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Home My WebLink About1985-01-02; City Council; 8009; Adoption Investment Policy & Report of InvestmentsCITYTF CARLSBAD - AGENDP TILL ,qE a 4B#-IIlllr: MTG. 1121845 ADOPTION OF AN INVESTMENT POLICY AND REPORT OF INVESTMENTS DEPT. I lClTY MOR. -a ~~ RECOMMENDED ACTION: Adopt Resolution No.7m3 adopting the City's Investment Policy. ITEM EXPLANATION: Section 53646 of the Government Code requires that the Treasurer "annually render to the legislative body of the local agency, a statement of investment policy." bill complies with that requirement. The Statement of Investment Policy attached to this agenda The attached Statement of Investment Policy has been drafted by the Treasurer to reflect the conservative investment approach that the City of Carlsbad has historically followed. Emphasis has been placed on the security of the investment as the primary consideration followed by liquidity and yield. This policy will be updated by the Treasurer from time to time as changes become necessary. Any substantive change will be submitted to the Council for its review and approval. Modifications including guidelines for assessing the stability of financial institutions will be submitted following the completion of the proposed Cash Management Study. State law also requires that the Treasurer provide the Council with a monthly report of investmenLs. The attached report will be presented to the Council on a monthly basis as an information item. FISCAL IMPACT : The City's investment policy has no direct fiscal impact, although it plays an important part in the safe guarding of the City's investment portfolio. EXHIBITS : 1. Investment Report for December 1984. 2. Resolution No.7843 adopting the City's Investment Policy. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RESOLUTION NO. 7863 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, ADOPTING THE CITY'S INVESTMENT POLICY. WHEREAS, the City Treasurer is charged with the responsibility of managing the City's investment portfolio, and WHEREAS, the effective management of this portfolio is of great importance to the fiscal well being of the City, and WHEREAS, both state law and good management practices require that an Investment Policy which will provide for the secure investment of City funds be adopted by the City. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California that the attached Investment Policy, Exhibit A, is hereby adopted by the City and that from time to time the City Treasurer may present changes to this policy to the City Council for adoption as such changes become necessary. PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council of the City of Carlsbad, California, held on the day of January , 1985, by the following vote, to wit: 2nd AYES : Council mrs Casler, Lewis, Kulchin, Chick and Pettine NOES: ABSENT: None MARY H. USLER, Mayor ATTEST : (SEAL) I CITY OF CARLSBAD STATEMENT OF INVESTMENT POLICY 2 3ANUARY 1985 The City 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, therefore; as a general law city, the City of Carlsbad operates its pooled idle cash position under a prudent man's rule. This affords the City a broad spectrum of investment opportunities so long as the investment is deemed prudent and is allowable under current legislation of the State of California and the local ordinances of the City of Carlsbad. The City of Carlsbad 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 responsibility of the City Treasurer. f ol lowing : Legal investments may be made in the Certificates of Deposit purchased from banks or savings and loan i nst itut ions Bankers Acceptances Treasury Bills and Notes , Government Agency Securities (e.g. Federal National Mortgage Association, Government National Mortgage Association, Federal Farm Credits, etc .) Repurchase Agreements Reverse Repurchase Agreements Commerci a1 Paper State Local Agency Investment Fund Passbook Savings Account 3 -2- 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 deposit, savings accounts and bankers acceptances are insured or collateralized. Most investments are highly liquid, with the exception of collateralized certificates of deposit 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 investments, provided that criteria for safety and liquidity are met. 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 City shall lengthen its maturities when rates are falling and shorten maturities when rates are rising. The City shall attempt to take advantage of imperfections in the market where a security's price is out of line with other investments, and try to improve the yields during contracyclical changes in interest rates through the purchase of occasional odd lots which are offered at bargain prices . The City shall apply the following additional guidelines to the investment of City funds: ,. . -3- No more than 10% of the investment portfolio shall be placed with any one financial institution. In the event that a decline in the investment pool causes a condition where more than 10% of the total portfolio is invested with one institution, the City shall remove that portion of funds necessary to reduce the investment in that institution to 10% of the total portfolio. This policy, however, does not mandate that an investment must be withdrawn prior to maturity or traded at or below cost. No more than 30% of the investment portfolio shall be invested in Banker's Acceptance Notes. No more than 30% of the investment portfolio shall be invested in commercial paper as allowed by State statutes. The City may invest in the State of California Local Agency Investment Fund to the limits provided in State law. The City shall pursue as diverse an investment portfolio as is practical and prudent using a variety of investment vehicles placed with consideration for the above policies. Investment Income shall be shared by the General Fund with restricted funds on a proportionate ratio of balances to total pooled cash and investment income credited accordingly on a quarterly basis. The basic premise underlying the City's investment philosophy is to insure the safety of its funds and to assure that money is always available when needed . i 5 .. In u 3 c cn K 0 c) c U n - n 2 0 a J *- -1 c 0 c I m 3 v1 a J. -I c Q c I 1 u) a m 000 i 'I ii I 1 i -- . 7 !' ! 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