HomeMy Public PortalAbout11) 7H Stmt of Invest PolicyCity Council
August 7, 2012
Page 2
6. On June 12, 2012, the Administrative Services Director/City Treasurer reviewed the
current Statement of Investment Policy and determined that there were no changes
being recommended at that time.
7. On June 19, 2012, the City Council approved the FY 2012-13 Statement of Investment
Policy as presented.
ANALYSIS:
Prior to June 17, 2008, the City was only investing its idle funds, funds that are not
needed to meet current fiscal obligations, with the Local Agency Investment Fund (LAIF).
Due to the decreasing interest rate in LAIF funds, the City Council amended the Statement
of Investment Policy in August 2008 to allow the City to invest in COs that were being
offered at a higher interest rate with maturities ranging from 30 days to 24 months. In
June 2011, the City Council further amended the Statement of Investment Policy allowing
the City to invest in higher yield COs authorized by Government Code Section 5360, with a
maximum maturity of 5 years (30 days to 60 months) in an effort to realize higher returns
on invested funds.
1. Types of Investments
The Administrative Services Director/City Treasurer has recently evaluated the
current investment portfolio as of May 31, 2012, and is recommending the FY 2012-
13 Statement of Investment Policy be modified expanding the types of vehicles the
City can invest in. The two additional types of vehicles suggested are:
A. Los Angeles Countv Pooled Investment Fund (LACPIF)
The LACPIF is similar to the State of California's Local Agency Investment Fund
(LAIF) as it pools investments from participating agencies in the respective
jurisdiction.
The City of Temple City has been investing in LAIF for many years and until the
2008-09 fiscal year, this was the only vehicle utilized by the City of Temple City
for the investments of the idle funds. Due to the decreasing interest rate of the
LAI F funds over the last 12 months, the City began diversifying its investments in
order to realize a better rate of return without sacrificing safety. Liquidity is also
essential to meet the City's on-going cash flow needs and LAIF historically has
been utilized as a vehicle for earnings on "overnight funds" as agencies can move
money in or out of the fund daily. Staff is recommending the City utilize the
LACPIF in addition to LAIF.
B. Medium-term Notes
Medium-term notes are defined as all corporate and depository institution debt
securities with a maximum remaining maturity of five years or less, issued by
corporations organized and operating within the United States, or by depository
City Council
August 7, 2012
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institutions licensed by the United States, or any state operating within the
United States. In accordance with the State of California Government Code
Section 53601, notes eligible for investment shall be rated uAu or better by a
Nationally Recognized Statistical Rating Organization (NRSRO). There are
nine NRSROs nationally however the most recognized are Moody's, Standard
& Poors and Fitch . Furthermore, medium-term notes cannot exceed 30% of
the total portfolio.
To have the option of investing in medium-term notes, the City will have the
ability to realize a higher rate of return on a portion of the portfolio. As indicated
above, California state law requires that the investment into medium-term notes
does not exceed 5 years, the note must have at least an "A" rating and not
exceed 30% of the total portfolio. Staff is recommending that the City's
Statement of Investment Policy mirror the state law as far as the term of the
investment (i.e., not to exceed 5 years), however staff is recommending the
City's Statement of Investment Policy be more stringent than State law with
respect to the percentage of investment of the portfolio and the rating
requirement The percentage of this type of investment, medium-term notes,
with respect to total portfolio shall be 15%, and a rating of "AA" or better from
Moody's, Standard & Poors or Fitch is more conservative and is what staff is
recommending.
The recommendation to amend the Statement of Investment Policy adding these two
vehicles was not brought forward in June 2012, because the County of Los Angeles
was is the process of revising their procedures and resolution authorizing the
investment of excess funds from outside agencies. In addition, staff was still in the
process of researching the viability of medium-term notes and was not ready to make
a recommendation at that time. Both of these issues have been resolved, the
research is complete and staff is ready to move forward with the recommendation for
modifications to the City's current Statement of Investment Policy.
2. Rates of Return
A copy of the City's most recent Treasurer's Report as of June 30, 2012, is attached
(Attachment "C") for reference when considering the City's current and potential rates
of return.
In order to compare the rates of return on the new recommended investment
vehicles, the most common benchmarks for comparison are Treasury rates . The
following rates of return for Treasuries as of July 23, 2012 are provided below:
City Council
August 7, 2012
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A. Treasuries:
Term
3 month
6 month
12 month
2 year
3 year
5 year
7 year
10 year
30 year
B. LACPIF
Rate
0.09%
0.13%
0 .15%
0.21%
0.28%
0.56%
0.91%
1.43%
2.50%
The latest published rate of return for LACPIF is 0.77% as of May 31, 2012.
Since interest rates have continued to fall since May, it is anticipated that the
return on the pool will be less for June and July, however not significantly. The
rate of return on LAIF funds as of June 30, 2012 was 0.36%. The LACPIF
provides for more than twice the rate of return than that of the LAIF fund and
LACPIF is also a liquid pool providing for daily access to invested funds.
However, it would not be the City's intent to utilize this pool as a vehicle for
earnings on "overnight funds", instead it would be in the City's best interest to
take advantage of this higher rate of return and leave the funds invested in
LACPIF on a more long term basis. The City would continue to utilize LAIF for
interest on liquid funds to meet on-going operations. Further it is significant to
point out that the LACPIF rate of return on liquid funds exceeds the current 5
Year Treasury by 0.21%.
In order to put the higher return in perspective for evaluating additional interest
earnings, for every $1 million dollars invested in LACPIF rather than in LAIF, an
additional $4,000 is earned annually. Just by moving $1 0,000,000 to LACPIF,
the City can yield an additional $40,000 annually in interest earnings, leaving
more than adequate funds in LAI F for on-going cash needs for operations.
C. Medium-Term Notes
The rates of return on medium-term notes as of July 23, 2012 are:
• Rating of AA, 5 year -0.96%
• Rating of A, 5 year -1.21%
If the changes to the Statement of Investment Policy are approved as
recommended, the City would be able to invest in a 5 Year medium-term note
with an "AA" rating at a rate of return of 0.96%, which yields 0.40% above the 5
Year treasury. Again, with each $1 million dollars invested in a note rather
City Council
August 7, 2012
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than a treasury, an additional $4,000 is generated annually in interest revenue.
Since staff is recommending that investments in medium-term notes be limited
to 15% of the portfolio (approximately $5,000,000), additional interest earnings
above the current treasury rate would yield approximately $20,000.
3. Budget Reseve Fund Balance Requirements
With the adoption Ordinance No. 12-953 adding a new Chapter to the Municipal Code
titled "Budget Reserve Fund Balance Requirements" which became effective July 5,
2012, the following Reserves must be readily available:
• Emergency/Disasters at $1 ,000,000;
• Liquidity at $2,000,000; and
• Local Economy Uncertainty at $500,000.
These proposed changes in the Statement of Investment Policy will not effect the
availability of the above reserve funds if they are immediately needed. The City does
invest funds that are not immediately needed for operations or capital projects in longer
term investments. However the City will always maintain the amount of the above
Reserves of $3,500,000 in LAIF or LACPIF, which is liquid or "overnight money'' and
can be accessed immediately. Further, as part of best practices for planning cash flow,
the City will maintain at least $10,000,000 in LAIF and LACPIF collectively to ensure
funds are avaialbe as required by the Budget Reserve Fund Balance Requirements
Ordinance and on-going operational financial obligations for the ensuing six months
are met.
CONCLUSION:
In order to achieve a higher yield on the City's current portfolio without compromising
safety, a revision to the Statement of Investment Policy, approving additional investment
vehicles for FY 2012-13, including LACPIF and medium-term notes is necessary. Further,
in order to participate in LACPIF, a Resolution authorizing and requesting the investment
of excess fund in the Los Angeles County Treasury Pool must be adopted.
FISCAL IMPACT:
Additional interest revenue of approximately $30,000 was conservatively estimated in
the Adopted FY 2012-13 City Budget in anticipation of some diversification of the
portfolio. Revenue estimates will be re-visited at mid-year and revisions will be
recommended if warranted based upon the types of investments made over the next 5
months
City Council
August 7, 2012
Page 6
ATTACHMENTS:
A. Resolution No. 12-4841 (including the Statement of Investment Policy with tracked
revisions)
B. Resolution No. 12-4842 Authorizing and Requesting the Investment of Excess Funds
in the Los Angeles County Treasury Pool
C. City of Temple City Treasurer's Report as of June 30, 2012
ATIACHMENT "A"
RESOLUTION NO. 12-4841
RESOLUTION OF CITY COUNCIL OF THE CITY OF
TEMPLE CITY CALIFORNIA REVISING THE STATEMENT
OF INVESTMENT POLICY FOR FISCAL YEAR (FY) 2012-
13
WHEREAS, the California State Legislature passed legislation during the 1995
session amending Section 53600 et seq. of the California Government Code with
respect to authorized investments, written statements of investment policy and quarterly
reporting by local public agencies; and
WHEREAS, the Governor of the State of California signed such legislation into
law effective January 1, 1996, as Section 53600 et seq. of the California Government
Code; and
WHEREAS, the City Treasurer of the City of Temple City recommends revisions
to the FY 2012-13 Statement of Investment Policy as attached (Exhibit "A").
NOW, THEREFORE, IT IS RESOLVED that the City Council of the City of
Temple approve revisions to the Statement of Investment Policy for FY 2012-13.
APPROVED AND ADOPTED this yth day of August, 2012.
Mayor
ATIEST:
City Clerk
Exhibit "A"
CITY OF TEMPLE CITY
STATEMENT
OF
INVESTMENT POLICY
I. PURPOSE
II . OBJECTIVE
Ill. SCOPE
CITY OF TEMPLE CITY
STATEMENT OF INVESTMENT POLICY
IV. STANDARDS OF CARE
1. PRUDENCE
2. DELEGATION OF AUTHORITY
V. INTERNAL CONTROLS
VI. SUITABLE AND AUTHORIZED INVESTMENTS
VII . REPORTING METHODS
VIII. POLICY CONSTRAINTS
1. CITY CONSTRAINTS
2. LEGAL CONSTRAINTS
IX. POLICY REVIEW
CITY OF TEMPLE CITY
STATEMENT OF INVESTMENT POLICY
I. PURPOSE
This statement is intended to provide a guideline for the prudent investment of
temporary idle cash, trust funds and restricted monies and to outline a policy for
maximizing the efficiency of the cash management system. Ultimate investment
goal is the protection of cash investments.
II. OBJECTIVE
The cash management system of the City of Temple City is designed to accurately
monitor and forecast expenditures and revenues, thus insuring the investment of
monies to the fullest extent possible. Attempts to obtain highest interest yields
possible are a statement of fact as long as investments meet the criteria required
for safety and liquidity.
Ill. SCOPE
This investment policy applies to activities of the City with regard to investing the
financial assets of all funds, including the following: General Fund, Special
Revenue Funds, Assessment Funds, Internal Service Funds, Capital Projects
Funds, Debt Service Funds, Reserve Funds, Trust and Agency Funds, and any
other Funds that may be created from time to time.
IV. STANDARDS OF CARE
1. PRUDENCE
The standard of prudence to be used by investment officials shall be the
"prudent investor'' standard as set forth in Section 53600.3 of the California
Government Code, which states in part that, 'When investing, reinvesting,
purchasing, acquiring, exchanging, selling, and managing public funds, a
trustee shall act with care, skill, prudence, and diligence under the
circumstances then prevailing, that a prudent person acting in a like capacity
and familiarity with those matters would use in the conduct of funds of a like
character and with like aims, to safeguard the principal and maintain the
liquidity needs of the Agency". The prudent investor standard shall be
applied in the context of managing the overall portfolio.
2. DELEGATION OF AUTHORITY
The authority to manage and operate the investment program is granted to
the Treasurer pursuant to Section 53607 of the California Government
Code. Individuals who may execute investment transactions are those
positions who are authorized signatures for warrants and checks or those
persons designated as a Deputy City Treasurer by the City Treasurer. No
other persons are authorized to execute an investment transaction.
STATEMENT OF INVESTMENT POLICY
PAGE2
V. INTERNAL CONTROLS
The Treasurer/Deputy City Treasurer is responsible for establishing and
maintaining an internal control structure designed to ensure that the assets of the
entity are protected from loss, theft or misuse.
The Treasurer/Deputy City Treasurer shall establish the investment functions so
that specific responsibility for the performance of duties and segregation of duties
are assigned with a clear line. The functions of authorizing, recording transactions,
and performing reconciliations are handled by separate persons to reduce the risk
that a person is in a position to conceal errors or fraud in the normal course of duty.
The current segregation of duties are as follows:
Function Responsibility
Develop formal investment policy Treasurer/Deputy City Treasurer
Review formal investment policy City's Auditing Firm
Adopt formal investment policy City Council
Execute investment transactions Treasurer/Deputy City Treasurer
(the above signers as well as
one of signers listed below)
City Manager, City Clerk, Director
of Parks & Recreation
Investment verification and Administrative Services Director
recordation
Reconcile investment records to Accountant
bank statements
While no internal control system, however elaborate, can guarantee absolute
assurance that the City's assets are safeguarded, it is the intent of the City's
internal control system to provide reasonable assurance that management of the
investment function meets the City's objectives. These internal controls shall be
reviewed annually by the independent auditor.
STATEMENT OF INVESTMENT POLICY
PAGE3
VI. SUITABLE AND AUTHORIZED INVESTMENTS
The California Government Code (Section 53601 and 53635) allows the City to
invest in the following instruments:
•
C'GC Investment Type Maximum Aulhonzed Required
Section Matunty Lim1t (%) Rating
5360J(a) Local Agency Bonds 5 years None None
536UI(b) U.S. Treasury Obligatmns 5 years None None
53601(c) State of California Obligatmns 5 years None None
5360](d) C A Local Agency Obligations 5 years None None
53601(e) U.S. Agencies 5 years None None
53601(1) Bankers Acceptances• IXO days 40% fed Reserve
Eligible
53601(g) Commercial Paper,.. 270 days 25% AI/PI Rating
53601(h) Negotiable Certificates of Deposit 5 years 30% None
53601(1) Repurchase Agreements I year None None
5360](i) Reverse Repurchase Agreements .. • 92 days 20% of base None
53601(j) Medium Tenn Notes 5 years 30% Aratmg
53601(k) Mutual Fundsn•• NiA 20% Multiple
53601(k) Money Market Funds NiA 20% Multiple
53601(m) Collateralized Bank Deposit~ 5 years None None
5360l(n) Mortgage Pass-1lrrough Secunues 5 years 20% AA Rating
5360l(d) Local Agency Investment Fund (LAIF) NiA None None
5360l(d) County Pooled Investment Funds N!A None None
53635 Time Deposits 5 years None None
So !D(lre lhan lO"a ofsurptw; limds Jll.3} be in,eolod in Bankm Accqnan= of any one OOIIIJlletCtil bank.
Cammercial paper >SSU<n must be V.S. CO<ponthons wilh $SOO milbon plus .n assets. Pwrl!ases may not represent more then
to•• ofoutstand.ng paper of an is.su1ng cmporation.
••• Re.c:rse R~hase Agmonenls musL be made "'lh Jl!•macy de.llm of tbe FodCJal Rcser.e Bank of NO\\ Ym and lhe
securities usee! for lhe agreernenL must have hem held by ibe inuor f"' aL least ~0 da)T
•••• NoJnOTelhan JQO,o of an agmcy'• 5urplus funds may be imested in any one mutual fwtd.
STATEMENT OF INVESTMENT POLICY
PAGE4
For Fiscal Year 2012-13, the City of Temple City is limiting its purchase of
investments to the following vehicles:
• LAIF (Local Agency Investment Fund)-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 balance of $40,000,000 as
of January 1, 2002 for any agency. However, any investment with LAIF
must comply with other self-imposed restrictions as specified in this
Investment Policy. The City is restricted to a maximum of fifteen
transactions per month. It offers high liquidity because deposits can be
converted to cash in twenty-four hours and no interest is lost. All interest is
distributed to those agencies participating on a proportionate share basis
determined by the amounts deposited and the length of time they are
deposited. Interest is paid quarterly. The State retains an amount for
reasonable costs of making the investments, not to exceed one-half of one
percent of the earnings;
The interest rates are fairly high because of pooling the State's surplus cash
with the surplus cash deposited. This creates a multi-billion dollar money
pool and allows diversified investments. In a high interest rate market, the
City does better than LAIF, but in times of low interest rates, LAIF yields are
higher. The City continually invests in the Local Agency Investment Fund.
• LACPIF (Los Angeles County Pooled Investment Fund-The Los Anqeles4
County Treasurer and Tax Collector (Treasury) maintains an External
Investment Pool {Pool) and manages the Pool of behalf of the participants.
The primary objective of the Treasury's Investment Policy is to ensure the
safety of the principal. The secondary objective is to meet the liquidity
needs of the participants and the third objective is to achieve a return on
funds invested. These objectives are accomplished through the purchase of
high quality fixed income investments, held to a designated maturity. Local
jurisdictions may participate in this pool by adopting a Resolution authorizing
and requesting the investment of excess funds in the this PooL
• Certificates of Deposit-time deposits of a bank or savings and loan. They
are purchased in various denominations with maturities ranging from 30
days to 60 months. The interest is calculated on a 360-day basis and is
payable monthly, semi-annually, or at maturity in case of short term CO's:
• Passbook Savings Account - a certificate of deposit issued in any amount for
a non specified amount of time. Interest rate is much lower than CD's but
the savings account allows flexibility. Funds can be deposited and
withdrawn according to daily needs;
• Interest Bearing Checking Accounts - a checking account which receives
revenues and pays disbursements. Interest earned can be paid to the local
jurisdictions on a regular basis or left in the account to offset the fees for
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monthly services;
• Money Market Mutual Funds -referred to in the California Government
Code Section 53601 (k) as shares of beneficial interest issued by diversified
management companies investing in securities authorized by Section 53601
(a) to (I) inclusive. Money Market Mutual Funds must have an average
maturity of 90 days or less, per SEC regulations;
STATEMENT OF INVESTMENT POLICY
PAGE 5
• U.S. Treasuries -Debt instruments issued directly by the United States
Government. These instruments are of highest credit quality and payment of
principal and interest are backed by the full faith and credit of the United
States Government; and
• U.S Agencies-Debt instruments issued by the various federally chartered
agencies. These instruments are also of the highest credit quality.
• Medium-term Notes -Corporate and depository institution debt securitieS'
with a maximum remaining maturity of five years or less. issued by
corporations organized and operating within the Unites States or by
depositorv institutions licensed by the United States or any state and
operating within the United States. Notes must have a rating of "M" or
better from Moody's, Standard & Pears or Fitch. &
VII. REPORTING METHODS
The Treasurer/Deputy City Treasurer shall prepare a quarterly investment report as
required by Section 53646 of the California Government Code which provides a
clear picture of the status of the current investment portfolio. The report should be
provided to the City Manager and legislative body. The report should include the
following:
a) Type of investment;
b) Institution or issuer;
c) Date of Maturity;
d) Amount of deposit or cost of security;
e) Current market value of securities and source of market value;
f) State that there are sufficient funds to meet the next 6 months' obligations or
provide an explanation as to why sufficient monies shall or may not be
available; and
g) State that investments are in compliance with the City's investment policy or
manner in which the portfolio is not in compliance
VIII. POLICY CONSTRAINTS
I
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1. CITY CONSTRAINTS
The City of Temple City operates its pooled idle cash investments under the
Prudent Investor Standard. The Treasurer will evaluate local banks and
savings institutions and may invest idle cash funds with such institutions
when the criteria for prudent investment previously stated are met. The City
operates its investment pool according to State and self-imposed
constraints. It does not buy stocks; it does not speculate; it does not deal in
futures or options. It does not purchase or sell securities on margins or
invest in derivative type investments such as inverse floaters, range notes or
interest only strips derived from a pool of mortgage as prohibited under
Section 53601.6 of the California Government Code. Any investment
extending beyond a five-year period requires prior City Council approval.
STATEMENT OF INVESTMENT POLICY
PAGE6
2. LEGAL CONSTRAINTS
Surplus funds must be deposited in State or national banks, State or Federal
savings association or State or Federal credit unions within the State of
California. The deposits cannot exceed the amount of the bank's or savings
and loan's paid-up capital and surplus.
The bank or savings and loan must secure public funds deposits with eligible
securities having a market value of 11 0% 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.
IX. POLICY REVIEW
As required by Section 53646 of the California Government Code, this Statement of
Investment Policy shall be reviewed at least annually as a public meeting of the City
Council to ensure its consistency with the overall objectives of preservation of
principal, liquidity and return, and its relevance to current law, financial and
economic trends.
ATIACHMENT "B"
RESOLUTION NO. 12-4842
RESOLUTION OF CITY COUNCIL OF THE CITY OF
TEMPLE CITY CALIFORNIA AUTHORIZING AND
REQUESTING THE INVESTMENT OF EXCESS FUNDS IN
THE LOS ANGELES COUNTYTREASURY POOL
WHEREAS, California Government Code ("Government Code") Section 53684
allows local agencies in the County of Los Angeles (the "County") to deposit excess
funds in the Los Angeles County Treasury Pool for the purpose of investment by the
Treasurer and Tax Collector of the County (the "Treasurer); and
WHEREAS, the City Council of the City of Temple City has determined or may
determine from time to time , that excess funds of the City of Temple City exist which are
not required for immediate use; and
WHEREAS, Government Code Section 6502 allows public agencies, even if
outside the County to enter into joint powers agreements with the County, under which
excess funds may be deposited in the County Treasury Pool; and
WHEREAS, the City of Temple City is a local agency as that term is defined in
Government Code Section 53600 and/or a public agency as that term is defined in
Government Code Section 6500; and
WHEREAS, the Board of Supervisors of the County has made the Government
Code Section 53684 operative in the County and has authorized such joint powers
agreements; and
WHEREAS, the City Treasurer of the City of Temple City_has determined that the
City of Temple City has excess funds which are not required for immediate use; and
WHEREAS, the County Board of Supervisors made Government Code Section
53684 operative in the County on February 24, 1987, as amended by said County
Board of Supervisors, on May 31, 1988 , to allow for the expansion authorized under
Government Code Section 6502;
WHEREAS, with the consent of the Treasurer and Tax Collector (the
"Treasurer''), the Treasurer may accept for investment deposits of [public agency],
provided that [public agency] is allowed pursuant to Government Code Section 6502.
WHEREAS, this City Council has determined that it would be desirable to deposit
the excess funds in the County Treasury Pool for the purpose of investment pursuant to
Government Code Sections 53601 and 53635.
NOW, THEREFORE, IT IS RESOLVED as follows;
1. The City Council of the City of Temple City hereby finds that it may, from
time to time, be advantageous to make deposits for purposes of investment with the Los
Angeles County Treasurer.
2. The City Council of the City of Temple City has received and carefully
reviewed the Los Angeles County's Treasurer and Tax Collector Investment Policy
(Exhibit "A"), and is familiar with its contents. Having considered and weighed the risks
of investing the City Council of the City of Temple City finds and determines that it is
appropriate and legal to invest its moneys in the Los Angeles County Treasury Pool, as
permitted by the Investment Policy . City of Temple City has been advised and
understands that the Investment Policy may be amended by the Treasurer without the
review and consent of City of Temple City.
3 . The City Manager or the City Treasurer is hereby authorized and directed
to request the Treasurer's consent to deposit in the County Treasury Pool those funds
he or she deems to be excess and not required for immediate use, for the purpose of
investment pursuant to Government Code Sections 53601 and 53635, and subject to
the terms and conditions set forth in Government Code Section 53684 and 27136, and
in accordance with the resolutions entitled "Resolution of the Board of Supervisors of
the County of Los Angeles Authorizing the County Treasurer and Tax Collector to Invest
Excess Funds of Public Agencies" and "Resolution of Board of Supervisors of the
County of Los Angeles Authorizing the County Treasurer and Tax collector to Invest
Excess Funds of Public Agencies" adopted by the Board of Supervisors of the County of
Los Angeles, on February 24, 1987, and on May 31, 1988, respectively .
4. This resolution , upon due adoption by this City Council and with the
consent of the Treasurer as evidenced by his signature or that of his designated
representative below, constitutes a joint powers agreement between the City of Temple
City and the County.
5. The City of Temple City hereby agrees to inform the Treasurer if and to
the extent any of the City of Temple City funds deposited in the County Treasury Pool
pursuant to this joint powers agreement are proceeds of the issuance of bonds,
certificates of participation, notes or other evidences of indebtedness ("Bond
Proceeds"). If the Bond Proceeds are restricted by a certificate of the City of Temple
City relating to compliance with federal tax requirement ("Nonarbitrage Certificate"), the
City of Temple City agrees to provide the Nonarbitrage Certificate to the Treasurer so
that the Treasurer can provide the market value of the Bond Proceeds as of the rebate
calculation dates as provided in the Nonarbitrage Certificate. Notwithstanding the
foregoing, the County takes no responsibility and the City of Temple City is solely
responsible for compliance with the terms and conditions of the Nonarbitrage
Certificates and of any federal tax requirements that may apply to the Bond issuance .
The City of Temple City will review bond documents to determine if funds can be
deposited into the County Treasury Pool.
6. Without limiting the rights of City of Temple City or the County's
obligation under Government Code Section 53684, City of Temple City agrees that the
County shall not be liable for damage or losses of any nature resulting from or arising
out of (i) investments made or authorized by the Treasurer in accordance with
Government Code Section 53601 or Section 53635; (ii) misrepresentations or false or
erroneous information provided by the City of Temple City or any of its officers ,
employees or agents; (iii) noncompliance with investment policies or guidelines adopted
by the City of Temple City; (iv) violation of yield or investment limitations applicable to
the funds deposited with the Treasurer for investment (such as federal arbitrage
regulations with respect to the investment of proceeds of borrowings, or state or federal
restrictions on the investment of grant proceeds); (v) circumstances beyond the
reasonable control of the County, such as a declaration of a banking moratorium or the
suspension of trading on any securities exchange; (vi) acts or omissions of the County,
its officers and employees with do not constitute gross negligence or willful misconduct,
or acts or omissions of the County's custodial bank, depository bank and investment
manager (the "Agent Banks"), provided that City of Temple City shall be subrogated to
the rights of the County to pursue a claim against the Agent Banks or any of them under
the contractual arrangements between the County and the Agent Banks.
7. City of Temple City hereby agrees that the County may calculate the
average daily balances of participants in the County Treasury Pool and may allocate
monthly interest payments thereon pursuant to any reasonable method established by
the County and consistently applied. City of Temple City further agrees to reimburse to
the County Treasury Pool any amounts disbursed to City of Temple City in error
promptly upon the discovery of such error or upon the request of the Treasurer.
The foregoing resolution was the ih day of August, 2012, adopted by the City of
Temple City.
Mayor
ATTEST:
City Clerk
Agreed and accepted on this __ day of _____ , 20_
(Revised July 2012)
Treasurer and Tax Collector
of the County of Los Angeles
Authority to Invest
COUNTY OF LOS ANGELES
TREASURER AND TAX COLLECTOR
INVESTMENT POLICY
Exhibit "A"
Pursuant to Government Code Section 27000.1 and Los Angeles County Code 2.52.025, the
Los Angeles County Board of Supervisors has delegated to the Treasurer the authority to invest
and reinvest the funds of the County and the funds of the depositors in the County Treasury.
Fundamental Investment Polley
The Treasurer, a trustee, is inherently a fiduciary and subject to the prudent investor standard.
Accordingly, when investing, reinvesting, purchasing, acquiring, exchanging, selling, and managing
investments, the investment decisions SHALL be made with the care, skill, prudence, and diligence
under the circumstances then prevailing, that a prudent person acting in a like capacity and
familiarity would use with like aims.
All investments SHALL be governed by the Government Code and comply with the specific
limitations set forth within this Investment Policy. Periodically, it may be necessary and prudent to
make investment decisions beyond the limitations set forth in the Investment Policy that are
otherwise permissible by California Government Code. In these special circumstances, ONLY the
Treasurer is permitted to give written approval to operate outside the limitations set forth within this
Investment Policy.
Pooled Surplus Investment Portfolio
The Treasurer SHALL establish and maintain a Pooled Surplus Investment (PSI) portfolio. The
PSI portfolio SHALL be used to provide safe, liquid investment opportunities for pooled surplus
funds deposited into the County Treasury.
The investment policies of the PSI portfolio SHALL be directed by and based on three prioritized
objectives. The primary objective SHALL be to ensure the safety of principal. The secondary
objective SHALL be to meet the liquidity needs of the PSI participants, which might be reasonably
anticipated. The third objective SHALL be to achieve a return on funds invested, without undue
compromise of the first two objectives.
PSI revenue/loss distribution SHALL be shared on a pro-rata basis with the PSI participants. PSI
revenue/loss distribution will be performed monthly, net of administrative costs authorized by
Government Code Section 27013 which includes employee salaries and benefits and services and
supplies, for investing, depositing or handling funds, and the distribution of interest income, based
on the PSI participants' average daily fund balance as recorded on the Auditor-Controllers
accounting records. Administrative costs SHALL be deducted from the monthly PSI revenue/loss
distribution on the basis of one-twelfth of the budgeted costs and adjusted to actual costs.
Investments purchased with the intent to be held to maturity SHALL be accounted for in the
Non-Trading partition of the PSI portfolio. Investments purchased with the intent to be sold prior to
maturity SHALL be accounted for in the Trading partition of the PSI portfolio. The investments in
the Trading partition SHALL NOT exceed $500 million without specific written approval of the
Treasurer.
County of Los Angeles
Treasurer and Tax Collector
Investment Policy
Page 2
In the event that a decision is made to transfer a given security from one partition to another, it
MAY be transferred at cost; however, the difference between the market value, exclusive of
interest, at the time of transfer and the purchase price, exclusive of interest, SHALL be computed
and disclosed as unrealized profrt or loss.
All PSI investments SHALL be categorized according to the period of time from settlement date to
maturity date as follows:
SHORT-TERM investments are for periods of up to ONE YEAR.
INTERMEDIATE-TERM investments are for periods of ONE YEAR to
THREE YEARS.
MEDIUM-TERM investments are for periods of over THREE YEARS to
FIVE YEARS.
LONG-TERM investments are for periods of over FIVE YEARS.
PSI investments SHALL be limited to the short-term category except that the Investment Office of
the Treasurer's Office MAY make PSI investments in accordance with the limitations imposed in
Attachments I, II, and Ill (all of which are attached hereto and incorporated by this reference.)
The weighted average maturity target of the PSI portfolio is 1.5 years. For purposes of maturity
classification, the maturity date SHALL be the nominal maturity date or the unconditional put option
date, if one exists.
The total PSI portfolio investments with maturities in excess of one year SHALL NOT exceed 75%
of the last three years' average minimum total cash and investments, after adjustments, as
indicated in Attachment II.
Liquidity of PSI Investments
Short-term liquidity SHALL further be maintained and adjusted monthly so that sufficient
anticipated cash is available to fully meet unanticipated withdrawals of discretionary deposits,
adjusted for longer-term commitments, within ninety days.
Such liquidity SHALL be monitored where, at the beginning of each month, the par value for
maturities in the next ninety days plus projected PSI deposits for ninety days, divided by the
projected PSI withdrawals for ninety days plus discretionary PSI deposits, is equal to or greater
than one.
The liquidation of investments Is not required solely because the discretionary' liquidity withdrawal
ratio is less than one; however, investments SHALL be limited to a maximum maturity of thirty days
until such time as the discretionary liquidity withdrawal ratio is equal to or greater than one.
County of Los Angeles
Treasurer and Tax Collector
Investment Policy
Page 3
The sale of any PSI instrument purchased in accordance with established policies is not required
solely because an institution's credit rating is lowered after the purchase of the instrument.
Specific Purpose Investment Portfolio
The Treasurer SHALL maintain a Specific Purpose Investment (SPI} portfolio to manage specific
investment objectives of the SPI participants. Specific investments may be made with the approval
of the requesting entity's governing body and the approval of the Treasurer. Revenue/loss
distribution of the SPI portfolio SHALL be credited to the specific entity for which the investment
was made. The Treasurer reserves the right to establish and charge the requesting entity fees for
maintaining the entity's SPI portfolio.
Investments SHALL be limited to the short-term category, as defined above in the previous section
for PSI investments, except when requested by a depositing entity and with the approval of the
Treasurer, a longer term investment MAY be specifically made and held in the SPI portfolio.
The sale of any SPI instrument purchased in accordance with established policies is not required
solely because an institution's credit rating is lowered after the purchase of the instrument.
Execution, Delivery, and Monitoring of Investments
The Treasurer SHALL designate, in writing, personnel authorized to execute investment
transactions.
All transactions SHALL be executed on a delivery versus payment basis.
The Treasurer or financial advisor, consultant or manager acting on behalf of the Treasurer, in
purchasing or obtaining any securities in a negotiable, bearer, registered, or nonregistered format,
requires delivery of the securities to the Treasurer or designated custodial instiMion, by book entry,
physical delivery, or by third party custodial agreement.
All investment transactions made by the Investment Office SHALL be reviewed by the Internal
Controls Office to assure compliance with this Investment Policy.
Reporting Reaulrements
The Treasurer SHALL provide the Board of Supervisors with a monthly report consisting of, but not
limited to, the following:
• All investments detailing each by type, issuer, date of maturity, par value, historical cost,
market value and the source of the market valuation.
• Month-end bank balances for accounts under the control of the Treasurer.
A description of funds, investments, or programs that are under the management of
contracted parties, including lending programs for the Treasurer.
County of Los Angeles
Treasurer and Tax Collector
Investment Policy
Page4
A description of all investment exceptions, if any, to the Investment Policy.
• A statement denoting the ability of the PSI portfolio to meet the anticipated cash
requirements for the participants for the next six months.
Discretionary Treasury Deposits and Withdrawal of Funds
At the sole direction of the Treasurer, PSI deposits may be accepted from local agencies not
required to deposit their funds with the Los Angeles County Treasurer, pursuant to Government
Code Section 53684.
At the time such deposits are made, the Treasurer may require the depositing entity to provide
annual cash flow projections or an anticipated withdrawal schedule for deposits in excess
of $1 million. Such projections may be adjusted periodically as prescribed by the Treasurer but in
no event less than semi-annually.
In accordance with Government Code Section 27136, all requests for withdrawal of such funds, for
the purpose of investing or depositing these funds elsewhere SHALL be evaluated, prior to
approving or disapproving the request, to ensure that the proposed withdrawal will not adversely
affect the principal deposits of the other PSI participants .
If it Is determined that the proposed withdrawal will negatively impact the principal deposits of the
other PSI participants, the Treasurer may delay such withdrawals until the impact can be mitigated.
Broker/Dealer Sectton
Broker/Dealer SHALL be limited to primary government dealers as designated by the Federal
Reserve Bank or institutions meeting one of the following :
A. Broker/Dealer with minimum capitalization of $500 million and who meets all five
of the below listed criteria;
1. Be licensed by the State as a Broker/Dealer, as defined in Section 25004 of
the Corporations Code or a member of a Federally regulated securities
exchange and;
2. Be a member of the National Association of securities Dealers and;
3. Be registered with the Securities and Exchange Commission and;
4. Have been in operation for more than five years; and
5. Have a minimum annual trading volume of $100 billion in money market
instruments or $500 billion in U.S. Treasuries and Agencies.
B. Emerging firms with office(s) in California licensed by the State as a
Broker/Dealer, as defined in Section 25004 of the Corporations Code Qr a
member of a Federally regulated exchange with a minimum capitalization of
$200,000 to a maximum capitalization of $5 million and have met the quality
criteria of the Treasurer.
County of Los Angeles
Treasurer and Tax Collector
Investment Policy
PageS
Commercial Paper and Negotiable Certificates of Deposit may be purchased directly from
issuers approved by the Treasurer.
An approved Treasurer Broker/Dealer list SHALL be maintained. Firms SHALL be removed
from the approved Broker/Dealer list and trading suspended with firms failing to accurately and
timely provide the following information:
A. Confirmation of daily trade transactions and all open trades in effect at
month-end.
B. Response to auditor requests for confirmation of investment transactions .
C. Response to the Internal Controls Office requests for needed information.
Honoraria, Gifts, and Gratuities Limitations
The Treasurer, Chief Deputy Treasurer and Tax Collector and designated Treasurer and Tax
Collector employees SHALL be governed by the provision of the State's Political Reform Act, the
Los Angeles County Code relating to Lobbyists, and the Los Angeles County Code relating to
postgovemment employment of County officials.
Investment Limitations
The Investment Office SHALL NOT invest in inverse floating rate notes, range notes, or interest
only strips that are derived from a pool of mortgages.
The Investment Office SHALL NOT invest in any security that could result in zero interest if held to
maturity.
For investment transactions in the PSI portfolio, the Investment Office SHALL obtain approval of
the Treasurer before recognizing any loss exceeding $100,000 per transaction , calculated using
amortized cost.
Proceeds from the sale of notes or funds set aside for the repayment of notes SHALL NOT be
invested for a term that exceeds the term of the notes.
Pennltted Investments
Permitted Investments SHALL be limited to the following:
A. Obligations of the United States Government, its agencies and instrumentalities.
1. Maximum maturity: None.
2 . Maximum total par value : None.
County of Los Angeles
Treasurer and Tax Collector
Investment Policy
PageS
3 . Maximum par value per issuer: None.
4. Federal agencies: Additional limits in Section G apply if investments are
Floating Rate Instruments.
B. Municipal Obligations from the approved list of municipalities (Attachment Ill)
1. Maximum maturity: As limited in Attachment Ill.
2. Maximum total par value: 10% of the PSI portfolio.
C . Asset-Backed Securities
1. Maximum maturity: Five years.
2. Maximum total par value: 20% of the PSI portfolio.
3 . Maximum par value per issuer: Per limits outlined in Attachment I for issuer's
current credit rating .
4 . All Asset-Backed securities must be rated at least "AA" and the issuer's corporate
debt rating must be at least "A".
0. Bankers' Acceptance Domestic and Foreign
1. Maximum maturity: 180 days and limits outlined in Attachment I for issuer's current
credit rating .
2 . Maximum total par value: 40% of the PSI portfolio.
3. Maximum par value per issuer: Per limits outlined in Attachment I for the issuer's
current credit rating .
4 . The aggregate total of Bankers' Acceptances and Negotiable Certificates of
Deposits SHALL NOT exceed :
a) The total shareholders' equity of depository bank.
b) The total net worth of depository bank.
E. Negotiable Certificates of Deposit (CO)
1. Maximum maturity: Three years and limits outlined in Attachment I for issuers
current credit rating .
County of Los Angeles
Treasurer and Tax Collector
Investment Policy
Page 7
2. Maximum total par value: Aggregate total of Domestic and Euro CO's are limited to
30% of the PSI portfolio.
3. Maximum par value per issuer. Per limits outlined in Attachment I for the issuer's
current credit rating.
4. Must be issued by:
a) National or State-chartered bank, or
b) Savings association or Federal association, or
c) Federal or State credit union, or
d) Federally licensed or &ate-licensed branch of a foreign bank.
5. Euro CO's:
a) Maximum maturity: One year and limits outlined in Attachment I for issuer's
current credit rating .
b) Maximum total par value: 10% of the PSI portfolio.
c) Maximum par value per issuer. Per limits outlined in Attachment I for issuer's
current credit rating.
d) Limited to London branch of National or StatEKtlartered banks.
6. The aggregate total of Bankers Acceptances and Negotiable Certificates of
Deposits SHALL NOT exceed:
a) The total shareholders' equity of depository bank.
b) The total net worth of the depository bank.
F. Corporate and Depository Notes
1. Maximum maturity: Three years and limits outlined in Attachment I for the issuer's
current credit rating.
2. Maximum total par value: 30% of the PSI portfolio.
3. Maximum par value per issuer: Per limits outlined in Attachment I for the issuer's
current credit rating.
4 . Notes MUST be issued by:
County of Los Angeles
Treasurer and Tax Collector
Investment Policy
Page 8
a) Corporations organized and operating within the United States .
b) Depository institutions licensed by the United States or any State and operating
within the United States
5. Additional limits in Section G apply if note is a Floating Rate Note Instrument.
G. Floating Rate Notes
Floating Rate Notes included in this category are defined as any instrument that has a
coupon or interest rate that is adjusted periodically due to changes in a base or
benchmar1( rate.
1. Maximum maturity: Seven years, provided that Board of Supervisors' authorization
to exceed maturities in excess of five years is in effect, of which a maximum of $100
million par value may be greater than five years to maturity.
2. Maximum total par value: 10% of the PSI portfolio.
3. Maximum par value per issuer: Per limits outlined in Attachment I for the issuer's
current credit rating .
4. Benchmari(s SHALL be limited to commercially available U.S. Dollar denominated
indexes .
5. The Investment Office SHALL obtain the prospectus or the issuer term sheet prior
to purchase for all Floating Rate Notes and SHALL include the following on the
trade ticket:
a) Specific basis for the benchmar1( rate .
b) Specific computation for the benchmar1<. rate.
c) Specific reset period.
d) Notation of any put or call provisions.
H. Commercial Paper
1. Maximum maturity: 270 days and limits outlined in Attachment I for the issuer's
current credit rating .
2 . Maximum total par value : 40% of the PSI portfolio.
County of los Angeles
Treasurer and Tax Collector
Investment Policy
Page9
3. Maximum par value per issuer. The lesser of 10% of the PSI portfolio or the limits
outlined in Attachment I for the issuer's current credit rating.
4. Credit: Issuing Corporation -Commercial paper of •prime• quality of the highest
ranking or of the highest letter and number rating as provided for by a nationally
recognized statistical-rating organization (NRSRO). The entity that issues the
commercial paper shall meet all of the following conditions in either paragraph (a) or
paragraph (b):
(a) The entity meets the following criteria:
1) Is organized and operating in the United States as a general corporation.
2} Has total assets in excess of $500 million.
3) Has debt other than commercial paper, if any, that is rated "A" or higher by
NRSRO.
(b) The entity meets the following criteria:
1) Is organized in the United States as a limited liability Company or Special
Purpose Corporation.
2) Has program-wide credit enhancements including, but not limited to, over
collateralization, letters of credit, or surety bond.
3) Has commercial paper that is rated ·A-1·or higher, or the equivalent, by
a NRSRO.
I. Shares of Beneficial Interest
1. Money Market Fund (MMF) -Shares of beneficial interest issued by diversified
management companies known as money market mutual funds, registered with
the Securities and Exchange Commission in accordance with Section 270.2a-7
ofTrtle 17 of the Code of Federal Regulation. The company SHALL have met
either of the following criteria :
a) Attained the highest possible rating by not less than two NRSROs.
b) Retained an investment adviser registered or exempt from registration with
the Securities and Exchange Commission with not less than five years
experience investing in the securities and obligations authorized in
Government Code Section 53601 and with assets under management in
excess of five hundred million dollars ($500,000,000).
County of Los Angeles
Treasurer and Tax Collector
Investment Policy
Page 10
Maximum total par value: 15% of the PSI portfolio. However, no more than 10% of
the PSI may be invested in any one fund.
2. State of California's Local Agency Investment Fund (LAIF) pursuant to
Government Code Section 16429.1.
3. Trust Investments-Shares of beneficial interest issued by a joint powers authority
organized pursuant to Section 6509.7 that invests in securities and obligations
authorized in Section 53601 (a) to (o) of the Government Code. To be eligible, the
joint powers authority issuing the shares shall have retained an investment adviser
that meets all of the following criteria:
a) The adviser is registered or exempt from registration with the Securities and
Exchange Commission.
b) The adviser has not less than five years of experience investing in the
securities and obligations authorized in Section 53601 (a) to {o) of the
Government Code.
c) The adviser has assets under management in excess of five hundred million
dollars ($500,000,000).
J. Repurchase Agreement
1. Maximum maturity: 30 days.
2 . Maximum total par value: $1 billion.
3 . Maximum par value per dealer. $500 million.
4. Agreements must be in accordance with approved written master repurchase
agreement.
5. Agreements must be fully secured by obligations of the United States Government,
its agencies and instrumentalities. The market value of these obligations that
underlay a repurchase agreement shall be valued at 102% or greater of the funds
borrowed against those securities and the value shall be adjusted no less than
monthly. Since the market value of the underlying securities is subject to daily
market fluctuations, the investments in repurchase agreements shall be in
compliance if the value of the underlying securities is brought back up to 102% no
later than the next business day. If a repurchase agreement matures the next
business day after purchase, the repurchase agreement is not out of compliance
with this collateralization requirement if the value of the collateral falls below the
102% requirement at the close of business on settlement date.
County of Los Angeles
Treasurer and Tax Collector
Investment Policy
Page 11
K. Reverse Repurchase Agreement
1. Maximum term: One year.
2. Maximum total par value : $500 million.
3. Maximum par value per broker: $250 million.
4. Dealers limited to those primary dealers or those Nationally or State chartered
banks that have a significant banking relationship with the County as defined in
Government Code Section 53601 0)(4)(8) approved specifically by the Treasurer.
5 . Agreements SHALL only be made for the purpose of enhancing investment
revenue.
6. Agreements must be in accordance with approved written master repurchase
agreement.
7 . Securities eligible to be sold with a simultaneous agreement to repurchase SHALL
be limited to obligations of the United States Government and its agencies and
instrumentalities.
8. The security to be sold on reverse repurchase agreement SHALL have been owned
and fully paid for by the Treasurer for a minimum of 30 days prior to sale.
9 . The proceeds of the reverse repurchase agreement SHALL be invested in
authorized instruments with a maturity less than 92 days unless the agreement
includes a codicil guaranteeing a minimum earning or spread to maturity.
1 0. The proceeds of the reverse repurchase agreement SHALL be invested in
instruments with maturities occurring at or before the maturity of the reverse
repurchase agreement.
11. In no instance SHALL the investment from the proceeds of a reverse repurchase
agreement be sold as part of a subsequent reverse repurchase agreement.
L. Forwards, Futures and Options
Forward contracts are customized contracts traded in the Over The Counter Market
where the holder of the contract is OBLIGATED to buy or sell a specific amount of an
underlying asset at a specific price on a specific future date.
Future contracts are standardized contracts traded on recognized exchanges where the
holder of the contract is OBLIGATED to buy or sell a specific amount of an underlying
asset at a specific price on a specific future date.
County of Los Angeles
Treasurer and Tax Collector
Investment Policy
Page 12
Option contracts are those traded in either the Over The Counter Market or recognized
exchanges where the purchaser has the RIGHT but not the obligation to buy or sell a
specific amount of an underlying asset at a specific price within a specific time period.
1. Maximum maturity: 90 days.
2. Maximum aggregate par value: $100 million.
3 . Maximum par value per counterparty: $50 million. Counterparties for Forward and
Option Contracts limited to those on the approved Treasurer and Tax Collector list
and must be rated "A" or better from at least one nationally recognized rating
agency.
4 . The undertying securities SHALL be an obligation of the United States Government
and its agencies and instrumentalities.
5. Premiums paid to an option seller SHALL be recognized as an option loss at the
time the premium is paid and SHALL not exceed $100,000 for each occurrence or
exceed a total of $250,000 in any one quarter. Premiums received from an option
purchase SHALL be recognized as an option gain at the time the premium is
received.
6 . Complex or hybrid forwards, futures or options defined as agreements combining
two or more categories are prohibited unless specific written approval of the
Treasurer is obtained PRIOR to entering into the agreement.
7. Open forward, future, and option contracts SHALL be marked to market weekly and
a report SHALL be prepared by the Internal Controls Office.
8 . In conjunction with the sale of bonds, the Treasurer MAY authorize exceptions to
maturity and par value limits for forwards, futures and options.
M. Interest Rate Swaps
Interest Rate Swaps SHALL be used only in conjunction with the sale of bonds
approved by the Board of Supervisors. In accordance with Government Code Section
53534, these agreements SHALL be made only if all bonds are rated in one of the three
highest rating categories by two nationally recognized rating agencies and only upon
receipt, from any rating agency rating the bonds, of written evidence that the agreement
will not adversely affect the rating.
Further, the counterparty to such an agreement SHALL be rated MA" or better from at
least one nationally recognized rating agency selected by the Treasurer, or the
counterparty SHALL provide an irrevocable letter of credit from an institution rated "A.
or better from at least one nationally recognized rating agency acceptable to the
Treasurer.
County of Los Angeles
Treasurer and Tax Collector
Investment Policy
Page 13
N. Securities Lending Agreement
Securities lending agreements are agreements under which the Treasurer agrees to
transfer securities to a borrower who, in tum agrees to provide collateral to the
Treasurer. During the term of the agreement, both the securities and the collateral are
held by a third party. At the conclusion of the agreement, the securities are transferred
back to the Treasurer in retum for the collateral.
1. Maximum term: 180 days.
2. Maximum par value: Maximum par value is limited to a combined total of reve~
repurchase agreements and securities lending agreements of 20% of the base
value of the portfolio.
3. Dealers limited to those primary dealers or those Nationally or State chartered
banks that have a significant banking relationship with the County as defined in
Government Code Section 53601(j}(4)(8) approved specifically by the Treasurer.
4. Agreements SHALL only be made for the purpose of enhancing investment
revenue.
5. Securities eligible to be sold with a simultaneous agreement to repurchase SHALL
be limited to obligations of the United States Government and its agencies and
instrumentalities.
6. The security to be sold on securities lending agreement SHALL have been owned
and fully paid for by the Treasurer for a minimum of 30 days prior to sale.
7. The proceeds of the securities lending agreement SHALL be invested in authorized
instruments with a maturity less than 92 days unless the agreement includes a
codicil guaranteeing a minimum eaming or spread to maturity.
8. In no instance SHALL the investment from the proceeds of a securities lending
agreement be sold as part of a subsequent reverse repurchase agreement or
securities lending agreement.
0. Investment of Bond Proceeds
Funds from bond proceeds may be invested in accordance with Government Code
Section 53601 (m), which permits investment according to the statutory provisions
governing the issuance of those bonds, or in lieu of any statutory provisions to the
contrary, in accordance with the approved financing documents for the issuance.
County of Los Angeles
Treasurer and Tax Collector
ATTACHMENT 1 a .
,-
Bankers' Certificates
Acceptance of Deposit
Maximum Maximum
maturity maturity
180 days 3_years
Moody's Moody~s
P-1/Aaa P-1/Aaa
P-1 /Aa P-1/Aa
P-1/A P-1A
-·
Corporate Notes, Asset
Backed Securities
(ABS) and Floating
Rate Notes CFRN)
Corporate: 3 years
ABS: 5 years
FRN: 5 years (1)
S&P Moody's
A-1/AAA P-1/Aaa
A-1 /AA P-1/Aa
A-1/A P-1/A
MINIMUM CREDIT RATING
DOMESTIC ISSUERS
-----
Limit Commercial Paper
Maximum maturity
270 days
S&P Moody's
$500MM maximum, of A -1/AAA P-1/Aaa
which $300MM may be over j
180 days.
$375MM maximum, of I A-1/AA P-1/Aa
which $175MM may be over
180 days.
$250MM maximum, of A-1/A P-1/A
which $125MM may be over
90 days to a maximum of
180 days. ------'--·-I
Limit
$750MM maximum , of which
$450MM may be over 180
days.
$575MM maximum, of which
$250MM may be over 180
days.
$375MM maximum, of which
$175MM may be over 90 days
to a maximum of 180 days.
(1) Seven years, if Board of Supervisors' authorization to exceed maturities in excess of five years is in effect, of which a maximum of $100 MM (million)
par value may be greater than five years to maturity.
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County of Los Angeles
Treasurer and Tax Collector
A TI ACHMENT 1 b.
Bankers' Commercial
Acceptance Paper
Maximum maturity Maximum maturity
180 days 270 days
Fitch IBCA Moody's S&P Moody's
2-A P-1/Aaa A-1/AAA P-1/Aaa
2-A/B
2-B P-1/Aa A-1/AA P-1/Aa
2-B/C
2-C P-1/A A-1/A P-1/A
-
MINIMUM CREDIT RATING
FOREIGN ISSUERS
Certificates of Corporate Notes,
Deposit Asset Backed
Securities (ABS)
and Floating Rate
Notes_(FRN}
Maximum maturity Corporate: 3 years
3 years ABS: 5 years
FRN: 5 years (1)
Fitch IBCA Moody's S&P Moody's
2-A P-1/Aaa A-1/AAA P-1/Aaa
2-A/B
2-B P-1/Aa A-1/AA P-1/Aa
2-B/C
2-C P-1/A A-1/A P-1/A
--------------
limit
$425MM maximum, of which $175MM may
be over 180 days.
$375MM maximum, of which $175MM may
be over 180 days.
$300MM maximum, of which $1 50MM may
be over 180 days.
$250MM maximum, of which $1 25MM may
be over 90 days to a maximum of 180 days.
$175MM maximum, of which $75MM may
be over 90 days to a maximum of 180 days.
(1) Seven years, if Board of Supervisors' authorization to exceed maturities in excess offive years is in effect, of which a maximum of $100 MM
(million) par value may be greater than five years to maturity.
County of Los Angeles
Treasurer and Tax Collector
Investment Policy
ATTACHMENT II
LIMITATION CALCULATION FOR
INTERMEDIATE-TERM, MEDIUM-TERM AND LONG-TERM HOLDINGS
(Actual$)
201 1 201 0
Minimum invested $22,584,298 ,248 $21 ,608,038,081
balance and available
cash
Less:
• Discretionary (2,703,340, 500) (2,152,440,974)
deposits
Minimum available $19,680,957,748 $1 9,455,597,107
balance
Average minimum available balance
Multiplied by the percent available for investment over one year
Equals the available balance for investment over one year
Intermediate-Term (from one to three years)
• One-third of the available balance for investment
Medium-Term and Long-Term (greater than three years)
• Two-thirds of available balance for investment (1 )
2009
$19,263,927,434
(2,307 1 116,848)
$16,956,810,586
$1 8,764,455,147
75%
$14,073,341 ,360
$4,691 ,113,787
$9,382,227,573
(1) Any unused portion of the Medium-Term and Long-Term available balance may be used for Intermediate-Term investments.
.
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County of Los Angeles
Treasurer and Tax Collector
Investment Policy
ATIACHMENT Ill
APPROVED LIST OF MUNICIPAL OBLIGATIONS
1. Any obligation issued or caused to be issued by the County of Los Angeles on its behalf
or on behalf of other Los Angeles County affiliates. If on behalf of other Los Angeles
County affiliates, the affiliate must have a minimum rating of "A3" (Moody's) or "A-"
(Standard and Poor's or Fitch). The maximum maturity is limited to 30 years.
2 . Any short-or medium-term obligation issued by the State of California or a California
local agency with a minimum Moody's rating of "MIG-1" or "AZ or a minimum Standard
and Poor's rating of "SP-1" or" A" Maximum maturity limited to five years.
CITY OF TEMPLE CITY
TREASURER'S REPORT
June 30, 2012
Cash in Bank *
Wells Fargo Bank -Checking
-Payroll
-Merchant Card
Camellia Fund·
East West Bank -Monthly Market Account
Wells Fargo Bank-Checking
Petty Cash
LAIF
Effective Quarter to Date Yield 6/30/12 0.360%
MorganStanley SmithBarney **
Certificates of Deposit
Weighted Average to Date Yield 6/30/12 1.343%
Government Securities
Weighted Average to Date Yield 6/30/12 0.995%
Money Market
Mutual Securities ***
Government Securities
Weighted Average to Date Yield 6/30/12 2.291%
Money Market
TOTAL
PRIOR MONTH STATUS
Total
Based on Bank Statements
Based on Mo rganStanley Smith Barney Client Statement
•• Based on Mutual Securities Statement
COST VALUE
758,746 .68
143,525.02
13,686.12
160,000.00
20,320.87
2,200.00
23,814,856.36
6,374,000.00
1,945,000.00
4,778 .29
4,162,420.00
0.27
$ 37,399,533.61
$ 37,919,350 .24
Attachment "C"
MARKET VALUE
758,746.68
143,525.02
13,686.12
160,000.00
20,320.87
2,200.00
23,843,698.84
6,440,406.58
1,952,214.83
4,778.29
4,149 ,060.00
0.27
$ 37,488,637.50
$ 38,026,114.16
All investments are placed in accordance with the City of Temple City's Investment Policy. The above summary prov1des sufficient cash flow
liquidity to meet the next six month's estimated expenditures . This report is in accordance with Government Code Sect1on 53646 .
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TRACEY L. HAU E
CITY TREASUR ER