HomeMy WebLinkAbout1992-080
1 RESOLUTION NO. 92-80
2 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO ACKNOWLEDGING THE RECEIPT AND FILING OF THE ANNUAL
3 STATEMENT OF INVESTMENT POLICY FOR THE YEAR 1992.
4 NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND COMMON
COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS:
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SECTION 1. Recitals.
A. The California State Legislature passed legislation
during the 1984 session requiring the filing of an annual
Statement of Investment Policy by local public agencies.
B. The Governor of the State of California signed such
legislation into law effective January 1, 1985 (Chapter 1226).
C. The City Treasurer of the City of San Bernardino
declares the annual Statement of Investment Policy is as set forth
in Exhibit "A", attached hereto and incorporated herein by this
reference as though fully set forth at length.
SECTION 2. Implementation.
An annual Statement of Investment Policy for the City of San
Bernardino has been filed by the City Treasurer for calendar year
1992 in compliance with Section 53646(a) of the Government Code of
the State of California.
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DAB/ses/Year-92.res
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March 2. 1992
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1 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF
SAN BERNARDINO ACKNOWLEDGING THE RECEIPT AND FILING OF THE ANNUAL
2 STATEMENT OF INVESTMENT POLICY FOR THE YEAR 1992.
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I HEREBY CERTIFY that the foregoing resolution was duly
adopted by the Mayor and Common Council of the City of San
regular
Bernardino at a
meeting thereof, held on the 2nd
day of March
, 1992, by the following vote, to wit:
Council Members:
AYES
NAYS
ABSTAIN
ABSENT
ESTRADA
x
REILLY
x
11 HERNANDEZ
12 MAUDSLEY
x
x
MINOR
x
POPE-LUDLAM
x
MILLER
x
-~
LA~
CitrClerk
~
/-
'd this 9th
day
The foregoing resolution
of March , 1992.
-/<>'
Approved as to
form and legal content:
JAMES F. PENMAN,
City Attorney
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By: --. 7fe7"~
U
DAB/ses/Year-92.res
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March 2. 1992
Res. 92-80
E X H I BIT -A-
INVESTMENT POLICY
I. Introduction:
The purpose of this document is to identify various
policies and procedures that enhance opportunities for
a prudent and systematic investment policy and to organize
and formalize investment-related activities.
II. Scope:
It is intended that this policy cover all funds and
investment activities under the direct authority of the
City of San Bernardino.
III.
Objectives:
A. Safety: It is the primary duty and responsibility
of the Treasurer to protect, preserve and maintain
cash and investments placed in his/her trust on
behalf of the citizens of the community.
B. Liquidity: An adequate percentage of the portfolio
should be maintained in liquid short-term securities
which can be converted to cash if necessary to meet
disbursement requirements. Since all cash require-
ments cannot be anticipated, investments in securities
with active secondary or resale markets is highly
recommended. Emphasis should be on marketable securi-
ties with low sensitivity to market risk.
C. Yield: Yield should become a consideration only
after the basic requirements of safety and liquidity
have been met.
D. Market-Average Rate of Return: The investment port-
folio shall be designed to attain a market-average
rate of return throughout budgetary and economic
cycles, taking into account the City's risk con-
straints, the cash flow characteristics of the
portfolio, and State and Local laws, ordinances or
resolutions that restrict investments.
E. Diversification: The investment portfolio will be
diversified to avoid incurring unreasonable and
avoidable risks regarding specific security types
or individual financial institutions.
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D. Prudence: The City adheres to the guidance provided
by the "prudent man rule," which obligates a
fiduciary to insure that:
"...investment shall be made with the exercise of
that degree of judgment and care, under circum-
stances then prevailing, which persons of prudence,
discretion and intelligence exercise in the management
of their own affairs, not for speculation but for
investment considering the probable safety of their
capital as well as the probable income to be derived."
G. Public Trust: All participants in the investment
process shall act as custodians of the public trust.
Investment officials shall recognize that the
investment portfolio is subject to public review
and evaluation. The overall program shall be designed
and managed with a degree of professionalism that
is worthy of the public trust. In a diversified
portfolio it must be recognized that occasional
measured losses are inevitable, and must be con-
sidered within the context of the overall portfolio's
investment return, provided that adequate diversifi-
cation has been implemented.
IV. Reporting:
The Treasurer shall submit a monthly investment report
to the City. Required elements of the monthly report:
a) Type of investment
b) Institution
c) Date of maturity
d) Amount of deposit or cost of the security
e) Current market value of securities with maturity
in excess of 12 months
f) Rate of interest
g) statement relating the report to the statement
of Investment Policy
h) statement that there are sufficient funds to
meet the next 30 days' obligations
V.
Investment Instruments:
Authorized investment instruments include:
Securities of the U. S. Government and obligations
of its agencies; registered treasury notes, bonds,
or legal obligations of the State of California;
Certificates of Deposits, placed with commercial
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VI.
VII.
VIII.
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banks and savings and loans; Bankers Accept-
ances; Repurchase Agreements; Commercial Paper;
negotiable Certificates of Deposit; Local
Agency Investment Fund Demand Deposits; Passbook
Savings Account Demand Deposits; Interest Bearing
Demand Deposits; Money-Market Accounts of accept-
able instruments.
Internal Controls:
A system of internal control shall be established
and documented in writing. The controls shall be
designed to prevent losses of public funds arising
from fraud, employee error, misrepresentation of
third parties, unanticipated changes in financial
markets, or imprudent actions by employees and
officers of the City. Controls deemed most impor-
tant include: control of collusion, separation of
duties, separating transaction authority from account-
ing and recordkeeping, custodial safekeeping, clear
delegation of authority, specific limitations regard-
ing securities losses and remedial action, written
confirmation of telephone transactions, minimizing
the number of authorized Investment Officials, docu-
mentation of transactions and strategies, and code
of ethics standards.
Maturities:
Investments will be chosen with appropriate maturities
so that funds will be available to meet the City's
cash flow requirements. No investment will be made
with a maturity over five years.
Banks and Securities Dealers:
In selecting financial institutions for the deposit
or investment of City funds, the Treasurer shall
consider the creditworthiness of institutions. The
Treasurer shall continue to monitor financial insti-
tutions' credit characteristics and financial history
throughout the period in which agency funds are
deposited or invested.
Risk Tolerance:
The City recognizes that investment risks can result
from issuer defaults, market price changes, or various
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technical complications leading to temporary
illiquidity. Portfolio diversification is
employed as a way to control risk. Investment
Managers are expected to display prudence in the
selection of securities, as a way to minimize
default risk. No individual investment transac-
tion shall be undertaken which jeopardizes the
total capital position of the overall portfolio.
The Treasurer shall periodically establish guide-
lines and strategies to control risks of default,
market price changes and illiquidity.
In addition to these general policy considerations,
the following specific policies will be strictly
observed.
A. All transactions will be executed on a delivery
versus payment basis.
B. A competitive bid process, when practical, will
be used to place all investment purchases.
X.
Safekeeping and Custody:
Securities will be delivered to the Bank Trust Depart-
ment and kept in the City's name.
XI.
Statement of Investment Policy:
The Statement of Investment Policy shall be reviewed
and submitted annually to the City.
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