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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 BE IT FURTHER RESOLVED, that Resolution No. 85-034 is hereby rescinded.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