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HomeMy WebLinkAbout05-RDA Item Redevelopment Agency · City of San Bernardino 300 North "D" Street, Fourth Roor . San Bernardino, California 92418 (714) 384-5081 FAX (714) 888-9413 Pride .,f ~e~ JANUARY 12, 1990 ADOPT THE ANNUAL STATEMENT OF INVESTMENT POLICY OF THE REDEVELOPMENT AGENCY FOR THE YEAR 1990. Synopsis of Previous Commission/Council/Committee Action: 02-06-89 Community Development Commission adopted the annual Statement of Investment Policy for the year 1989. Recommended Motion: (COMMUNITY DEVELOPMENT COMMISSION) Move to adopt the Annual Statement of Investment Policy of the Redevelopment Agency of the City of San Bernardino for the year 1990. Respectfully Submitted, Supporting data attached: Yes Funding requirements: NA Commission Notes: Ward: All Project: All l190A Agenda of: January 22, 1990 Item No.: ~5 Redevelopment Agency S T A F F R E P 0 R T Government Code Section 53646 requires that the Redevelopment Agency of the City of SAn Bernardino annually approve a Statement of Investment Policy. Attached is the Redevelopment Agency's Statement of Investment Policy for the year 1990. This policy is identical to the policy the City of San Bernardino is currently using and is the same policy adopted by the Commission for the year 1989. The policy is used as a guideline for the efficient placement and monitoring of investments the Redevelopment Agency. It outlines the types of investments the Redevelopment Agency may purchase and the stresses the importance of maximizing the yield from all investments and minimizing risk on these investments. It is, therefore, recommended that the Commission approve the attached Statement of Investment Policy. Redevelopment Agency of the City of San Bernardino Statement of Investment Policy PURPOSE This statement is intended to provide guidelines for the prudent investment of the Redevelopment Agency's temporary idle cash, and outline the policies for maximizing the efficiency of the Redevelopment Agency's cash management system. The ultimate goal is to enhance the economic status of the Redevelopment Agency while protecting its pooled cash. OBJECTIVE The Redevelopment Agency's cash management system is designed to accurately monitor and forecast expenditures and revenues, thus enabling the Redevelopment Agency to invest funds to the fullest extent possible. The Redevelopment Agency attempts to obtain the highest yield obtainable as long as investments meet the criteria established for safety and liquidity. POLICY The Redevelopment Agency operates its temporary pooled idle cash investments under the prudent man rule (Civil Code Section 2261, et sequl). This affords a broad spectrum of investment opportunities so long as the investment is deemed prudent and is allowable under current legislation of the State of California and other imposed legal restrictions. The Redevelopment Agency strives to maintain the level of investment of idle funds as near to 100% as possible, through daily and projected cash flow determination. Idle cash management and investment transactions are the responsibility of the Redevelopment Agency's Accounting Department. Investments are made under the terms and conditions of Section 53600-53683 of the Government Code of California. Criteria for selecting investments and the order of priority are: 1) SAFETY Safety and the minimizing of risks associated with investments refers to attempts to reduce the potential loss of principal, interest, or a combination of the two. The first level of control is in State law which restricts municipalities to certain investment instruments. The second level of risk control is the investment in instruments that appear on examination to be the most credit worthy. The third level of control is in the reduction of market risk by investing in sufficient instruments that have maturities coinciding with dates of disbursement. The Redevelopment Agency only invests in those instruments that are considered very safe. 2) LIQUIDITY Liquidity is the ability to easily sell at any time with the minimal risk of losing some portion of principal or interest. Liquidity is an extremely important quality as the Redevelopment Agency may have an unexpected need for funds to be disbursed occasionally. Most investments are highly liquid, with the exception of collateralized or insured term certificates of deposit issued by banks and savings and loans. Certificate maturities are selected to anticipate cash needs, thereby eliminating the need for forced liquidation. 3) YIELD Yield is the potential dollar earnings an investment can provide or "rate of return". The Redevelopment Agency attempts to obtain the highest yield possible when selecting an investment, provided that the criteria stated in the Investment Policy for safety and liquidity are met and the investment guideline and strategy are adhered to. Investments are made in the following: 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 Deposit, placed with commercial banks and savings and loans; Bankers Acceptances; Repurchase Agreements; Commercial Paper; negotiable Certificates of Deposit; Local Agency Investments Fund Demand Deposits; Passbook Savings Account Demand Deposits; Interest Bearing Demand Deposits; Money-Market Accounts of acceptable instruments. Government and agency securities are the highest quality investments available in terms of safety and liquidity. Certificates of Deposit, savings accounts, repurchase agreements, and bankers acceptances are insured or collateralized. Only commercial paper with both A-I Moody's and P-l Standard and Poor's ratings are purchased. The Redevelopment Agency operates its investment program with many Federal and State, and self-imposed constraints. It does not buy stock, or deal in futures, options, or security loan agreements. To maximize investment income, the Redevelopment Agency uses all available economically feasible investment aids. Economic conditions and various money markets are monitored in order to assess the probable course of interest rates. The final basic premise underlying the Redevelopment Agency's investment philosophy is to insure the safety of existing funds and insure that they are always readily available when needed. 0988A