HomeMy WebLinkAboutR07-Economic Development Agency
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DBVELOPMDT DBPAIt.l"l'll51'[[ OF -0
CIrt OF SAB BBIl1tUDIRO
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REOUEST FOR COtlfiSSIOII/COmrCIL ACTIOII
From:
KENl!lETH J. HENDERSON
Executive Director
Subject: IBVESTMEBr POLICY
Date:
December 6, 1991
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Synopsis of Previous ComBission/Council/ComBittee Action:
02-06-89 Community Development Commission adopted the annual Statement of
Investment Policy for the year 1989.
01-22-90 Community Development Commission adopted the annual Statement of
Investment Policy for the year 1990.
12-17-90 Community Development Commission adopted the annual Statement of
Investment Policy for the year 1991.
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RecomBended Motion:
(COMMUNIrt DEVELOPMENT COMMISSION)
THAT TBB COllllllllIrt DBVELOPMDT COtIfiSSIOII APPROVE ABD ADOPT TBB
DBVELOPIIBlIr OBPh:uuutr'S AIDmAL STAr&'IIII!IY OF IIIVESnuuu POLICY FOR TBB
BAR 1992.
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~Oll' Executive Director
Develo~ent Department
Administrator
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Contact Person: Barbara Lindseth
Phone: 5081
Project Area: All
Ward(s): All
Supporting Data Attached: Statement of Investment Policv
FUNDING REQUIREMENTS:
Amount: NA
Budget Authority:
Source:
Commission/Council 1I0tes:
KJH:bl:1388A
COtlfiSSIOII REETIBG
Meeting Date: 12/16/91
Agenda Item 110: 1
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DBVELOPMBlIr DBPA.Icum1t-,[
STAFF REPORT
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Investment Policy
Government Code Section 53646 requires that the Community Development
Commission annually approve a Statement of Investment Policy for the
Development Department.
Attached is the Development Department's "Statement of Investment Policy" for
the year 1992. The proposed 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 years 1989, 1990 and 1991. This policy is used as a
guideline for the efficient placement and monitoring of investments by
outlining the types of investments the Development Department may purchase,
while stressing the importance of maximizing the yield earned on all
investments and minimizing the risk on same. The criteria for selecting
investments, and the order of priority are (i) safety; (ii) liquidity, and;
(Ui) yield.
On December 5, 1991, the Redevelopment Committee recommended adoption of the
attached "Statement of Investment Policy".
I recommend approval by the Commission of the attached "Statement of
Inveatment Policy".
., Executive Director
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ICJH:bl:1388A
COIMISSIO. IIDTIIG
Meetina Date: 12/16/91
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DBVELOl'MDr DBPA.IcJ:JmIn: OF rJIB CITY OF SAIl IIEIIlWlDIBO
"StateBent of Inves~ent Policy"
A.
Pumose
This Statement is intended to provide guidelines for the prudent
investment of the Development Department's temporary idle cash, and
outline the policiea for maximizing the efficiency of the Development
Department'a cash management system. The ultimate goal is to enhance
the economic status of the Development Department while protecting its
pooled cash.
B. Obiective
The Development Department' s cash management system is designed to
accurately monitor and forecast expenditures and revenues, thus
enabling the Development Department to invest funds to the fullest
extent possible. The Department attempts to obtain the highest yield
obtainable as long as investments meet the criteria established for
safety and liquidity.
C. Polic:v
The Development Department operates its temporary pooled idle cash
investments under the prudent man rule (Civil Code Section 2261, et
seq). This affords the Department 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.
1) Safetv:
Safety and the minimiZing of risks aasociated 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 which 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 Development
Department only invests in those instruments that are considered
very safe.
2) Liauiditv:
Liquidity is the ability to easily sell investment instruments at
any time with the minimal risk of losing some portion of principal
or interest. Liquidity is an extremely important quality as the
Development Department may have an unexpected need for funds to be
disbursed.
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DEVELOPMDr DBP~
Statellent of Investaent Policy
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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 Development Department attempts to obtain
the highest yield possible when selecting an investment, provided
that the criteria stated in the Investment Policy for safety and
liquidity sre met and the investment guideline and strategy are
adhered to.
D. Inve......t.
Investments are made in the following manner:
Securities of the United States 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, and; 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 Development Department operates its investment program with many
federal, state and self-imposed constraints. It does not buy stock, or
deal in futures, options, or security loan agreements. To maximize
investment income, the Development Department uses all available
economically feasible investment tools. Economic conditions and
various money markets are monitored in order to assess the probable
course of interest rates.
The final basic premise underlying the Development Department's
investment philosophy is to insure the safety of existing funds and
ensure consistent availability of same.
0988A
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