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Home My Public Portal AboutA1999-06-06 LPFA . � � AGENDA ITEMS ON FILE FOR CONSIDERATION AT THE REGULAR MEETING OF ' �Z� ��-� THE LYNWOOD PUBLIC FINANCE AUTHORITY R E �E D I TO BE HELD ON APRIL 6, 1999 CRypp lYNW00U 6:00 P.M. � CfTY CLERKS Of7CE COUNCIL CHAMBERS APR X 1 1999 AY ' PN RICARDO SANCHEZ . 7�8�9�11�1��5�6 PRESIDENT C C�� -- �� I_ _,,,, P �'�`: LOUIS BYRD ARMANDO REA Q ��i/��` VICE PRESIDENT MEMBER ARTURO REYES PAUL H. RICHARDS, II MEMBER MEMBER CHIEF ADMINISTRATIVE OFFICER FINANCE DIRECTOR RALPH W. DAVIS, III ALFRETTA EARNEST SECRETARY TREASURER ANDREA L. HOOPER IRIS PYGATT OPENING CEREMONIES 1. CALL TO ORDER 2. ROLL CALL OF COUNCIL MEMBERS Louis Byrd � Armando Rea AP'tUl'0 RAy@5 Paul Richards Ricardo Sanchez 3. CERTIFICATION OF AGENDA POSTING BY CITY CLERK PUBLIC ORAL COMMUNICATIONS cRegarding Agenda Items Only) PUBLIC ORAL COMMUNICATIONS IF AN ITEM IS NOT ON THE AGENDA, THERE SHOULD BE NO SUBSTANTIVE DISCUSSION OF THE ISSUE BY THE COUNCIL, BUT IT IS ALL RIGHT FOR COUNCIL TO REFER THE MATTER TO THE STAFF OR SCHEDULE SUBSTANTIVE DISCUSSION FOR A FUTURE MEETING. (The Ralph M. Brown Act, Government Code Section 54950-54962, Part III, Paragraph 5.) 4. MINUTES OF PREVIOUS MEETING: Regular Meeting, March 16, 1999 . � i - -� � 5. INVESTMENT POLICY Comments: The Statement of Investment Policy has been prepared to establish guidelines for the prudent investment of Lynwood Public Finance Authoriry�s, idle cash. Recommendation: It is recommended that the President and Members adopt the attached resolution entitled: °A Resolution of Lynwood Public Finance Authority of the City of Lynwood Approving the Treasurer�s Statement of Investment Policy". ADJOURNMENT ' MOTION TO ADJOURN TO THE REGULARLY SCHEDULED MEETING ON APRIL ; 20, '1999 AT 6:00 P.M., IN THE COUNCIL CHAMBERS OF THE CITY HALL, ; 11330 BULLIS ROAD, CITY OF LYNWOOD, CALIFORNIA. i _- ' I � � � I ; , I 2 '� i � I - � � LYNWOOD PUBLIC FINANCE AUTHORITY. MARCH 16. 1999 The Public Finance Authority of the City of Lynwood met in a Regular Session in the City , 11330 Bullis Road, on the above date at 6:45 p.m. President Sanchez presiding. Member Byrd, Rea, Reyes, Richazds and Sanchez answered the roll call. Also present were Interim Chief Administrative Officer Davis, Finance Director Earnests, Secretary Hooper and Treasurer Pygatt. Secretary Hooper announced the Agenda was duly posted in accordance with The Brown Act. PUBLIC ORALS None ITEMS FOR CONSIDERATION It was moved by Member Byrd, seconded by Member Reyes, and carried to approve the following minutes: a) Regulaz Meeting, Mazch 2, 1999 President Sanchez introduced the next item, SB859 Economic Equity Districts. � It was moved by Member Byrd, and carried to: ; RECEIVE AND FILE STAFF'S RECOMMENDATION, FOLLOWED BY THE PRESENTATION BY THE WILSON GROUP. , Having no further discussion, it was moved by Member Byrd, seconded by Member j Richazds and carried to adjoum. � l i PRESIDENT RICARDO SANCHEZ SECRETARY ANDREA L. HOOPER ; I � _ i AGc.i1D T�d 1 � � � � � DATE: April 6, 1999 TO: PRESIDENT AND MEMBERS OF T'HE LPFA FROM: Iris Pygatt, City Treasurer SUBJECT: Investment Policy—Lynwood PubGc Financing Authority INTRODUCTION: The investment policies and practices of the City of Lynwood are based on state law and principles of prudent money management. Tfvs statement is intended to provide guidelines for the prudent investment of the Agency's temporarily idle cash, and it is submitted annually for City review. The primary goals of these policies aze: 1. To assure compliance with all federal, state, and local laws governing the investment of Monies under the control of the City Treasurer. 2. To protest the principal and asset holdings of the City's portfolio. 3. To generate the maximum amount of investment income within the pazameters of these ' Investment policies and guidelines for suitable investments. I 4. To ensure that adequate liquidity is provided for the prompt and efficient handling of Ciry ' disbursements. j POLICY: � i i Under laws appiicable to general law agencies, and in accordance with guidelines adopted by ihe � Lynwood Redevelopment City, the City Treasurer is responsible for investing the unexpended ! cash in the Ciry treasury. This delegation of authoriry to the City Treasurer is subject to annual ' review and renewal by the City, Lynwood Redevelopment Agency and Lynwood Information Inc. ' This investment policy applies to all investment.activities of the City, except for the Employees Retirement and Deferred Compensation Funds, which are administered sepazately. This policy � applies to all City funds, e�ccept for bond proceeds that aze managed by trustees. Trustees have i no obligation to adhere to this policy, but they must comply with the provisions of bond indenture j agreements. Policy statements outlined in this document apply to the City's pooled funds, as well i as all other funds under the Ciry Treasurer's control unless exempted by resolution or by statute. j PRUDENCE: � I Generally, investments must be made in accordance with the "prudent investor rule", which states i that: � '7nvestments sha11 be made wrth judgment and care, under circumstances then prevailing, which i persons of prudence, discretion, and intelligence exercise in the management oJ their own. � affarrs, not for speculation, but for investment, considering the probable income to be derrved. " � at the time of purchase, it is the City's intent to hold all investments until maturiry to ensure the � return of all invested principal. However, it is recognized that market prices of securities will vary ! depending on economic and interest rate conditions at any point in time. � i The Ciry Treasurer, and other individuals who may be designated to manage the Ciry's investment portfolio, when acting within the intent and scope of tlris investment poGcy and other authorized written procedures, and when exercising due diligence, are refieved of personal liability for the ! credit risk or market price change of a security or other investment, provided that deviations from ; AQENDA ITEN ' i � - I . � � • expectations are reported to the City of Lynwood in a timely manner and that appropriate action is taken to mitigate unforeseen adverse conditions. GOALS AND OBJECTIVES: The basic goal of the City's investment policy is to ensure the safety and availability of temporarily idle funds when they aze needed. Taking into account the City's daily and periodic cash-flow needs, the City desires to invest all temporarily idle funds at a level as close to 100% as is reasonably possible. . The major.portion of ' the City investment portfolio will consist of investment securities having mahuates of one year or less. Longer term maturates are authorized, but may not generally exceed 15% of the investment portfolio. Safety of principal is the foremost objective of the City. Each investmem transaction must seek to ensure that capital losses are avoided, whether from securities default, broker-dealer default, or erosion of market va(ue. The City will endeavor to preserve principal by mitigating both credit risk and market risk, as specified below. Credit risk, which is defined as the risk of loss due to insolvency or other failure of the issuer of a security, must be mitigated by purchasing investment gade securities and by diversifying the i investment portfolio so that the failure of any one issuer does not unduly harm the Agency's � capital base and cash flow. i i Mazket risk, which is defined as market value fluctuations, must be mitigated by Gmiting the � average maturity of the City's investment portfolio to 2 years, limiting the maximum maturity of � any one security to 5 yeazs, structuring the portfolio to take into account historic and current cash � flow analysis, eliminaring the need to sell securities for the sole purpose of short term speculation. j LIQUIDI7'Y: -- � Because the City operates its own water utility and bills monthly for utility services, cash flow is � generated on a daily basis. Historical cash flow uends must be compazed to current cash flow requirements on an ongoing basis to ensure that the City's investment portfolio will remain � sufficiently liquid to enable the Ciry to meet all reasonable anticipated operating requirements. � COLLATERAL REQUIREMENTS: ' Collateral is required for investments in certificates of deposit and repurchases agreements. In order to reduce mazket risk, the collateral level must be at least 102% of market value of principal and accrued interest. � In conformity with the provisions of the Federal Bankruptcy Code that provide for the liquidation ' of securities held as collateral, the only securities acceptable as collateral aze certificates of � deposit, commercial paper, eligible bankers acceptances, and medium term notes or securities that aze the direct obligation of, or are fully guazanteed as to principal and interest by, the United ' States or any City of the United States. ' AUTHORIZED INVESTMENTS: � Generally, investments must be made in accordance with the "pn�dent investor rule" that is cited above under the heading "Prudence." � The City is subject to California Government Code, Sections 53600 et seq. Within the context of ' these limitations, the following investments are authorized, subject to the restrictions noted below: A. United States treasury bills, notes, and bonds, or similar instruments for which the full faith and credit of the United States is pledged for paymem of principal and interest. There is no Gmitation on the percentage of the City's surplus funds that can be invested in these instruments. The ma�dmum maturity period may not exceed 5 years. . � � B. Obligations issued by the Federal Fazm Credit Bank System (FFBC), the Federal Home Loan Bank Boazd (FHLB), and the Federal National Mortgage Association (FNMA). Although there is no percentage Gmitation on investments in these obGgarions, the "prudent investor rule" applies to obGgations issued by any of these agencies, because U. S. Govemment badang is impGed rather than guaranteed. G Bills of exchange or time drafts drawn on and accepted by a commercial bank, otherwise known as bankers acceptances. Bankers acceptances that aze purchased may not exceed 270 , days maturity, or 40% of the City's temporarily idle fiu�ds, and no more that 30% of the Ciry's temporally idle funds may be invested in the bankers acceptances of any one commercial bank. D. Commercial paper rated "P1"by Moody's Investor Services and "Al+" by Standard & Poor, and issued by a domestic corporation having assets in excess of $500,000,000 and having an "AA" or better rating on its long term debt as determined by Moody's or by Standard and Poor. The purchase of eligible commercial paper may not exceed 180 days maturity nor represent more than 10% of the outstanding paper of an issuing corporation. The purchase of commercial paper may not exceed 15% of the City's surplus funds. E. Negotiable certiScates of deposit issued by a nationally or state-charted bank or a state or federal savings and loan association. Negotiable certificates of deposit may not exceed 30% of the City's total portfolio. Certificates purchased from a bank may not exceed the shazeholders' equity in the bank. CertiScates over $500,000 purchased from a savings and loan association may not exceed the net worth of the association. A maturity limitation of 5 � years is applicable. , F. The City may invest in the Local City Investment Fund (LAIF) established by the State ' Tteasurer for the benefit of local agencies up to the maximum permitted by State law. G. The City may invest in non-negotiable time deposits that are collateralized as required by the - i California Govemment Code, and that are maintained in banks and savings and loan � associations that meet the requirements for accepting deposits of public funds. Because time deposits are not liquid, no more that 25% of the City's temporarily idle funds may be � invested in this category. � H. Medium term corporate notes with a maximum maturiry of 5 yeazs may be purchased. Securities eligible for investment must be rated AA or better by Moody's or Standard & ! Poor's rating services. Medium term notes may not exceed 30% of the market value of the ' Ciry's portfolio, and not more than 15% of the market value of the portfolio may be � invested in notes issued by any one corporation. Commercial paper holdings must be included � when calcularing this 15% Gmitation. ! PROHIBITED INVESTMENTS: I Investments not described above, including but not limited to corporate shazes of stock, corporate � bonds, reverse repurchase agreements, and investments prohibited by Section 53601.6 of the ' Government Code aze prohibited under this investment policy. ' QUALIFIED DEALERS AND INSTITUTIONS: , T'he Ciry may transact business only with banks, savings and loan associations, and registered investment dealers. Any investments other than those purchased directly from an issuer must be purchased &om (i) an individua] or entity licensed by the State as a broker-dealer, as defined in � Section 25004 of the Corporations Code, and wtrich is a member of the National Association of Securities Dealers; or (ri) from a member of a federally-regulated securities exchange; or (rii) a , ; . � � ,. national or state-chartered bank; or (iv) a federal or state association (as defined by Section 5102 of the Financial Code); or (v) a brokerage firm designated as a primary govemment dealer by the Federal Reserve Bank. The City treasurer must investigate and evaluate all Snancial institutions that des'ue to do business with the City in order to determine whether they are adequately capitalized, whether they make markets in securities that are appropriate to the City's needs, and whether they will agree to abide by the conditions and limitations set forth in the City's investment policy. This may be accomplished by requiring a financial institution to complete and retwn an appropriate questionnaire. COMPETITIVE BIDDING: It is the policy of the City to obtain competitive bids for the purchase and sale of investment securities. Whenever practicable, at least three bids will be obtained prior to any purchase or sale of securities by the City. SAFEKEEPING OF SECURITIES: To protect against potential losses caused by the dissolution, insolvency, or other failure of securities dealers, all securities owned by the City, must be held in safekeeping by a third-party trust department of a bank acting as agent for the City under a custody ageement executed by the bank and the City. All securities must be received and delivered using customary industry procedures. INVESTMENTS REPORTING AND MON'THLY REPORTS: In accordance with Section 53646 of the Govemment Code, the Treasurer must submit a monthly � report to the City, Lynwood Redevelopment Agency and Lynwood Information Inc. showing the i type of investment, issuer, date of maturity, par value, cost basis, interest rate, current mazket ' value of all securities, and such additional information as may be required by the City of I Lynwood. The monthly report. must also state that the portfolio is in compliance with this ; investment policy (or the manner in which it is not in compliance) and must include a statement as to the City's abiliry to meet its expenditure requirements for the next six months ( or an ' explanation as to why sufficient money will not or may not be available). INVESTMENT CON1'ROLS: � The Ciry treasurer has developed a system of intemal investment controls. These controls are � i designed to prevent losses of pubGc funds from fraud, employee error, misrepresentation of third parties, or imprudent actions by the City Treasurer's staff. ! FUTURE LEGISLATIVE CHANGES: ' I Any future legislation of the State of California that affects any provisions of this investment policy will be incorporated into this investment policy and will supersede all inconsistent � provisions. DELEGATION OF AUTHORITY: i In accordance with Section 53607 of the Government Code, the City, Lynwood Redevelopment � Agency and Lynwood InfoRnation Inc. may delegate to the City Treasurer the suthority to invest ' or reinvest City funds for a one-year period, which authority will be renewable each year. In the � absence of the City Treasurer, the authority to enter into investment transactions involving the � temporarily idle funds of the City will be exercised by that person who may be designated by the ' City of Lynwood to perform the duties delegated to the City Treasurer in the absence of the City Treasurer. ' • ! � POLICY REVIEW: In accordance with Section 53646 of the Government Code, the City Treasurer must annually submit to the City, Lynwood Redevelopment Agency and Lynwood Information Inc. a statement of investment policy, which the City of Lynwood will consider at a public meeting. Any change in the statement of investment policy will also be considered by the City of Lynwood at a public meeting. The Ciry strives to maintain the level of investment of all surplus funds as neaz 100% as possible, through daily and projected cash flow determinations. The major portion of the City's portfoGo is kept in investments with maturities of one year or less. Longer term investments are allowable, but generally do not exceed 15% of the portfo6o. The basic premise underlying the City's investment philosophy is, and will continue to be, to insure the safety and availability of funds when needed. RECOMMENDATION: It is recommended that the Agency Chairman and Boazd Members adopt the attached resolution: "A RESOLUTION OF LYNWOOD INFORMATION INC. OF THE CITY OF LYNWOOD APPROVING THE TREASURERS'S STATEMENT OF INVESTMENT POLICY. , ' I � � I � , � � : RESOLUTION NO. A RESOLUTION OF THE PRESIDENT AND MEMBERS OF THE LPFA APPROVING THE TREASURER'S STATEMENT OF INVESTMENT POLICY WHEREAS, the Lynwood City Treasurer is responsible for the City's cash flow whereby funds aze transferred from various.accounts io meet operating.obligations; and W HEREAS, the Treasurer is also responsible for the investment of idle cash; and WHEREAS, the City Treasurer has prepazed guidelines for a prudent investment policy; and WHEREAS, the policy contains certain investment criteria; and WHEREAS, the basic premise of the policy is to ensure the safety of funds and assure that the City's cash needs aze met. NOW, THEREFORE, the City Council does hereby find, proclaim, order and resolve as follows: Sectiox 1. That the City Treasurer's Statement of Investment Policy is hereby approved. Section 2. This resolution shall go into effect immediately upon its adoption. PASSED, APPROVED and ADOPTED this day of , 1999. � � I RICARDO SANCHEZ � President � APPROVED AS TO FORM: � CITY ATTORNEY , I ATTEST. � � ANDREA L. HOOPER Secretary i APPROVED AS TO CONTENT: I IRIS PYGATT City Treasurer I �