Loading...
HomeMy WebLinkAboutRES-12-6782 (RESCINDING RESOLUTION NO. 11-6729)1 2 3 4 5 6 7 s 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 ?R RESOLUTION NO.12-6782 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HERMOSA BEACH, CALIFORNIA, CONFIRMING A STATEMENT OF INVESTMENT POLICY AND RESCINDING RESOLUTION NO. 11-6729 SECTION 1. The City strives to maintain the level of investment of all idle funds as near to 100% as possible through the optimum operation of its cash management system, and the City has determined that its investment goals are safety, liquidity, and yield, in that order. SECTION 2. The authority to invest City funds is vested in the elected City Treasurer subject to the limitations set forth in this Investment Policy. The City Treasurer will review and select all qualified investments. No investment shall be made in any single specific security that exceeds 5% of the idle investment portfolio. Subject to restrictions established herein, actual administration of the selected investments, including the transference of funds and bank reconciliations, will be performed by the Department of Finance staff and the Deputy Treasurer. SECTION 3. The City's investments shall be limited to the following investment instruments as approved by California Government Code 53600 and 53601: 1. Demand deposits in any FDIC insured institution. 2. Los Angeles County Treasury Pool ("LACT") administered by the Treasurer and Tax Collector of Los Angeles County. 3. The Local Agency Investment Fund ("LAIF") administered by the Treasurer of the State of California. 4. Certificates of Deposit, fully insured by the Federal Deposit Insurance Corporation, either as direct deposits or the CDAR (Certificate of Deposit Account Registry Service) program which any qualified member bank can administer. 5. Securities issued by the United States Government such as Treasury Bills and Treasury Notes. 12-6782 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 )A 6. U.S. Government Sponsored Enterprise securities such as Freddie Mac, Fannie Mae, GNMA, Student Loan Marketing Association, Federal Farm Credit Bank, and Federal Home I Loan Bank. 7. Money Market Savings Accounts, provided that no deposit made pursuant to this I paragraph in any one institution shall exceed the amount insured by the Federal Deposit Insurance Corporation. 8. Medium Term Corporate Notes that have a Moody or S & P rating of at least AA, and mature in 5 years or less. 9. California General Obligation Bonds rated A or higher. 10. Except as provided in Section 53601 (1) of the Government Code, the listed investments are the only authorized investments for the City. SECTION 4. Investment Goals. 1. Safety: Safety and the minimizing of risk associated with investing refers to attempts to reduce the potential for loss of principal, interest, or a combination of the two. The first level of risk controls is found in state law, which restricts the particular type of investments permissible for municipalities. The second level of risk control is reduction of default risk by investing in instruments that are the most credit worthy. The third level of risk control is reduction of market risk by investing in instruments that have maturities in an aggregate amount that avoids the risk of loss from a forced sale to satisfy cash needs. The City invests only in those instruments that are considered very safe. 2. Liquidity: Liquidity is the ability to easily sell at any time with a minimal risk of losing some portion of principal or interest. Liquidity is an important quality for an investment since the City may experience unexpected or unusual circumstances requiring larger disbursements than anticipated, and necessitating the sale of investments to meet the contingency. Most of the City's investments are reasonably liquid, with the exception of insured Time Certificates of Deposit issued by banks 2 12-6782 1 2 3 4 5 6 7 a 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 ?R whose maturities are selected in anticipation of disbursement needs, thereby avoiding forced liquidation or lost interest penalties. 3. Yield: Yield is the potential dollar earnings an investment can provide; it is sometimes described as the rate of return. The City attempts to obtain the highest yield possible when selecting an investment, provided that the criteria stated herein for safety and liquidity are met. SECTION 5. Policy constraints and guidelines. The City of Hermosa Beach, California, operates its investment program with various self- imposed constraints. It does not speculate. It does not buy corporate debt securities. It does not deal in futures or options. It does not purchase on margin or through reverse repurchase agreements. It does not buy securities exceeding 10 year maturity unless otherwise noted. The City will utilize LAIF and LACT to the extent it is feasible and practical to maintain liquidity for its short term cash needs. SECTION 6. Investment reports. In accordance with Government Code Section 53646, the Treasurer renders an annual Statement of Investment Policy for City Council approval. Similarly, and in accordance with the City's Investment Policy, the Treasurer renders a monthly Investment Report to the City Manager and City Council. The Investment Report includes an Investment Schedule summarizing the type of investment, date of purchase, institution, date of maturity, amount of deposit or purchase price, and current market value and rate of interest for all securities. The monthly Investment Report clearly states compliance with, or manner of noncompliance if any divergence from, or violation of the Investment Policy exists, by including a detailed statement on this matter. California Government Code Section 53646 (i) requires the City to submit its annual investment policy to the California Debt and Investment Advisory Commission within 60 days after the close of the second quarter of the calendar year (and within 60 days of any amendments thereto). 3 12-6782 1 2 3 4 5 6 7 s 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 �R SECTION 7. Investment audits and investment policy evaluation. Annually, in conjunction with the City's "annual" audit, there shall be an external audit of the City's Investment Program by an independent auditor to assure compliance with the Investment Policy. The report of this audit shall be included as part of the auditor's report. SECTION 8. Investment guidelines. 1. Only investments authorized by the Investment Policy are used. 2. A copy of this Investment Policy should be given to each financial institution with which the City conducts business. 3. Before an unfamiliar security is purchased, the issuer and the instrument are researched and investigated and all contractual agreements and administrative procedures are completed before any transactions are consummated. 4. The City only invests in banks which are insured or are collateralized pursuant to the California Government Code. 5. Every investment transaction is properly documented and the procedure for monitoring is clearly defined. 6. Investment strategies are approved by the Council annually and can be reviewed more frequently as changes in economic conditions may dictate. SECTION 9. Guidelines for Certain Types of Investment. 1. California State/Local Agency Investment Fund (LAIF) — A Resolution of the City is on file with the State Treasurer, which permits maintaining an account in LAIF. The City can use this account for its short term liquidity requirements, but will not have more than 50% of total pooled funds invested for any extended period of time. 2. Cash Management for Operations -- The City is required to maintain working capital balances in its general operating accounts. These balances will be minimal and maintained solely to cover outstanding checks. SECTION 10. Internal control objectives for investments. 4 12-6782 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 ?9 The objectives of the internal control of investments are established by the City's management to ensure: 1. An orderly and efficient conduct of investing, including adherence to investment policies. 2. The safeguarding of assets. 3. The accuracy and completeness of the accounting records for investment. 4. The timely preparation of reliable financial information. 5. The prevention of errors. 6. The detection of fraud. The following procedures will be implemented to ensure that the objectives of internal control for the City's investments are accomplished: 1. Responsibility Specific responsibility for the performance of duties should be assigned and lines of authority and reporting clearly identified and understood. 2. Segregation of Functions Segregation of functions reduces the risk of developing a situation where one individual may be in a position to conceal errors. To this end, the following accounting functions will be performed by different individuals: investments, receivables, and reconciliations. 3. Authorization All transactions must be authorized by the assigned individual whose responsibilities and limits of authorization have been clearly delineated. Delegation of authority to approve transactions must be carefully monitored. 4. Transfer of Investment Funds The transferring of investment funds will be carried out exclusively by use of the Federal Reserve Bank's electronic wire transfer system. The Treasurer will issue each bank with which the City conducts business a written list of the City's pre -authorized bank accounts to ensure that funds are transferred only between the City's established accounts. E 12-6782 1 2 3 4 5 6 7 a 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 ')R The written list will include the names of the specific staff authorized to initiate transfers. Any changes to this list will be submitted in writing to the pertinent banks by the Treasurer as changes arise. 5. Recording The manual and electronic recording procedures must be carried out independently of the individual initiating the investment transaction, to ensure the validity, completeness, and appropriate authorization of each investment transaction. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF HERMOSA BEACH, CALIFORNIA, DOES HEREBY RESOLVE AS FOLLOWS: SECTION 11. That the annual Statement of Investment Policy for the City of Hermosa Beach, California, as set forth in the recitals hereof, filed by the City Treasurer in compliance with Section 53646 (a) of the Government Code, is hereby approved. SECTION 12. That this policy applies to investments effective January 1, 2012 PASSED, APPROVED AND ADOPTED this 24th day of January 2012. PRESIDENT of the City Council and MAYOR of the City of Hermosa Beach, California ATTEST: r 6 UMMIKelffelm City Attorney 12-6782 STATE OF CALIFORNIA COUNTY OF LOS ANGELES CITY OF HERMOSA BEACH I, Elaine Doerfling, City Clerk of the City of Hermosa Beach, California, do hereby certify that the foregoing Resolution No. 12-6782 was duly and regularly passed, approved and adopted by the City Council of the City of Hermosa Beach at a Regular Meeting of said Council at the regular place thereof on January 24, 2012. The vote was as follows AYES: DiVirgilio, Duclos, Tucker, Mayor Fishman NOES: None ABSTAIN: None ABSENT: Bobko Dated: February 14, 2012 Elaine Doerfling, City C '