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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 Page 3 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 Page4 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 Page 5 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 r Fonnatted: List Paragraph, Bulleted + L.eve""l:l l I + Ahgned at: 0.75" +Tab after: 1 " + Indent . at: 1" __________ _ r Fonnatted: Font: (Default) Anal, Condensed , by O.l~pt __________ __) 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 Formatted: List Paragraph, Btllleted + Level: 1 I + All!lned at: 0.75" +Tab after: 1" +Indent at: 1" r Formatted: Foot: (Def~ult) Arial, Condensed l by 0.15 pt 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. I ' I I I I I 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. . I --- 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 . -:Lo. ~ ={. l~ TRACEY L. HAU E CITY TREASUR ER