORNIA,
AMENDING INVESTMENT POLICY FOR PUBLIC FUNDS
AND RESCINDING RESOLUTION NO. 85-034
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Poway,
California, that the Investment Policy, attached as Exhibit A, is hereby
adopted as the Investment Policy of the City of Poway.
BE IT FURTHER RESOLVED, that Resolution No. 85-034 is hereby rescinded.
PASSED, ADOPTED AND APPROVED, by the City Council of the City of Poway,
California, at a regular meeting thereof this 16th day of June, 1987.
Bruce Tar
ATTEST:
Marjorie K. Wahlsten, City Clerk
STATE OF CALIFORNIA )
) SS.
COUNTY OF SAN DIEGO )
I, Marjorie K. Wahlsten, City Clerk of the City of Poway, do hereby certify
that the foregoing Resolution, No. 87-D67, was duly adopted by the City Council
at a meeting of said City Council held on the 16th day of June, 1987, and that
it was so adopted by the following vote:
AYES: BRANNON , EMERY , HIGGINSON , KRUSE , TARZY
NOES: NONE
ABSTAIN: NONE
ABSENT: NONE
Marjorie'K. Wahlsten, City Clerk
City of~_~Poway
EXHIBIT "A"
INVESTMENT POLICY
The City of Poway has a fiduciary responsibility to maximize the productive use
of assets entrusted to its care and to invest and manage those public funds
wisely and prudently. The City of Poway operates its pooled idle cash to afford
a broad spectrum of investment opportunities that are deemed prudent and are
legally allowable under both state legislation and local ordinances. These
investment decisions shall be made using the trust principles and general
prudent man theory as outlined below:
"In acquiring, investing, reinvesting, exchanging, selling and managing
property for the benefit of another, a fiduciary 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, 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 capital. Within the limita-
tions of the foregoing standard, and subject to any express provisions
or limitations contained in any particular trust instrument, a fidu-
ciary is authorized to acquire and retain every kind of property, real,
personal or mixed, and every kind of investment specifically including
but not by way of limitation, debentures and other corporate obliga-
tions, and stocks, preferred or common, which men of prudence, discre-
tion and intelligence acquire for their own account."
In addition, the City recognizes that it has an equal obligation to be aware of
the social and political impacts of its investments, and subsequently to act
responsibly in making its financial decisions.
The City shall not knowingly make any investments in any institution, company,
corporation, subsidiary or affiliate that practices or supports directly or
indirectly through its actions discrimination on the basis of race, religion,
color, creed, national or ethnic origin, age, sex, sexual preference, or
physical disability.
The City shall strive to maintain the level of investment of all idle funds as
near 100% as possible, through daily and projected cash flow determinations.
Idle cash management and investment transactions are the joint responsibility of
the City Treasurer and Administrative Services Department. The eligible
deposits and investments are referred to in Government Code Sections 53601.1 and
53602, and 53635 and are as follows:
° Securities of the U.S. Government or its agencies
° Certificates of Deposits (or Time Deposits), placed
with commercial banks and savings and loan companies
° Bankers Acceptances
° Negotiable certificates of deposits
Investment Policy
o Local Agency Investment Fund demand deposits
° Commercial Paper
o Repurchase Agreements and Reverse Repurchase Agreements
° Passbook Savings Account demand deposits
° Shares of Beneficial Interest {Mutual Funds) issued by diversified
management companies.
° Medium-Term Corporate Notes to maximum maturity of five years.
Criteria for selecting investments, and the order of priority, are:
1. Safety
2. Liquidity
3. Yield
Government and agency paper, and repurchase agreements, are the highest quality
investment available in terms of safety and liquidity. Certificates of
deposits, savings accounts and bankers acceptances are insured or collatera-
lized. Only commercial paper, with both A-1 Moody's and P-1 Standard & Poor's
ratings, is purchased. Mutual funds must consist of securities and obligations
of the U. S. Government authorized by Sec. 53601 of Government Code as amended.
The management companies shall either (1) attain the highest ranking or the
highest letters and numerical rating provided by not less than two of the three
largest nationally recognized rating services, or (2) have an investment advisor
registered with the Securities and Exchange Commission with not less than five
years' experience investing in the securities and obligations as authorized
above and with assets under management in excess of five hundred million dollars
{$500,000,000). The purchase price of shares of beneficial interest purchased
shall not include any commission these companies may charge and shall not exceed
15 percent of the City's surplus money which may be invested.
Medium-term corporate notes must have a maximum maturity of five years and be
issued by corporations operating in the United States. Securities eligible for
investment shall be rated in the top three note rating categories by two of the
three largest nationally recognized rating services. Investment may not exceed
15 percent of surplus funds.
The City shall deposit funds only with financial institutions which operate in
the State. These banks and savings and loans must be insured by the Federal
Deposit Insurance Corporation, the Federal Savings and Loan Insurance
Corporation or other federal government insurance banking systems.
The City's policy shall be to waive security for the amount insured. Deposits
in excess of the insured amount shall be secured with eligible securities speci-
fied in Government Code Section 53651. The City shall comply with and act to
Investment Policy -3
secure compliance with the security (collateralization) system specified in the
Government Code Section 53649 and 56652.
Most investments are highly liquid, with the exception of collateralilzed
certificates of deposits held by banks and savings and loans. Maturities shall
be selected to anticipate cash needs, thereby avoiding the need for forced
liquidation.
The City shall attempt to obtain the highest yield available when selecting in-
vestments, provided that criteria for safety and liquidity are met. This may
include the payment of fees to brokers to secure a higher yield than otherwise
would be available.
The City shall attempt to ladder its maturities to meet anticipated cash needs
in such a way that new investment money can be placed in maturities that carry a
higher rate than is available in the extremely short market of thirty days or
under.
The basic premise underlying the City's investment philosophy is to ensure that
money is always available when needed and at the same time reaping the highest
and best return. In order to maintain liquidity, no more than 10 percent of the
portfolio shall be held in securities with a maturity in excess of two years.
Investments with a maturity in excess of one year may not be purchased at a pre-
mium nor sold at a loss unless the loss is provided for in the City's budget.
Investment Income shall be shared by the General Fund, the Water Fund, the Sewer
Fund and other funds as budgeted or required by legislation. This income shall
be a proportionate ratio of balances to total pooled cash and investment income
credited accordingly on a monthly basis.
Additionally, the investment responsibility carries with it the added duties of
insuring that investments placed are done so without the appearance of improper
influence. The personnel in Administrative Services or the Treasurer's Office
involved in the investment function shall adhere to the State's Code of Economic
Interest and to the following:
1)
All persons authorized to place or approve investments shall not personally
nor through a close relative maintain any accounts, interest, or private
dealings with any fi rmwith which the City places investments, except for
regular savings accounts, checking accounts, money market accounts, or other
similar transactions which are offered on a non-negotiable basis to the
general public. Such accounts shall be disclosed annually to the City Clerk
in conjunction with annual disclosure statements of economic interest.
2)
All persons authorized to place or approve investments shall report to the
City Clerk kinship relations with principal employees of firms that the City
places investments with.
3)
All persons authorized to place or approve investments shall report quar-
terly to the City Clerk any meals, entertainment, gifts, or other items of
monetary value in excess of $50.00 received from any person employed by a
fi rmwith which the City places investments