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CITO OF SAN BERNARDI~ - REQUEB' FOR COUNCIL AJ
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From: CRAIG A. GRAVES, Ci ty Treasurer .
Dept: CITY TREASURER'S OFFICE
Date: Apri 1 6, 1987
.'. ,,' ~l:Iject: Filing of City's Investment Policy
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Synopsis of Previous Council action:
September 19, 1985 - The City's Investment Policy as submitted by the City Treasurer and
the City Administrator is reviewed by the Ways and Means Committee and
approved. It was forwarded to the Mayor and Common Council for
fil in9.
October 7, 1985 - Mayor and Common Council receipted and filed Statement of Investment Policy
March 24, 1986 - Mayor and Common Council receipted and filed Statement of Investment Policy
Recommended motion:
Adopt the Resolution.
Council Notes:
75-0262
Agenda Item No. IS:
CI'IO OF SAN BERNARDI~ - REQUEQI' FOR COUNCIL AC"C))N
STAFF REPORT
Two years ago the California Legislature adopted legislation which requires the
City Treasurer to file annual investment policy each calendar year with the
legislative body. Attach~u is the investment policy that was reviewed by the Ways
a.nd Means Corrmittee in 1985 and then was received and filed by the Mayor and Common
Council. The only changes in the investment policy from 1986 are the inclusion of
money market instruments and interest bearing demand deposits (checking accounts). These
were authorized investment instruments in the last legislative session. They will
allow the City to have liquidity and still receive interest income when needed.
The attached investment policy sets forth the parameters being used in the investment
of City Funds. It includes the priorities used for determining investments and the types.
It also states the purpose and objectives of the City's investment program.
4/6/87
75-0264
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RESOLUTION NO.
RESOLUTION OF THE CITY OF SAN BERNARDINO ACKNOWLEDGING THE
RECEIPT AND FILING OF THE ANNUAL STATEMENT OF INVESTMENT POLICY
FOR THE YEAR 1987.
BE IT RESOLVED BY THE MAYOR AND COMMON COUNCIL OF THE CITY
OF SAN BERNARDINO AS FOLLOWS:
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 nAn, attached hereto and incorporated herein by
this reference as though fully set forth at length.
California.
I HEREBY CERTIFY that the foregoing resolution was duly
adopted by the Mayor and Common Council of the City of San
day of
meeting thereof, held on the
, 1987, by the following vote, to
Bernardino at a
wit:
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AYES:
Council Members
NAYS:
ABSENT:
City Clerk
The foregoing resolution is hereby approved this
, 1987.
day
Mayor of the City of San Bernardino
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Approved as to form:
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14 City Attorney
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CITY OF SAN BERNARDINO
Statement of Investment Policy
PURPOSE
This statement is intended to provide guidelines for the prudent
investment of the City's temporary idle cash, and outline the
policies for maximizing the efficiency of the City's cash management
system. The ultimate goal is to enhance the economic status of
the City while protecting its pooled cash.
OBJECT! VE
The City's cash management system is designed to accurately monitor
and forecast expenditures and revenues, thus enabling the City to
invest funds to the fullest extent possible. The City attempts
to obtain the highest yield obtainable as long as investments meet the
criteria established for safety and liquidity.
POLICY
The City of San Bernardino operates its temporary pooled idle cash
investments under the prudent man rule (Civil Code Section 2261,
et sequl) (copy attached). 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 City of San Bernardino 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 City Treasurer. Inves~ments are made
under the terms and conditions of Sections 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. San Bernardino only invests in those instruments that are
considered yery safe.
EXHIBIT "A"
4/6/87
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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 City 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 earning an investment can provide or
"rate of return". San Bernardino 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 adherred 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 Deposits, placed with commercial banks
and savings and loans; Bankers Acceptances; 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 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-1 Moody's
and P-l Standard and Poor's ratings are purchased.
The City of San Bernardino operates its investment program with many Federal
and State, and self-imposed constraints. It does not buy stocks, or deal
in futures, options, or security loan agreements.
To maximize investment income, the City of San Bernardino uses all available
economically feasible investment aids. Economic conditions and various
money markets are monitored inorder to assess the probable course of
interest reates.
The final basic premise underlying the City of San Bernardino's investment
philosophy is to insure the safety of existing funds and insure that they
are always readily available when needed.
4/6/87