HomeMy WebLinkAbout15- City Treasurer CITE( OF SAN BERNA.&ADINO - REQUEST F,,.;R COUNCIL ACTION
From: DAVID C. KENNEDY, CITY TREASURER Subject: RECEIPT AND FILING OF THE 7rNNUAT
STATEMENT OF INVESTMENT POT,ICY
Dept: CITY TREASURER
Date: 10/21/93
Synopsis of Previous Council action:
Resolution acknowledging receipt and filing of the annual
Statement of Investment Policy adopted 3/9/92
Resolution No. 92-80
Recommended motion:
Adopt resolution
Sign t re �
Contact person: Barbara Lee Phone: 5021
Supporting data attached: Ward:
FUNDING REQUIREMENTS: Amount:
Source: (ACCT. NO.)
(ACCT. DESCRIPTION)
Finance:
Council Notes:
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3 RESOLUTION NO.
4 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY
OF SAN BERNARDINO ACKNOWLEDGING THE RECEIPT AND FILING OF
5 THE ANNUAL STATEMENT OF INVESTMENT POLICY FOR THE YEAR 1993 .
6 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.
8 The City Treasurer of the City of San Bernardino
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declares the annual Statement of Investment Policy is as set
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forth in Exhibit "A" , attached hereto and incorporated
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herein by this reference as though fully set forth at
12 length.
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SECTION 2 . Implementation.
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An annual Statement of Investment Policy for the City
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of San Bernardino has been filed by the City Treasurer for
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the calendar year 1993 .
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2 I HEREBY CERTIFY that the foregoing resolution was duly adopted by
3 the Mayor and Common Council of the City of San Bernardino at a
4 meeting thereof, held on the day of
5 1993 , by the following vote, to wit:
6 COUNCIL MEMBERS AYES NAYS ABSTAIN ABSENT
7 NEGRETE
8 CURLIN
9 HERNANDEZ
10 OBERHELMAN
11 DEVLIN
12 POPE-LUDLAM
13 MILLER
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15 CITY CLERK
16 The foregoing resolution is hereby approved this day of
1993 .
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19 Tom Minor, Mayor
City of San Bernardino
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Approved as to form
21 and legal content:
22 JAMES F. PENMAN
City Attorney
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By•
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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 requirements
cannot be anticipated, investments in securities with
active secondary or resale markets is highly
recommended. Emphasis should be on marketable
securities 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
portfolio shall be designed to attain a market-average
rate of return throughout budgetary and economic
cycles, taking into account the City's risk
constraints, 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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F. 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 circumstances 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 considered within the context
of the overall portfolio's investment return, provided
that adequate diversification has been implemented.
IV. Reportina:
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 bank
and savings and loans; Bankers Acceptances; Repurchase
Agreements; Commercial Paper; negotiable Certificates
of Deposit; Local Agency Investment Fund Demand
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Deposits; Passbook Savings Account Demand Deposits;
interest Bearing Demand Deposits;Money-Market Accounts
of acceptable instruments.
VI. 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
important include; control of collusion, separation of
duties, separating transaction authority from accounting and
record keeping, custodial safekeeping, clear delegation of
authority, specific limitations regarding securities losses
and remedial action, written confirmation of telephone
transaction, minimizing the number of authorized Investment
Officials, documentation of transactions and strategies, and
code of ethics standards.
VII. Maturities:
Investments will be chosen with appropriate maturities so
that funds will be available to meet the City's cash flow
requirements.
VIII. Banks and Securities Dealers:
In selecting financial institutions for the deposit or
investment of City funds, the Treasurer shall consider the
credit worthiness of institutions. The Treasurer shall
continue to monitor financial institutions' credit
characteristics and financial history throughout the period
in which agency funds are deposited or invested.
IX. Risk Tolerance:
The City recognizes that investment risks can result from
issuer defaults, market price changes, or various 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 transaction shall be undertaken
which jeopardizes the total capital position of the overall
portfolio. The Treasurer shall periodically establish
guidelines and strategies to control risks of default,
market price changes and illiquidity.
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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 department
and kept in the City's name.
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