CC - Item 3F - Investment PolicyE M •
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ROSEMEAD CITY COUNCIL
STAFF REPORT
TO: THE HONORABLE MAYOR AND CITY COUNCIL
FROM: ANDREW C. LAZZARETTO, CITY MANAG
DATE: JUNE 27, 2006
SUBJECT: INVESTMENT POLICY
SUMMARY
Attached is a copy of the City's Investment Policy, which was first approved by the City
Council on October 3, 1995 (Attachment A). Also included is background
documentation from that meeting for review (Attachment B).
Staff Recommendation
Staff recommends that the City Council adopt the attached Investment Policy.
ANALYSIS
The City's Auditor, McGladrey & Pullen, LLP, requires the City to approve on an annual
basis the City's Investment Policy. The authority governing investments for municipal
governments is set forth in the Government Code, Sections 53601, et. seq, and the
City's investment philosophy is based on safety, liquidity, and yield.
PUBLIC NOTICE PROCESS
This item has been noticed through the regular agenda notification process.
Submitted by:
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Finance erector
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Attachment A: Investment Policy
Attachment B: October 3, 1995 Meeting Documentation
APPROVED FOR CITY COUNCIL AGENDA:
ITEM NUMBER:
• 0 ATTACHMENT A
CITY OF ROSEMEAD
INVESTMENT POLICY
The investment of the funds of the City of Rosemead is directed to the goals of safety,
liquidity and yield. The authority governing investments for municipal governments is set
forth in the Government Code, Sections 53601, et seq.
The primary objective of the investment policy of the City of Rosemead is SAFETY.
Our investments are placed in those securities as outlined below; the balance between the
various investment instruments may change in order to give the City the best combination of
liquidity and additional yield.
LOCAL INVESTMENT VS. DIRECT MARKET INVESTMENT
As a matter of public policy, one of the goals of a public agency's investment program
may be local economic development.
Placing funds in local banks is one method of promoting this goal. It can be argued
that the total return to the government from keeping the money at "home" is the sum of the
direct yield on the time deposits and the indirect yield that comes from the added tax
revenues generated by local economic growth.
In general, however, it is hard to measure the costs and benefits of such a policy.
Private financial institutions that receive public funds can allocate those funds to many
different assets. Bank credit is mobile and can be directed to areas and uses that meet the
banking institution's preferences. Probably banks invest in whatever assets will realize the
greatest income to them.
The City of Rosemead places investments in local banks to the extent one can without
sacrificing the other goals of our investment policy, i.e., safety, liquidity and yield.
A VARIED INVESTMENT PROGRAM
The City of Rosemead uses a varied investment program to accomplish all of our
goals-safety, liquidity and yield as well as local investment. Following are the types of
investments the City makes and some of the advantages of each:
The local Agency Investment Fund of the State of California offers high liquidity
because our deposits can be wired to our checking account within twenty-four (24)
hours. Interest is computed on a daily basis.
Our savings account allows us to transfer money from checking to savings and earn
short-term interest on odd amounts of money.
U.S. treasury securities are highly liquid in addition to being considered the safest
of all investments.
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City of Rosemead
Investment Policy, Page 2
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Federal Agency securities are high liquid and considered riskless.
Bankers Acceptances are frequently the highest in yield, and are safe investments
are highly liquid.
Commercial paper issued by prime rated industrial and financial institutions allows
the investment of money for one to 180 days at rates higher than we can earn from'
the previously listed securities. These are also collateralized.
Certificates of deposit allow the City to select the exact amount and day to maturity as
well as the exact depository. There are penalties for withdrawal of funds prior to the
original maturity date. These are also collateralized.
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.
Medium Term Corporate Notes offer a competitive alternative to Negotiable
Certificates of Deposits and standard Certificates of Deposits. These securities enjoy
an actibve secondary market to provide liquidity.
Mutual Funds or "beneficial shares" is another authorized investment allowing the
City to maintain liquidity and receive money market rates.
DEPOSITORY SERVICES AS THEY RELATE TO THE CITY OF ROSEMEAD
Legal Constraints
Money must be deposited in state or national banks, state or federal savings
associations or state or federal credit unions in the state. It may be in inactive deposits,
active deposits or interest-bearing active deposits. The deposits cannot exceed the amount
of the bank's paid up capital and surplus.
The bank must secure the active and inactive deposits with eligible securities having a
market value of 110% of the total amount of the deposits. State law also allows as an eligible
security, first trust deeds having a value of 150% of the total amount of the deposits. A third
class of collateral is letters of credit drawn on the Federal Home Loan Bank (FHLB). As a
matter of policy, the City does not accept 150% collateral in first trust deeds or 105% Letters
of Credit drawn on the FHLB, even though the state statutes allow municipalities to accept
them.
City of Rosemead
Investment Policy, Page 3
The treasurer may, at his 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. It is to the City's advantage to not waive this collateral requirement for the first
$100,000. If funds are to be collateralized, the collateral we accept is 110% of the deposit in
government securities..
Depository Services
Active deposits are demand or checking accounts which receive revenues and pay
disbursements. The City of Rosemead has three demand accounts:
General checking account
Payroll checking account
Redevelopment Agency bond proceeds checking account
Interest-bearing active deposits are money market accounts at a financial institution (i.e.,
bank, savings and loan, credit union). These accounts are demand accounts (i.e., checking
accounts) with restricted transaction activity. The City of Rosemead has two accounts of this
nature for the Rosemead Redevelopment Agency.
Inactive deposits are Certificates of Deposit issued in any amount for periods of time as short
as fourteen (14) days and as long as several years. Interest must be calculated on a 360 day
basis, actual number of days. At any given time, the City may have certificates of deposit in
several financial institutions. As a matter of policy, we do not invest in CD's for longer than
on year.
We require that each financial institution submit current financial statements which are
evaluated by staff prior to investment of funds. We use the following criteria:
The institution must have been in business at least three years.
The institution must submit audited financial statements.
The institution must have assets of at least $50 million and a net worth to liability
ratio of 3.5 to 1. For calculations, net worth does not include subordinated debt
and Reserves for Allowance for Loan Losses.
City investments of less than 180 days to maturity can use a net worth to asset
ration of 3.0 to 1.
Whenever possible, the use of several years' financial data is evaluated to present
a trend of activity in the institution.
We also require that interest be paid to the City on a monthly basis (current state law
only requires quarterly payment).
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City of Rosemead
Investment Policy, Page 4
•
Passbook savings account is similar to an inactive deposit except not for a fixed term. The
savings account allows us flexibility. Funds can be deposited and withdrawn according to our
daily needs.
INVESTMENT VEHICLES AS THEY RELATE TO THE CITY OF ROSEMEAD
Legal Constraints
Surplus funds of local agencies may only be invested in certain eligible securities. The
City of Rosemead invests only in these securities. See Government Code, Section 53601, a-
m, Investment of Surplus Funds.
Effective January 1, 1989, the Government Code, Section 53601 states:
"no investment shall be made in any 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."
The investment strategy for the City of Rosemead is similar to administer an
operational portfolio. A definition of an operational portfolio is to have adequate funds
available at all times to meet appropriated and projected cashflow requirements for the City of
Rosemead.
From time to time, the investment strategy may wish to capture high yields with the
purchase of safe, low risk, highly liquid investments. For purchases greater than five years,
the following requirements must be met:
The security must be a U.S. Treasury Note or bond, a Federal National
Mortgage Association (FNMA) debenture of Federal Home Loan Bank (FHLB)
debenture.
2. A maximum of twenty-five (25) percent of the City's funds can be invested in
securities with maturities between five and seven years.
3. No securities can be purchased for the City of Rosemead or the Rosemead
Redevelopment Agency with a maturity greater than five years, without the
Committee approval and Council consent.
The City of Rosemead does not purchase or sell securities on MARGIN.
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City of Rosemead
Investment Policy, Page 5
Investment Vehicles
U.S. TREASURY's are direct obligations of the United States Government.
U.S. T-BILLS 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 a highly liquid security.
U.S. T-NOTES are initially issued with two to ten year maturities. They are actively
traded in a large secondary market and are very liquid. The Treasury may issue bond
issues with a minimum of $1,000.
Federal Agency issues are guaranteed directly or indirectly by the United States Government.
All agency obligations quality as legal investments and are acceptable as security for public
deposits. They usually provide higher yield then 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 Veteran's Administration. They are issued for various maturities from a few
months to twenty years in denominations of $10,000 minimum. The notes are issued
with maturities of less than one year and interest is paid at maturity. The bonds are
issued at various maturities and interest is paid semi-annually. Interest is computed
on a 30 day month, 360 day year basis. There is a strong secondary market in these
securities. The City invests periodically in FNMA's.
FHLB's (Federal Home Loan Bank) 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. The
minimum denomination is $5,000. The notes are issued with maturities of less htan
one year and interest is paid at maturity. the bonds are issued at various maturities
and carry semi-annual coupons. Interest is computed on a 30 day month, 360 day
year basis. There is a strong secondary market in these securities. The City invests
periodically in FHLB's.
FFCB's (Federal Farm Credit Bank) are debt instruments to finance the short and
intermediate term needs of farmers and the national agricultural industry. They are
issued monthly with 3 and 6 month maturities. The FFCB also issues discount notes
with maturities less than one year purchased at a discount with interest paid at
maturity. FFCB term issues longer than one year pay interest semi-annually on a
30/360 basis. These issues enjoy an established secondary market. The City invests
in these securities from time to time.
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City of Rosemead
Investment Policy, Page 6
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TVA's (Tennessee Valley Authority) are loans to finance the capital acquisitions of the
Authority. These issues are issued in intermediate and long term maturities. All
issues are fully guaranteed by the U.S. Government against default. Interest is
payable semi-annually and at maturity and is calculated on a 30/360 basis.
Other federal agency issues are Small Business Administration notes (SBA's) and
Government National Mortgage Association notes (GNMA's). As a matter of policy,
the City does not invest in these issues because they do not suit our purpose as well
as those outline above.
Bankers Acceptances
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
original issue terms of 30 to 180 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. The City may invests in
bankers acceptances.
Local Agency Investment Fund
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 $20,000,000 for any agency.
The City is restricted to a maximum of ten transactions per month. L.A.I.F. offers high
liquidity because deposits can be converted to cash within twenty-four hours. All City of
Rosemead Investment Policy 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 direct deposit to Agency's L.A.I.F.
account.
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
L.A.I.F., but in times of low interest rates, L.A.I.F. yields are higher. The City continually
invests in the Local Agency Investment Fund.
The State keeps an amount for reasonable costs of making the investments, not to
exceed one-quarter of one percent of the earnings.
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City of Rosemead
Investment Policy, Page 7
10
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
L.A.I.F., but in times of low interest rates, L.A.I.F. yields are higher. The City continually
invests in the Local Agency Investment Fund.
Commercial Paper
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 or at par value with interest bearing. Commercial paper is issued by corporations such
as General Motors Acceptance Corporation (GMAC), Shearson-American Express, Bank of
America, Wells Fargo Bank, 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 fifteen percent of the local agency's surplus funds.
Medium Term Corporate Notes
Medium Term Corporate Notes are unsecured promissory notes issued by a
corporation organized and operating in the United States. These are negotiable instruments
and traded in the secondary market. Medium Term Corporate Notes can be defined as
extended maturity Commercial Paper. Corporations use these medium term debt securities
to raise capital. Examples of corporate medium term notes (MTN's) are General Electric,
Shearson-American Express, GMAC, Wells Fargo Bank, Citibank, Southern California
Edison, etc.
klo~wordlbankmiscMnvestpolicy.doc (11-02-99)
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TO: HONORABLE MAYOR
AND MEMBERS
ROSEME_AD CITY COUNCIL
10
FROM: FRANK G. TRIPEPI, CITY MANAG
DATE: SEPTEMBER 28, 1995
RE: CITY FINANCE COMMITTEE
After discussing this issue with the City Treasurer, staff drafted the attached document which is
basically the City of Lakewood's investment policy without the following investment options:
the County of Los Angeles Pooled Fund, Repurchase. Agreements, Reverse Repurchase
Agreements and Financial Futures and Options. Since the City already has an Investment
Committee, as defined in Section 2207 of the RMC, the attached policy would serve as a
guideline for that Committee.
RECOMMENDATION
It is recommended that after making any changes, the Rosemead City Council approve the
attached policy and' direct the City Treasurer to implement that policy.
COUNCIL AGENDA
0 C T -31995
ITEM No.
A %JA UjW
djw:ccstf(5 1)
CHAPTER 2 - OFFICERS
220.0 Assessor and Tax Collector. Pursuant to the authority
granted by Section 51501 of the Government Code of the
State of California, the assessment and tax collection
duties performed by the City Assessor and Tax Collector
hereby are transferred to the Assessor and Tax Collector
of the County of Los Angeles. 1 8-4-59
2200.1 Same. Abolishment of Offices. The offices of City
Assessor and Tax Collector hereby are abolished. 1 8-4-59
2200.2 Same. Transfer of Duties. Pursuant to the authority
granted by Section 51507 of the Government Code of the
State of California, the duties'of the City Assessor,
other than assessing of City property and the duties
of the Tax Collector, other than the collection of taxes,
hereby are transferred to and shall be performed by the
City Clerk, or such officer of the County of Los Angeles
authorized to perform such duties. 1 5-4-59
2201 City C1erk.Duties. Any applications required to be
filed with the City or fees required to be paid to the
City, pursuant to the provisions of this Code, shall be
filed with or paid to the City Clerk, unless otherwise
by this Code provided. The City Clerk shall also be the
Assistant Treasurer. 1 8-4-59 0 480 12-12-78
2201.1 City.Clerk Bond. The City Clerk upon the entry to his
duties of office shall execute a bond to the City in
conformity with bonds of public officers, and in con-
formity with the provisions of the Government Code of
the State of California relating thereto, in the amount
of $5,000. 1 8-4-59
2202 'City Treasurer. The City Treasurer shall be appointed
by and serve at the pleasure of the City Council. The
City Treasurer shall have the following duties:
(a) Receive and have custody of all moneys
receivable by the City from any source;
(b) Deposit all moneys received in such de-
positories as may be designated by resolution of
the City Council;
(c) Disburse moneys on demands properly
audited ZrO approved in the manner provided for;
(d) Prepare and submit to the City Clerk
monthly written reports of all receipts, dis-
bursements and fund balances, copies of which
reports shall be filed with the City Manager and
City Finance Director and City Council;
It 1j
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2202, (e) Discharge any other financial duties which
Cont'd may from time to time be assigned by the City
Manager whether the same pertains to.the normal
duties of a City Treasurer or not;
(f) Serve as Chairman of the Investment Company
(g) Review and sign all investment documents to
verify that they are in compliance with applicable
laws and regulations. 1 8-4-59 458 10-25-77
2203. Removal of Papers or Documents from City Hall. No per-
son unless authorized by the City Clerk, Mayor or City
Attorney, shall remove any papers or documents from
the City Hall.
2204. Office of Director of Finance and Purchasing Officer.
Pursuant to Section 40805.5 of the Government Code of
the State of California, the Office of Director of Fi-
nance is hereby established, and the duties provided
for in Government Code Sections 40802, 40803, 40804
and 40805 are hereby transferred from the City Clerk
to the Director o-f Finance. The Director of Finance
shall also be the Purchasing Officer and shall be ap-
pointed by the City Manager on the basis of his pro-
fessional and administrative qualifications and.ability
and shall serve as a Department Head at the pleasure of
the City Manager.
With the approval.of the City Council, the City Manager
may be app.o.inted the Director of Finance and perform
the functions thereof, including the appointment of a
deputy, or deputies and the delegation to other employees
of the functions of the office. 164 8-12-65 458 10-25-77
4TT 12.-12-78
2205. Powers and Duties of Director of Finance. The Director
of Finance shall be vested and charged with the following
powers, duties and responsibilities:
(a) To have charge of the administration of the
financial affairs of the City;
(b) To assist the City Manager in preparing the
annual budget for submission to the City Council,
and to administer it after adoption;
.(c) To keep the City Manager fully informed on
the financial condition and needs of the City;
(d"-' To serve as the Accounting Officer of the
City and maintain records readily reflecting the
financial condition of the City;
(e) To prepare.for presentation
at the end of each fiscal year a
of receipts and disbursements by
1 - _1 __.3 .1 ^nn" 1 T R F. -1 __4__ G..-A
to the City Council
summary statement
departments and funds,
1-1 -.0 rho rre;l-
u
1-1
2205. (f) To cause the financial statement of the City
Cont'd to be published in a newspaper of general circulation
printed and published in the City, within 120 days-
after the close of the fiscal year for which such
statement is compiled;
(g) To audit and approve before payment all bills,
invoices, payrolls, demands or charges against the
City, and with the advice of the City Attorney when
necessary, determine the regularity, legality and
correctness of such claims, demands and charges;
(h) Supervise the keeping of current inventories
of all property of the City by all City departments,
offices and agencies;
(i) Perform such other duties as may be imposed
upon him by ordinance or directive of the City Manager;
(j) To serve on the Finance .Committee as set forth
in Section 2201 of this.Code;
(k) To act as purchasing officer as defined in
Section 2602 of this code for the purchase of supplies,
equipment, services and facilities as described in
Section 2602 through 2612 of this code.
The Di,rector.of Finance shall be bonded in an amount
to -be Betermin.ed by the -Ci-ty,.Council with-the advice of
the City Attorney. 164 8-12-65 458 10-25-77
IV C, LIE 4
2206 Powers and Duties'of iYp~} ^f a Acting as
Assistant City Treasurer. The City Treasurer shall appoint;
the Director. of Finance to act as the Assistant City
Treasurer shall perform the following duties:
(a) To act for the Treasurer when the Treasurer
is absent, unable or refuses-to perform his duties.
(b) Preparation of cash flow projections for use
in determining monies available for investment by the
City;
(c) Collection of taxes and licence fees;
(d) Preparation of a monthly report of receipts,
disbursements, and fund balances as required by
Government Code Section 41004;
(e) Preparation of demand listing and checks or
warrants and payment thereof;
(f) Receipt and deposit of money via the use of
prenumbered receipt forms, cash register machines,
cash journals, deposit 'slips and coordination of
night deposits at all receiving points. 458 10-25-77
-15-
Ll
2207 The Investment Committee. There shall be an Investment
Committee which shall serve as an advisory body to the
` City Treasurer and City Council.
(a) Duties. The Investment Committee shall meet
on a regular basis, not less than once each month, to
determine investments, appropriate depository banks, the
amount and allocation of active nad inactive deposits,
the methods of deposit, and all other matters pertinent
to the investment and cash-flow of the City of Rosemead.
The Investment Committee shall advise the Treasurer and
report,•from time to time, to the City Council on the
status of the investment and cash-flow requirements of the
city.
(b) Members of Investment Committee. The Investment
Committee shall consist of the Treasurer, who shall be
its chairman, the City Manager, and the Director of Finance.
458 10-25-77
-16-
CITY OF ROSEMEAD
INVESTMENT POLICY
The investment of the funds of the City of Rosemead is directed to the goals of safety,
liquidity and yield. The authority governing investments for municipal governments is set
forth in the Government Code, Sections 53601, et seq.
The primary objective of the investment policy of the City of Rosemead is SAFETY. Our
investments are placed in those securities as outlined below; the balance between the various
investment instruments may change in order to give the City the best combination of liquidity
and additional yield.
LD " INVESTMENT VS DIRECT MARKET INVESTMENT
. As a matter of public policy, one of the goals of a public agency's investment program
may be local economic development.
Placing funds in local banks is one method of promoting this goal. It can be argued that
the total return to the government from keeping the money at "home" is the sum of the direct
yield on the time deposits and the indirect yield that comes from the added tax revenues
generated by local economic growth.
In general, however, it is hard to measure the costs and benefits of such a policy.
Private financial institutions that receive public funds can allocate those funds to many
different assets. Bank credit is mobile and can be directed to areas and uses that meet the
banking institution',s preferences. Probably banks invest in whatever assets will realize the
greatest income to them. .
The City of Rosemead places investments in local banks to the extent one can without
sacrificing the other goals of our investment policy, i.e., safety, liquidity and yield.
A VARIED INVESTMENT PROGRAM
The City of Rosemead uses a varied investment program to accomplish all of our goals -
-safety, liquidity and yield as well as local investment. Following are the types of investments
the City makes and some of the advantages of each:
The local Agency Investment Fund of the State of California offers high liquidity because
our deposits can be wired to our checking account within twerity-four hours. Interest
is computed on a daily basis.
Our savings account allows us to transfer money from checking to savings and earn
short-term interest on odd amounts of money.
U.S. treasury securities are highly liquid in addition to being considered the safest of all
investments.
City of Rosemead
Page 2
0
Investment-PolicY
•
Federal Agency securities are high liquid and considered riskless.
Bankers Acceptances are frequently the highest in yield, and are safe investments are
highly-liquid.
Commercial paper issued by prime rated industrial and financial institutions allows the
investment of-money for one to 160 days at collateralized. than we can earn from the
previously listed securities. These are also co
Certificates of deposit allow the'City to select the exact amount and day of prmaturity ior to the
well as the exact depository. There are penalties
original maturity date. These are also collateralized. higher interest rate
Negotiable certificates of deposit are high grade instruments, paying a
n re ular certificates of deposit. They are liquid because they can be traded in the
tha g
secondary market.
Medium Term Corporate Notes offer a competitiv s alternative to Nr tee enjoy rtif active
of Deposits and standard Certificates d tYs of Deposit
secondary market to provide Mutual Funds or "beneficial shares" is another auth Srized investment allowing the City
to maintain liquidity. and receive money market rate
T., ,-ut riTY c)F ROSEMEAD
N..
L2 g a I Constraints
state or federal savings associations
Money must be deposited in state or national banks, of the bank's paid
federal credit unions in the state. It may be incimactive eed the amount deposits, active deposits
or state or fed deposits. The deposits cannot ex
or interest-bearing active up capital and surplus.
must secure the active and inactive deposits with eligible securites ha inga State law also allows as
The bank
market value of 110% of the total amount of the deposits-
first trust deeds having a value of 150% of the total amount of the deposits.
a Loan Bank (FHLB).
eligible security, a
05 °!0
A third class of collateral is letters of t accept 50% toll to al in first trust deeds or a►i 1ties to
As a matter of policy, the City does no
Credit. drawn-on the FHLB, even though the state statutes allow munc~p
Letters of
accept them. which 1!
his discretion, waive security for that portion afdepostss fade all•
The treasurer may, at the first 5100,000 of fir=
insured pursuant. to federal law. Currently,
insured. It is to the City's advantage l`Z d othe ive t collateral wle accelpt is 110% uirement of for the the depos
$100,000. If funds are to be collatera
in government securities.
City of Rosemead investment policy
page 3
Deo sierv~ces
dive deposits are demand or checking accounts nd acccourece nts ive revenues and pay
A
disbursements. The City of Rosemead has three
General checking account
• Payroll checking account
Redevelopment Agency bond proceeds checking account
Interest-bearing active deposits are money market accounts at a financial institution (i.e., check ing
bank, savings and loan, credit union). These ~ GtY of Rosemead hastwo accounts of this
accounts) for the restricted Redevelopment Agency.
nature
Inactive deposits are Certificates of Deposit issued in any must bfor periods of ti a 3s day
asf as several years. Interest calculated on
b fourteen days and of long given time, the City may have certificates of deposit
basis, actual number of days. At any we do not invest in CD's for longer
in several financial institutions. As a matter of policy,
than one year.
We require that each financial institution submit use s fnanci lg following ements which are
evaluated by staff prior to investment of funds.
The institution must have been in business at least three years.
'the .institution must submit audite financial statements.
iability ratio
to V
The to orth
institution must have assets of at least $50 million and a net ed debt and Reserves
of 3..5 5 to 1. For calculations, net worth does not include subordina
for Allowance for Loan Losses.
City investments of less than 180 days to maturity can use a net worth to asset ration
eral years' financial data is evaluated to present a trend
of 3.0 to 1. possible.-the use of sev
Whenever
of activity in the institution.
We also require that interest be paid to the City on a monthly basis (current state law
only requires quarterly payment).
due
Passbook savings account is similar to an inactive deposit except of for a fixed ding to Th
savings account allows us flexibility. Funds can be deposited and withdrawn daily needs.
•
City of Rosemead Investment Policy
Page 4
INVESTMENT VEHICLES AS THEY RELATE TO THE CITY OF ROSEMEAD
9cal Constraints
Surplus funds of local agencies may only be invested in certain eligible securities. The
City of Rosemead invests only in these securities. See Government Code, Section 53601,
a-m, Investment of Surplus Funds. -
Effective January 1, 1989, the government code, Section 53601 states:
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."
The investment strategy for the City of Rosemead is similar to administer an operational
portfolio. A definition of an operational portfolio is to have adequate funds available at all
times to meet appropriated and projected cashflow requirements for the City of Rosemead.
From time to time, the investment strategy may wish to capture high yields with the
purchase of safe, low risk, highly liquid investments. For purchases greater than five years,.
he following requirements must,.be met:
1.. The security must be a U.S. Treasury Note or bond, a Federal National Mortgage
Association (FNMA) debenture of Federal Home Loan Bank (FHLB) debenture.
2. A maximum of twenty-five percent of the City's funds can be invested in
securities with maturities between five and seven years.
3. No securities can be purchased for the City of Rosemead or the Rosemead
Redevelopment Agency with a maturity greater than five years, without the
Committee approval and Council consent. ,
The City of Rosemead does NOT purchase or sell securities on MARGIN.
Investment Vehicles
U.S. TREASURY's are direct obligations of the United States Govemment.
U.S. T-BILLS 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 a highly liquid security.
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City of Rosemead Investment Policy
Page 5
U.S. T-NOTES are initially issued with
traded in a large secondary market and
issues with a minimum of $1,000.
two to ten year maturities.' They are actively
are very liquid. The Treasury may issue bond
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 As 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. They are issued for various maturities frorn "a few months to twenty
years in denominations of $10,000 minimum. The notes are issued with maturities, of
less than one year and interest is paid at maturity. The bonds are issued at various
maturities and interest is paid semi-annually. Interest is computed on a'30 day month,
360 day year basis. There is a strong secondary market in these securities. The City
invests periodically. in FNMA's.
FHLB's (Federal Home Loan Bank) 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. The minimum,
denomination is $5,000. The notes are issued with maturities of less than one year and
interest is paid at maturity: .-The bonds are issued at various maturities and carry semi-
annual coupons. Interest.is computed .on a 30 day month, 360 day year basis. There
is a strong secondary market in these securities. The City invests periodically in FHLB's.
FFCB's (Federal Farm Credit Bank) are debt instruments to finance the short * and
intermediate term needs of farmers and the national agricultural industry. They are
issued monthly with 3 and 6 month maturities. .The FFCB also issues discount notes
with maturities less than one year purchased at a discount with interest paid at maturity.
FFCB term issues longer than one year pay interest semi-annually on a 30/360 basis.
These issues enjoy an established secondary market, The City invests in these securities
from time to time.
`TVA's (Tennessee Valley Authority) are loans to finance the capital acquisitions of the-
Authority. These issues are issued in intermediate and long term maturities. All issues
are fully guaranteed by the U.S. Government against default. Interest is payable semi-
annually and at maturity and is calculated on-a 301360 basis.
Other federal agency issues are Small Business Administration notes (SBA's) and
Government National Mortgage Association notes (GNMA's). As a matter of policy, the
City does NOT invest in these issues because they do not suit our purpose as well as
those outlines above.
City of Rosemead Investment Policy
Page 6
Bankers Acceptances
Bankers Acceptances are a short-term credit arrangement to enable bus' esses to obtain
funds to finance commercial transactions. They are time drafts drawn n a bank by an
exporter or importer to obtain funds to pay for specific merchandise. By jin-restis acceptance, the
bank becomes primarily liable for the payment of the draft at its maturitn acceptance is
a high grade negotiable instrument. Acceptances are purchased in varionominations for
original issue terms of 30"to 180 days but no longer than 270 days. The calculated
on a 360 day. discount basis similar to Treasury Bills. Locat agencies not invest more
than forty percent of their surplus money in bankers acceptances. The vesttln bankers
acceptances; - ay be in these short term
investments. The City of Rosemead does not use these:
Local Agencv Investment Fund
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
if $5,000, in multiples- of $1,000 above that, with a maximum of $20,000,000 for any
agency. The City is restricted to a maximum of ten transactions per month. L.A.I.F. offers
high liquidity because deposits can be converted to cash within twenty-four hours. All
City of Rosemead Investment Policy
Page 7
interest is distributed to those agencies participating on a proportionate share determined by
the amounts deposited and the tpngth of time they are deposited. Interest is paid quarterly
via a check or direct deposit to Agency's L.A.I.F. account.
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
L.A.I.F., but in times of low interest rates, L.A.I.F. yields are higher. The City continually
invests in the Local Agency Investment Fund.
Negotiable
institution, banl
accrued inter
issuance ' in n
of $50Z,000 al
of
M 7, (NCD's) unsecurAll ations or 71 a
ug?pa Yn ' a to face v ue
h' able t . The prim
he arket aides in de ina
e occailablty invests riodic~
;r of with t U.S. B s (i.e.,
tan, a sec arket is
Local agencies may not i nvest more t n 30° of
at at Y. They
u s of $1 mi
ugh smaller I
although as
established for continued
•
City of Rosemead Investment Policy
Page 7
Commercial Paoer
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
or at par value with interest bearing. Commercial paper is issued by corporations such as
General Motors Acceptance Corporation (GMAC), Shearson-American Express, Bank of
America, Wells Fargo Bank, 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. fifteen percent of the local agency's surplus funds.
Medium Term Corporate Notes
Medium Term Corporate Notes are unsecured promissory notes issued by a corporation
organized and operating in the United States. These are negotiable instruments and traded
in the secondary market. Medium Term Corporate Notes can be defined as extended maturity
Commercial Paper. Corporations use these medium term debt securities to raise capital.
Examples of corporate medium term notes (MTV's) are General Electric, Shearson-American
Express, GMAC, Wells Fargo Bank, Citibank, Southern California Edison, etc.
Local agencies are restricted by-the Government Code to investments in corporations
rated in the top three note categories by a nationally-recognized rating service. Further
restrictions are a maximum term of five years to maturity and total investments in MTN's may
not exceed thirty percent of the local agency's surplus money.
Mutual
beneficial in
fists jd by
its b ws to tf
to in
n is as the oca gen
f Calif omi a d City
of Deposit, otiable C
ality ratin * nd perc
l agency o applie c
601, L, as "shares of
Mutual Fund must be
rhese ' es ment are
Notes.
;able to
of
in
A ~urther restnl'ction is that the purchase price of shares of the mutual funds
include any sales commission. Investments in mutual funds shall not exceed fiftee
of the local agency's surplus money.
wp:agenda:13
9
ATTACHMENT B
NOT OFFICIAL UN7-1,
ADOPTED BY THE
ROSEMEAD
MINUTES OF THE ADJOURNED REGULAR MEETING CITY COUNCIL
ROSEMEAD CITY COUNCIL
OCTOBER 3, 1995
il
ll
d
de
f
h
R
d Ci
C
b
i
ounc
e
osemea
was ca
e
to or
r
y
ng o
t
ty
The adjourned regular meet
Mayor Vasquez at 7:50 p.m. In the Conference Room of the City Hall, 8838 E. Valley
Boulevard, Rosemead, California.
The Pledge•to the Flag was led by Councilmember Taylor.
The Invocation was delivered by Councilmember Bruesch
ROLL CALL OF OFFICERS:
Present: Councilmembers Bruesch, Imperial (arrived at 7:55 p.m.), Taylor, Mayor
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Pro Tam Clark (arrived at 7:55 p.m.), and Mayor Vasquez
Absent: -'None
1. A STUDY SESSION TO DISCUSS THE CITY FINANCE-COMMITTEE
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Councllmember Taylor defined the inakaup,of the current investment Committee as
consisting of the Treasurer, the City Manager, and the Finance Director and asked what has
changed since the problem we had after the last bond sale to prevent it from recurring.
Frank Tripepl, City Manager, responded that the Council has set a very specific policy
that says we will not deal with brokerage houses, get into the stock market, securities, or the
long bond market as investment vehicles. Mr. Tripepi stated he believed the purpose of this
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meeting was to define the proper investments.
v
Councilmember Taylor asked what caused the problem with the bond proceeds and
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who will be responsible for uinderstanding the restrictions and regulations to prevent this from
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happening again.
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Mr. Tripepi explained that the oversight was coused.by a lack of understanding by Merrill
Lynch of whet were viable and/or legal investment- vehicles that the City or Agency could
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Invest in, and that the city Treasurer, working with the Finance Committee members will
follow policy set by Council to invest funds at the highest yield rate possible within legal
boundaries.
Councilmember Taylor inquired if the three members. of the Investment Committee
were aware or not of the regulations. _
Mr. Tripepi responded that some were and some weren't.
a
Councllmember Taylor responded that it there was an oversight and it was missed, at
that point whet protection would we have that that doesn't happen again.
Mr. Tripepi responded that there needs to be a better understanding between the
Treasurer and the other members as to what those Investments will be prior to the time they .
are made.
Councilmember Taylor then asked who'would be sure the oversight wouldn't happen
9
again and determined that the Treasurer apparently has that responsibility.
Hugh Foutz, City Treasurer, said that he was fully aware that long term bonds were
not to be invested in without specific approval, but that since he had been doing it for twenty
years, he felt that that was a kind of approval. After some discussion about fluctuating
'
held on to the
interest rates, he felt that the loss could have been prevented if we had
securities.
CC 10-3-95
Page 1
•
Mr. Tripepi pointed out that.the policy which states that purchases more then five
years cannot be done without Council approval.
Peter Wallin, City Attorney, stated that the problem was that Mr. Foutz had invested
in long term securities.
Mr. Foutz stated that he did not hold anything long term and always had cash reserve
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to cover any of the forecast cash flow.
Councilmember Imperial stated that there was no use pointing fingers at who was
wrong and stated that an investment policy and finance committee needs to be formed in
order to prevent future problems from occurring. Mr. Imperial continued that this should never
have happened, but that he thought we had a safety system in place-and apparently it wasn't :
good enough and that we need to move forward.
f
Mayor Pro Tem Clark stated that if there is no admission of what went wrong, then*
we may fall into the some situation again and added that investments longer then five years.
should require Council approval. Sli"e also stated that in addition to the long term investment,
anothar•problern was the type of investments which weren't legal anymore.
Mr. Wallin affirmed that the legal- restrictions applicable to City money were not the
some as for Agency money. The Redevelopment Agency did not have a limitation on five year
investments as the City did, and Bond Counsel opined that several of the Agency investments,
:n
although they may be legal under redevelopment low,. they not legal under the bond
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covenants. •
Mayor Pro Tom Clark stated that the third problem was the fact of arbitrage -that even .
= a•
If you make more money on your investments than the rate you borrowed the monay at, the
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Federal government says you cannot keep the profit.
Mr. Foutz stated that since you are not through with the investment for thirty years,
he would want to make a good profit on the investment and that It is after thirty years that
?y •
you measure whether you made a profit..
Mayor Pro Tom Clark repeated her concern that since the government makes you pay
back any profit you make, why ere we taking the risk of investing in securities that can
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fluctuate?
Mr. Wallin and Mr. Tripepi confirmed that It is not at the end of thirty years, it is every
year that bond counsel computes the arbitrage. You cannot invest at a higher yield than you
borrowed at. W. Tripepi confirmed that this information comes from the Bond Counsel and
independent city.suditors.
Mr. Foutz stated that he has conflicting advice about arbitrage from many sources, but
that he must abide by our Bond Counsel.
Councilmember Imperial stated that this was 'water under the bridge' and we need
to move on.
Councilmember Bruesch explained that the public is more aware of City's finances, that
laws are being changed and tightened and Council needs to move forward and become more-
knowledgeable and start overseeing Rosemead's finances and investments.
Discussion ensued as to who would be on the Finance Committee and receiving
quarterly repoits from the City Treasurer.
MOTION SY COUNCILMEMBER BRUESCH, SECOND BY MAYOR PRO TEM CLARKthat
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the Council receive quarterly reports and Minutes from the Finance Committee meetings.
Before vote could occur, more discussion ensued.
CC 10-3-95
Page 2
Councilmember Taylor emphasized that this motion does not change anything and what
guarantee is there that somebody is keeping current and aware. of all state, and federal
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regulations. Mr. Taylor continued that while Mr. •Foutz has done a good job, someone else
needs to be accountable also, such as the City Manager and Finance Director if they can keep
abreast of -all the changes and reflect those changes in the minutes.
Councilmember Imperial suggested that a Councilmember be involved in the committee.
Councilmember Taylor responded that a professional familiar with the rule and changes
would be more suitable.
v . Mr. Tripepi stated that the California Society of Municipal Finance Officers (CSMFO)
publication and the California Municipal Treasurer's Association (CMTA) have meetings and
publications discussing guidelines regarding legal investments and that the Finance Committee
meetings should consist mainly of making decisions as lo what to do with investments rolling
over and where should It go to maximize the investments.
Councilmember Bruesch stated his motion again that the Council receive quarterly
reports and minutes from the City Finance Committee, and that the minutes be placed on the
city's Consent Calendar. Before vote could result, more discussion ensued.
Mr. Tripepi explained that there may be times-when-there will not be a meeting, for
example, when the money is already invested and does not require any decisions.
After discussion, it was agreed that the Finance Committee should mast quarterly
regardless.
Councilmember Taylor said that his onl _robl with J~Ar. Foutz' inv stme s over
years had been the legal regulations=
U 1 Y' .
Mr. Tripepi stated that other members of the Council did not feel taxpayer!;. dollars
should be played in a volatile market such as the bond m rket. He heard this expressed by
Mayor Pro Tom Clark and Councilmember Bruesch.
Mayor Pro Tom Clark asked What would happen If there was not a unanimous consent
among the Finance Committee members.
' Peter Wallin, Clty'Attomey;• responded that if the committee serves as advisor to the
Treasurer, then the Treasurer has the power to do investments.
w Mayor Pra Tom Clark named the three areas that she considered were wrong; (1) the
investments in question had emphasized yield over safety and liquidity and there was no
rational basis for such an investment policy, when in any event, yield was limited by arbitrage
'r restrictions; (2) the Agency investments in bonds issued by utility companies did not appear
y to be suthorized•by the bond covenants or state law; and (3) the Investment of City funds in
bonds that matured in more than five years had, as pointed out in the letter from the City
g auditor, violated legal restraints on City investments. Mayor Pro. Tom Clark than asked Mr.
2 Foutz whether the -City Manager had pointed out to him what was wrong with these
"S Investments.
Mr. Foutz stated that no one pointed them out until Frank had the proposal with
Structured Finance.
Councilmember Bruesch again asked Mr. Foutz that since he had not been attending
:w. the Treasurers' meetings whether he was privy to the information concerning these
:z regulations?
Mr. Foutz stated that arbitrage is a grey area and that Bond Counsel was unclear about
It even at the meeting.
P
CC 10-3-95
Page 3
Mayor Pro Tom Clark disagreed and stated that It had been made very clear. • She
reitaratpd her concern that if local governments cannot keep the money they make on higher
interest rates, then why are we investing in risky investments.
Mr Foutz countered as to why we seek lower borrowing rates In the first place?
Mr. Tripepi explained that you borrow at the lowest rate possible, similar to a home
buyer, and that the purpose of borrowing the money Is to do projects, not to reinvest the
money.
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, if
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ly
Councilmember Imperial repeated that he felt we should not be going over this again.
Mayor Pro Tom Clark stated again that if there Is not an admission of mistakes made,
the same problem wig occur again, and that is why she is asking for a unanimous agreement
among the committee, and if an admission is not made, then we have a serious problem.
Mrs. Clark continued that It was her understanding that Mr. Tripepi had warned Mr. Foutz
concerning the investments and asked If that was true.
Mr. Foutz said that it was 'over his bhoulder, walking into his office% saying he
wanted to do...the 3.6696 when it first came out
Councilmember Taylor commented that it would be the responsibility of the Finance
Committee to be aware of the three items that Mrs. Clark mentioned. Mr. Taylor stated that
basically it was not a question of poor investment but of not following regulations, such .es
the TVA. While it was a good investment, it was a violation of utility and long-term
investment regulations.
Mayor Pro Tom Clark stated that if one member of the committee informs the Treasurer
of a violation, than that item would have to go to Council to resolve. Councilmembers Taylor
and Imperial concurred.
Councilmember Bruesch requested that a clause be added to the Investment
Committee of the RMC. Section 2207, (c) to read that any decision of the Finance Committee
be of unanimous consent.
Mr. Tripepi stated that he had no -problem with taking on an additional duty. He stated
that Structured Finance was not new to this City and that when we sold all those long term
bonds, Structured Finance had given Mr. Foutz a schedule of investments of all the money.
Mr. Foutz had objected to Mr. Tripepi getting involved end stated he would do the
investments. Mr. Tripepi stayed out of it with the exceptioh of the escrow fund overage,
which stayed with Structured, which has been perfectly legal; not triggered by the audit, and
has been a fine Investment. Mr. Foutz took the bond proceeds and put them with Merrill
Lynch. That was not Mr. Tripepi's choice. He reiterated that Mr. Foutz had most Structured
Finance early on,in the bond deal.
Mr. Foutz stated that he felt that was an oversimplification of what had taken place.
Councilmember Bruesch. called for the question.. .
Discussion ensued that that would be a policy change. Mr. Wallin added that a policy
change, such as taking away the power of the City Treasurer and investing it in a committee
of the three, would require an ordinance.
COUNCILMEMBER BRUESCH requested that his MOTION include the unanimous
consent clause as part of the Investment Committee section of the Rosemead Municipal Code.
COUNCILMEMBER TAYLOR bifurcated that MOTION to vote first on the submittal of
-quarterly reports and the updating of regulations.
Councilmember Bruesch called for the question.,
CC 10-3-95
Page 4
Mayor Pro Tom Clark requested clarification on the motion and the unanimous consent
clause and stated that she does not went to vote on the Investment Committee without that
clause as it Is germane to the effectiveness of the committee.
Mr. Wallin clarified that there is a Motion and a Second on the floor that the Finance
Committee provide Council with quarterly reports of their meetings, and there is nothing
before the Council at this time on how the committee makes their decisions.
Mayor Pro Tom Clark asked what procedure Is necessary to include that policy
decision.
Mr. Wallin responded that such a decision could be included In the investment policy,
or by adopting a resolution, or by minute action.
Mr. Tripapi'stated that the committee Is already in place and this motion assures that
' the committee will most on a regular basis and provide reports.
Councilmember Bruesch confirmed that anything that changes the duties of the
committee would have to be done by ordinance.
Mr. Wallin added that the Council can adopt a motion to instruct staff to return with
an ordinance to that effect:
Councllmember Bruesch stated that world be the next step.
MOTION BY COUNCILMEMBER BRUESCH, to amend the previous motion calling for
unanimous consent and directed staff to develop a policy that 2207 (c) of the Rosemead
Municipal Code state that the committee will provide Cotiincil with quarterly reports and
minutes of the meetings. '
Mayor Pro Tam Clark stated that she will not second the amended motion without the
inclusion of the unanimous consent statement.
MOTION BY COUNCILMEMBER TAYLOR, SECOND BY COUNCILMEMBER BRUESCH
to table the previous motion and that the new motion include under 2207 (c) Rosemead
Municipal Code that the Finance Committee most quarterly and provide Council with reports
of those meetings. Vote resulted:
Yes:
No:
Absent: t
Abstain:
Bruesdh, Vasquez, Imperial, Taylor
Clark
None _
None
The Majidr_declared such motion duly carried and so ordered.
MOTION BY COUNCILMEMBER BRUESCH, SECOND BY MAYOR PRO TEM CLARK that
2207 Idl state that-ell investment policies be by unanimous consent of the members of the
Investment Committee and any non-unanimous decisions be brought before the Council.
a Before vote could result, more discussion ensued.
Mr. Tripepi pointod out that if investments come due after- a Finance Committee
meeting, would a special meeting of the Council have to be called as to where to invest that
c. money.
Mr. Wallin asked If every Investment would have to come before the Finance
:F Committee, for example, if on a Friday afternoon and Mr. Foutz is not available, can Mr.
Tripepi invest $500,000 available in to a short term fund investment to earn 82,000 over the
weekend.
CC 10-3-95
Page 5 -
Councilmember Bruesch suggested a proviso can be added whereby only major
decisions regarding the amount and length of investments come' before the Council.
Mr. Tripapl explained that that would be taking power away from the Treasurer and
that the Treasurer has to be given the responsibility to do those short term repurchase
Investments, with his alternate as backup when he Is out"of town.
s.
Councllmember Taylor stated that there have not been any. problems with the .
investments made by the Treasurer in the past, and with the Finance Committee in place
providing quarterly reports, the Council will have a financial overview without having to
become involved in the day-by-day operations.
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Mr. Foutz stated there have not been any disagreements over the years with his
Investments except this one occasion and this situation came about largely due to the Orange
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County fiasco.
Mayor Pro Tam Clark agreed that the Council should not micro-manage either, but
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there were investments made in thdpsst that were not proper and wants assurance that this
does not occur again. Mrs. Clerk stated that she did not feel we had solved the problem.
Also discussed *end agreed upon was the willingness and ability of the City Treasurer
and City Manager to work together on the Finance Committee to follow Council's policy. .
Councilmember Taylor called for the question. Vote resulted:
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Yas: Bruesch, Clark
:4
No: , Vasquez, Imperial, Taylor
Absent: None
Abstain: None
3
The Motion failed to pass. ,
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Councilmember Taylor clarified for Mr. Foutz that the Motion was that the committee
had to be unanimous in everything it did for the investments 'and the vote was No; therefore,
they are to continue as they have been.
The next topic discussed for contextual purposes was the City's Investment Policy.
Counciimember Bruesch asked If banks have a local investment policy.
Mr. Tripepi responded that that Is not necessary because federal banking laws under'
the Community Reinvestment Act requires local banks to puts percentage of money back into
the community that they gat by way of investments.
Councllmsfnber Taylor inquired about another law or regulation that requires Investing
our money in banks that earn the highest return for the taxpayers.
Mr. Tripepi responded that the City or Agency has to buy the Certificate of Deposits
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from the bank that has the highest return.
Councilmember Bruesch requested that the Investment Policy include investing in local
banks as much as possible.
' Mayor Pro Tam Clark inquired about the Negotiable Certificates of Deposit (NCD's)
section relating to unsecured obligations.
Foutz responded that the City does not use NCD's and the C.D's invested in has
Mr
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a 110% guarantee, and he will not Invest money in a bank without collateral.
MOTION BY MAYOR PRO TEM CLARK, SECOND BY COUNCILMEMBER TAYLOR that
the entire paragraph relating to Negotiable Certificates of Deposit of the Investment Policy be
deleted. Vote resulted:
CC 10-3-95
Page 6
0
Aye:
No:
Absent:
Abstain:
The May
Bruesch, Clark, Vasquez, Imperial, Taylor
None
None
None
or declared said motion duly carried and so ordered.
MOTION BY COUNCILMEMBER BRUESCH, SECOND BY COUNCILMEMBER TAYLOR
.#mt the entire paragraph relating to Mutual Funds of the Investment Policy be deleted. Vote
resulted:
I
yr
3r
A:'
Aye: Bruesch, Clark, Vasquez, Imperial, Taylor
No: None
Absent.: None
Abstain: None
The Mayor declared said motion duly carried end so ordered.
Mayor Pro Tam Clark requested confirmation from the City Treasurer, City Manager,
and Finance Director that the Items remaining in the Investment Policy are safe Investments.
The response vyas affirmative.
MOTION BY COUNCILMEMBER TAYLOR, SECOND BY COUNCILMEMBER IMPERIAL
that the Council approve the amended Investment Policy. Vote resulted:
Aye:
Bruesch, Clerk, Vasquez, Imperial, Taylor
No:
None
Absent:
None
Abstain:
None
The Mayor declared sold motion duly carried and so-ordered: -
II. - ADJOURNMENT
There being no further action at this time, the meeting was adjourned at 9:20 p.m.
The next regular meeting will be held on October 14, 1995, at 8:00 p.m.
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Respectfully submitted:
City Clerk
APPROVED:
MAYOR
CC 10-3-95
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