HomeMy WebLinkAbout2011/02/22 Item 3CITY COUNCIL
AGENDA STATEMENT
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CHUTA VISTA
FEBRUARY 22, 2011, Item 3
ITEM TITLE: RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA ACKNOWLEDGING RECEIPT OF THE
CITY'S INVESTMENT POLICY AND GUIDELINES; AND
AMENDING SECTION 18.0 OF THE POLICY
INVESTMENT REPORT FOR THE QUARTER ENDED
DECEMBER 31, 2010
SUBMITTED BY: DIRECTOR OF FINANCE/TREASURE$~~
REVIEWED BY: CITY MANAGER 5 ~
ASSISTANT CITY MANAGER S?~
4/STAS VOTE: YES ~ NO ~X
SUMMARY
Per California Government Code Section 53646, the City Treasurer may annually present the
City's Investment Policy to the City Council to reaffirm or make any changes to the existing
policy. The Investment Policy provides guidelines for the investment of idle funds and affords
the City various investment opportunities, as long as the investment is deemed prudent and is
allowable under Government Code Section 53600, et seq. The City received the Certificate of
Excellence Award from the Association of Public Treasurers United States and Canada (APT-
US&C) in August 2007 for its Investment Policy, and most recently, the Policy was reviewed
and adopted by City Council on March 2, 2010. At this time, staff is recommending an
amendment to Section 18.0 to more clearly state the Policy requirement on the annual
acknowledgement of the City's Investment Policy and Guidelines.
Transmitted herewith is the City's investment report for the quarter ended December 31, 2010. To
meet the reporting requirements set forth in the California Government Code Sections 53600 et seq.
and the City of Chula Vista Investment Policy, a separate report was distributed to the City Council
as an informational item.
ENVIRONMENTAL REVIEW
The Environmental Review Coordinator has reviewed the proposed activity for compliance with
the California Environmental Quality Act (CEQA) and has determined that the activity is not a
"Project" as defined under Section 15378 (b)(4) of the State CEQA Guidelines; therefore,
pursuant to Section 15060(c)(3) of the State CEQA Guidelines the activity is not subject to
CEQA. Thus, no environmental review is necessary.
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FEBRUARY 22, 2010, Item 3
Page 2 of 3
RECOMMENDATION
Council adopt the resolution and accept the report.
BOARDS/COMMISSION RECOMMENDATION
Not applicable.
DISCUSSION
Investment Policy _
The City's Investment Policy and Guidelines adopted on Mazch 2, 2010 by Resolution 2010-045
intended to provide direction for the prudent investment of temporarily idle cash, and for
maximizing the efficiency of the cash management process. The stated goal is to enhance the
economic condition of the City while ensuring the safety of funds invested. The policy includes a
list of specific investment instruments available under the relevant California Government Code
sections, 53600 et seq. and 53635 et seq. Each investment transaction is made in the context of first
ensuring the "safety" of principal, second, investing only for that timeframe that the cash is not
needed for operational purposes ("liquidity"), and last seeking the highest return possible ("yield")
provided that the first two factors are met.
Quarterly Investment Report
The total cash and investment portfolio as of December 31, 2010 was $166,053,186. This is an
increase of approximately $1,681,295 from September 30, 2010 to December 31, 2010. For the
quarter ended December 31, 2010 the earned interest yield was 1.676%, an increase from the
1.562% reported for the quarter ended September 30, 2010, reflecting reinvestment in higher
yielding investments with longer maturity dates. The weighted average maturity as of December
31, 2010 was 2.89 years, an increase from the 2.48 years in the prior quarter. The weighted
average maturity remains sufficiently liquid to enable the City to meet all operating requirements
which might be reasonably anticipated.
DECISION MAKER CONFLICT
Staff has reviewed the decision contemplated by this action and has determined that it is not site
specific and consequently the 500 foot rule found in California Code of Regulations section
18704.2(a)(1) is not applicable to this decision.
Staff Member Conflicts Verification By: Nadine Mandery
Date: February 4, 2011
CURRENT YEAR FISCAL IMPACT
Considering the projected timing of cash receipts and disbursements and the structure of the
Pooled Investment Portfolio, the City should be able to comfortably meet overall cash flow
needs over the next six months. There is no direct fiscal impact by this action.
ONGOING FISCAL IMPACT
There is no ongoing fiscal impact by this action.
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FEBRUARY 22, 2010, Item~_
Page 3 of 3
ATTACHMENTS
A. Investment Report for the Quarter Ended December 31, 2010
B. City of Chula Vista Investment Policy and Guidelines
C. Proposed Amendment to Investment Policy Section 18.0
Prepared by: N Mandery, Treasury Manager, Finance Dept.
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ATTACHMENT A
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CITY OF
CHULAVISTA
Finance Department
Investment Report for the Quarter Ended December 31, 2010
February 22, 2011
Honorable Mayor and City Council,
I am pleased to present this report of investment activity for the quarter ended December 31,
2010 in compliance with the reporting requirements as set forth in the California Government
Code Sections 53600 et seq. and the City of Chula Vista Investment Policy. The information
presented in this report highlights the investment activity for the quarter ended December 31,
2010 as well as provides a comparison to the quarters ended September 30, 2010 and
December 31, 2009.
Market Overview
The Federal Open Market Committee (FOMC) continues to maintain the key Fed Funds rate at
a target range of 0.00% to 0.25% in hopes of stimulating the economy. Two-year Treasuries
yielding 0.42% at the beginning of the quarter rose significantly to 0.60% at the end of the
quarter.
The overall consumer price index (CPI) rose 1.5% on ayear-over-year basis, and the core CPI
(excluding food and energy) showed a 0.8% increase year-over-year indicating that inflation
remains under control.
Portfolio Composition
The table below provides a summary of the City's total investment portfolio as of December 31,
2010. The Investment Portfolio ($157,395,368), Cash/Time Deposits ($8,657,818) and Bank
Trustee/Fiduciary Funds ($91,436,175) continue to be invested in accordance with the
Government Code, bond covenants and the Council Investment Policy as adopted on March 2,
2010.
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Honorable Mayor and City Council
Investment Report Quarter ended 12/31/2010
Page 2 of 4
Summary of Cash and Investments as of December 31, 2010
of
Investment Type Par Value Market Value Book Value Portfolio
Investment Portfolio
Federal Securities 130,000,000 129,788,931 129,998,125 50.49%
Pooled Investments 23,395,368 23,420,728 23,395,368 9.09%
Corporate Bonds 4,000,000 4,092,860 3,992,960 1.55%
Subtotal 157,395,368 157,302,519 157,386,453 59.57%
CashRime Deposits $8,657,818 $8,657,818 $8,657,818 3.36%
Total Cash 8 Investments Held by the City $166,053,186 $165,960,337 $166,044,271 64.49%
Held by Bank TrusteelFiduciary Funds (1)
U. S. Government 8,921,563 9,075,303 8,920,863 3.46%
Investment Agreements' 14,897,830 14,897,830 14,897,830 5.79%
Mutual Funds` 56,045,635 56,045,635 56,045,635 21.77%
Cash with Fiscal Agents 0 0 0 0.00%
oo~+d~re,~ r~~ti 11 571.147 11.571.147 11.571.147 4.49%
Total Portfolio $257,489,361 $257,550,252 $257,479,746 100.00%
(1) Reflects band proceeds held by trustee in accordance with bond covenants.
The graph below provides a snapshot of the portfolio composition by investment type for that
portion of the portfolio not held by the bank trustee or in a fiduciary fund.
Portfolio Composition
as of December 31, 2010
US Government
Agency
82% _
Corporate Coupon
Bonds
3%
~~LAIF (State Pool)
SD County Pool 11
3%
3-5
-'CalTrust
1%
Honorable Mayor and City Council
Investment Report Quarter ended 12!31/2010
Page 3 of 4
Portfolio Performance
Portfolio performance is provided in more detail in the attachments to the report. The summary
information provided below includes the total portfolio income recognized for the last quarter as
compared to the prior quarter and the same quarter one year ago.
Total Portfolio Income Recognized
Accrual Basis
Total Portfolio December 31, 2010 September 30, 2010 December 31, 2009
Quarter-End
Net Interest Earnings
Sales
614,188 $
666,912 $ 780,166
4,700 $ -
Net TotallncomeRecognized $ 614,188__ $ ti/1,Fi12 $ iriu,ltiti
Fiscal Year-to-Date
Net Interest Earnings $ 1,281,100 $
Net Gains (Losses) from Sales $ 4,700 $
This info comes !rom the monthly Sympro "Interest Earnings Summary" reports.
This table shows the City's average yield to maturity as of
December 31, 2010 as compared to the County of San Diego
and other cities in the county. Carlsbad and Oceanside both
have dedicated staff that actively manage their portfolios by
buying and selling investments daily as opposed to our more
passive "hold-to-maturity" investment style. Liquidity needs and
risk tolerance can also affect yields.
Benchmark Comparison
666,912 $
1,679,141
A enc Yield
Chula Vista 1.68°/
County of San Diego 0.76%
Carlsbad 2.06%
EI Cajon 1.50%
Oceanside 1.80°/
San Die o 1.15%
The following graph compares the monthly earned interest yield of the
the monthly average yields for the same period of the State of
Investment Fund (LAIF) and the two-year and three-year treasury from
December 2010.
a.o %
3.5%
3.0
2.5%
2.0
1.5%
1 .0%
0.5%
0.0
Monthly Benchmark Comparison
City's Portfolio Fund with
California Local Agency
December 2008 through
Dee-09 Mar-09 Jun-09 Se -09 Dec-09 Mar-10 Jun-10 Se -10 Dec-10
~Clfy rt-IAIF -~2yf Tfeasury -~--~3yf Teasury
3-6
Honorable Mayor and City Council
Investment Report Quarter ended 12/31/2010
Page 4 of 4
Per Section 16.1 of the City's Investment Policy, the two-
year U.S. Treasury and the Local Agency Investment
Fund yields are the performance benchmarks to be used
when determining whether market yields are being
achieved. The three-year U.S. Treasury is added as an
additional point of reference in order to provide an upper
range that is above the weighted average maturity of the
City's portfolio, which is at 1,055 days.
Investment Activity
Benct(mark~ ~.~:Yield ~ '?xADM~~
City 1.68% 1,055
LAIF 0.46% 215
2 Year Treasury 0.60% 730
3 Year Treasu 1.00% 1,095
ADM = Avera a Da s to Maturit
During the quarter, three investments totaling $10,000,000 were redeemed prior to their maturity
dates. These monies represent pooled cash received from various funding sources such as
sewer, RDA, TDIF, PAD, General Fund, etc. These funds were reinvested through the
purchase of nine Federal Agency Securities totaling $27,000,000 using the City's Investment
Policy guideline to ensure safety, liquidity and yield. There is no further activity to report on
other than routine investments in money market mutual funds by the City's fiscal agents.
Conclusion
The total cash and investment portfolio held by the City as of December 31, 2010 was
$164,371,891. This is an increase of approximately $1,681,295 from September 30, 2010 to
December 31, 2010. For the quarter ended December 31, 2010, the earned interest yield was
1.676%, a slight increase from the 1.562% reported for the quarter ended September 30, 2010,
reflecting purchases of higher yielding investments with longer maturity dates.
The weighted average maturity as of December 31, 2010 increased from the previous quarter's
2.48 years to 2.89 years which is within the Council Policy of less than 3.0 years. The weighted
average maturity remains sufficiently liquid to enable the City to meet all operating requirements
that might be reasonably anticipated.
Considering the projected timing of cash receipts and disbursements and the structure of the
Pooled Investment Portfolio, the City should be able to comfortably meet overall cash flow
needs over the next six months. There is no direct fiscal impact by this action.
I certify that this report reflects the City of Chula Vista and related agencies pooled investments
and is in conformity with the State of California Government Code on authorized investments and
with the Investment Policy of the City of Chula Vista as stated in Resolution No. 2010-045 dated
March 2, 2010.
Respectfully submitted,
Maria Kachadoorian
Director of Finance/Treasurer
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ATTACHMENT B
CITY OF CHULA VISTA
INVESTMENT POLICY AND GUIDELINES
I.0 Purpose :.................................................................................................................................... 2
2.0 Policy :....................................................................................................................................... 2
3.0 Scope :........................................................................................................................................ 2
4.0 Prudence :.................................................................................................................................. 3
5.0 Objective :.................................................................................................................................. 3
6.0 Delegation of Authority :...............................................................:.......................................... . 4
7.0 Ethics and Conflicts of Interest :............................................................................................... . 4
8.0 Authorized Financial Dealers and Institutions :....................................................................... . 4
9.0 Authorized & Suitable Investments :........................................................................................ . 5
10.0 Portfolio Adjustments :............................................................................................................ 9
11.0 Collateralization :..................................................................................................................... 9
12.0 Safekeeping and Custody :.................................................................................................... 10
13.0 Diversification :..................................................................................................................... 10
14.0 Maximum Maturities :........................................................................................................... 10
15.0 Internal Control :.................................................................................................................... 11
16.0 Performance Standards :........................................................................................................ 11
17.0 Reporting :............................................................................................................................. 12
18.0 Investment Policy Adoption :................................................................................................ 13
GLOSSARY ................................................................................................................................. 14
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CITY OF CHULA VISTA
INVESTMENT POLICY AND GUIDELINES
1.0 Purpose:
This "Investment Policy and Guidelines" (the "Investment Policy") Policy is intended to provide
guidelines for the prudent investment of the City of Chula Vista's (the "City") cash balances, and
outline policies to assist in maximizing the efficiency of the City's cash management system,
while meeting the daily cash flow demands of the City.
2.0 Policy:
The investment practices and policies of the City of Chula Vista are based upon state law and
prudent money management. The primazy goals of these practices are:
A. To ensure compliance with all Federal, State, and local laws governing the investment of
public funds under the control of the Director of Finance/Treasurer.
B. To protect the principal monies entrusted to the City's Finance Department.
C. Achieve a reasonable rate of return within the parameters of prudent risk management while
minimizing the potential for capital losses arising from mazket changes or issuer default.
3.0 Scope:
This Investment Policy applies to all financial assets of the City of Chula Vista, as indicated in
3.1 below. These funds are accounted for in the City's Comprehensive Annual Financial Report.
3.1 Funds:
The Director of Finance/Treasurer is responsible for investing the unexpended cash in the City
Treasury for all funds, except for the employee's retirement funds, which are administered
separately, and those funds which are managed sepazately by trustees appointed under indenture
agreements. The Director of Finance/Treasurer will strive to maintain the level of investment of
this cash as close as possible to 100%. These funds are described in the City's annual financial
report and include:
• General Fund
• Special Revenue Funds
• Capital Project Funds
• Enterprise Funds
• Trust and Agency Funds
• Any new fund created by the legislative body, unless specifically exempted
This Investment Policy applies to all transactions involving the financial assets and related
activity of the foregoing funds.
Adopted on March 2, 2010 by Resolution 201~~~5
CITY OF CHULA VISTA
INVESTMENT POLICY AND GUIDELINES
4.0 Prudence: --
The standard of prudence to be used by the Director of Finance/Treasurer shall be the "prudent
investor standard". This shall be applied in the context of managing an overall portfolio.
The "prudent investor standard" is applied to local agencies, pursuant to Califomia
Government Code Section 53600.3 which provides, in pertinent part:
" ... all governing bodies of local agencies or persons authorized to make
investment decisions on behalf of those local agencies investing public funds
pursuant to this chapter are trustees and therefore fiduciazies subject to the
prudent investor standazd. When investing, reinvesting, purchasing, acquiring,
exchanging, selling, or managing public funds, a trustee shall act with care, skill,
prudence, and diligence under the circumstances then prevailing, including, but
not limited to, the general economic conditions and the anticipated needs of the
agency, that a prudent person acting in a like capacity and familiarity with those
matters would use in the conduct of funds of a like character and with like aims,
to safeguard the principal and maintain the liquidity needs of the agency...."
4.1 Personal Responsibility:
The Director of Finance/Treasurer, Assistant Director of Finance and Treasury Manager as
investment officers acting in accordance with written procedures and the Investment Policy and
exercising due diligence, shall be relieved of personal responsibility for an individual security's
credit risk or market price changes, provided deviations from expectations aze reported to the
City Council in a timely fashion and appropriate action is taken to control adverse developments.
5.0 Objective:
Consistent with this aim, investments are made under the terms and conditions of California
Government Code Section 53600, et seq. Criteria for selecting investments and the absolute
order of priority are:
5.1 Safety:
Safety of principal is the foremost objective of the investment program. Investments of the City
of Chula Vista shall be undertaken in a manner that seeks to ensure the preservation of capital in
the overall portfolio. To attain this objective, diversification is required in order that potential
losses on individual securities do not exceed the income generated from the remainder of the
portfolio.
5.2 Liquidity:
Adopted on Mazch 2, 2010 by Resolution 20 ~L~~S
CITY OF CHULA VISTA
INVESTMENT POLICY AND GUIDELINES
The City of Chula Vista's investment portfolio will remain sufficiently liquid to enable the City
to meet all operating requirements which might be reasonably anticipated and to maintain
compliance with any indenture agreement, as applicable. Liquidity is essential to the safety of
principal.
5.3 Return on Investments:
The City of Chula Vista's investment portfolio-shall be designed with the objective of attaining a
market-average rate of return throughout budgetary and economic cycles (market interest rates),
within the City's Investment Policy's risk parameters and the City's cash flow needs. See also
Section 16.1.
6.0 Delegation of Authority:
The Director of Finance/Treasurer shall be responsible for all transactions undertaken and shall
establish a system of controls to regulate the activities of subordinate officials. The
responsibility for the day-to-day investment of City funds will be delegated to the Treasury
Manager under the general direction of the Assistant Director of Finance.
7.0 Ethics and Conflicts of Interest:
In addition to state and local statutes relating to conflicts of interest, all persons involved in the
investment process shall refrain from personal business activity that could conflict with proper
execution of the investment program, or which could impair their ability to make impartial
investment decisions. Employees and investment officers are required to file annual disclosure
statements as required for "public officials who manage public investments" [as defined and
required by the Political Reform Act and related regulations, including Government Code
Sections 81000, et seq., and the rules, regulations and guidelines promulgated by California's
Fair Political Practices Commission (FPPC)].
8.0 Authorized Financial Dealers and Institutions:
The City's Director of Finance/Treasurer will maintain a list of the financial institutions and
brokers/dealers authorized to provide investment and depository services and will perform an
annual review of the financial condition and registrations of qualified bidders and require annual
audited financial statements to be on file for each company. The City will utilize Moody's
Securities or other such services to determine financially sound institutions with which to do
business. The City shall annually send a copy of the current Investment Policy to all financial
institutions and brokers/dealers approved to do business with the City.
As far as possible, all money belonging to, or in the custody of, a local agency, including money
paid to the City's Director of Finance/Treasurer or other official to pay the principal, interest, or
penalties of bonds, shall be deposited for safekeeping in state or national banks, savings
Adopted on March 2, 2010 by Resolution 201~L-q~
CITY OF CHULA VISTA
INVESTMENT POLICY AND GUIDELINES
associations, federal associations, credit unions, or federally insured industrial loan companies in
this state selected by the City's Director of Finance/Treasurer; or may be invested in the
investments set forth in Section 9.0. To be eligible to receive local agency money, a bank,
savings association, federal association, or federally insured industrial loan company shall have
received an overall rating of not less than "satisfactory" in its most recent evaluation by the
appropriate federal financial supervisory agency of its record of meeting the credit needs of
California's communities, including low- and moderate-income neighborhoods.
- To provide for the optimum yield in the investment of City funds, the City's investment
procedures shall encourage competitive bidding on transactions from approved brokers/dealers.
In order to be approved by the City, the dealer must meet the following criteria: (i) the dealer
must be a "primary" dealer or regional dealer that qualifies under Securities and Exchange
Commission Rule 15C3-1 (Uniform Net Capital Rule); (ii)the dealer's institution must have an
office in California; (iii)the dealer must be experienced in institutional trading practices and
familiar with the Califomia Government Code as related to investments appropriate for the City;
and (iv) all other applicable criteria, as may be established in the investment procedures. All
brokers/dealers and financial institutions who desire to become qualified bidders for investment
transactions must submit a "Broker/Dealer Application" and related documents relative to
eligibility including a current audited annual financial statement, U4 form for the broker, proof
of state registration, proof of National Association of Securities Dealers certification and a
certification of having read and understood the City's Investment Policy and agreeing to comply
with the Investment Policy. The City's Director of Finance/Treasurer shall determine if they are
adequately capitalized (i.e. minimum capital requirements of $10,000,000 and five years of
operation).
9.0 Authorized & Suitable Investments:
The City is authorized by Califomia Government Code Section 53600, et. seq., to invest in
specific types of securities. Investments not specifically listed below are deemed inappropriate
and prohibited:
A. BANKERS' ACCEPTANCES, maximum 25% of portfolio (up to 40% with Council
approval). Maximum term 180 days.
Banks must have a short term rating of at least Al/Pl and along-term rating of A or higher as
provided by Moody's Investors Service or Standard and Poor's Corp. No more than 30% of the
agency's money may be invested in the bankers' acceptances of any one commercial bank
pursuant to this section.
B NEGOTIABLE CERTIFICATES OF DEPOSIT, These are issued by commercial banks and
thrift institutions against funds deposited for specified periods of time and earn specified or
variable rates of interest. Negotiable certificates of deposit (NCD) differ from other
certificates of deposit by their liquidity. NCD's are traded actively in secondary markets. In
compliance with Califomia Code 53601.8, all FDIC insured CD's, whether directly placed or
Adopted on March 2, 2010 by Resolution 20}~L-8425
CITY OF CHULA VISTA
INVESTMENT POLICY AND GUIDELINES
placed through a private sector entity, will be classified as a Negotiable Certificate of
Deposit.
a. Maximum Maturity
1. The maximum maturity of a NCD issue shall be 5 years.
2. The maximum maturity of any FDIC insured CD's, whether directly placed or placed through
a private sector entity, shall be 13 months.
b. Maximum Exposure of Portfolio -The maximum exposure to the Portfolio for this category
shall be 30%.
c. Maximum Exposure Per Issue -The maximum exposure to a single issue shall be 2.5% of the
Portfolio value. -
d. Maximum Exposure Per Issuer -The maximum exposure to a single issuer shall be 5% of the
Portfolio value.
e. Minimum Credit Requirement
1. All NCD must have the following investment grade from one of these rating firms. If
unrated by Standard & Poor's, security would need to be authorized by Standard & Poor's
with a shadow rating prior to purchase.
a) Standazd & Poor's - A-1 or A (long-term when applicable)
b) Moody's - P-1 or A (long-term when applicable)
c) Fitch - F-1 or A (long-term when applicable)
(For NCD's 1 yeaz or less, use short-term rating)
(For NCD's over 1 year, use long-term rating)
2. There is no minimum credit requirement for FDIC insured CD's, whether directly
placed or placed through a private sector entity.
C. COMMERCIAL PAPER, maximum 25% of portfolio. Maximum term 270 days.
Commercial paper of prime quality of the highest ranking or of the highest letter and
number rating as provided for by Moody's Investor Services, Standard & Poor's and
Fitch Financial Services. The issuing corporation must be organized and operating
within the United States,
with total assets in excess of $500 million and shall issue debt, other than commercial paper,
that is rated "A" or higher by Moody's, S&P and Fitch. Split ratings (i.e. A2/Pl) are not
allowable. No more than 10% of'the outstanding commercial paper of any single corporate
issue may be purchased.
D. BONDS ISSUED BY THE CITY OR ANY LOCAL AGENCY WITHIN THE STATE OF
CALIFORNIA.
Bonds must have an "A" rating or better from a nationally recognized authority on ratings.
E. OBLIGATIONS OF THE UNITED STATES TREASURY
United States Treasury Notes, bonds, bills or certificates of indebtedness, or those for which
the faith and credit of the United States are pledged for the payment of principal and interest.
There is no limit on the percentage of the portfolio that can be invested in this category.
Adopted on March 2, 2010 by Resolution 201~~
CITY OF CHULA VISTA
INVESTMENT POLICY AND GUIDELINES
F. FEDERAL AGENCIES
Debt instruments issued by agencies of the Federal government. Though not general
obligations of the U.S. Treasury, such securities are sponsored by the government or related
to the government and, therefore, have high safety ratings. The following aze authorized
Federal Intermediate Credit Bank (FICB). Federal Land Bank (FLB), Federal Home Loan
Bank (FHLB), Federal National Mortgage Association (FNMA), Federal Home Loan
Mortgage Corporation (FHLMC), Government National Mortgage Association (GNMA),
Tennessee Valley Authorities (TVA). Student Loan Association Notes (SLMA) and Small
Business Administration (SBA). There is no limit on the percentage of the portfolio that can
be invested in this category.
G. REPURCHASE AGREEMENT, maximum term 3 months.
Investments in repurchase agreements may be made, on any investment authorized in this
section, when the term of the agreement does not exceed 3 months. A Master Repurchase
Agreement must be signed with the bank or broker/dealer who is selling the securities to the
City.
H. REVERSE-REPURCHASE AGREEMENTS (Requires Council approval for each
transaction)
Reverse repurchase agreements or securities lending agreements may be utilized only when
all of the following conditions are met:
a) The security to be sold on reverse repurchase agreement or securities lending
agreement has been owned and fully paid for by the local agency for a minimum
of 30 days prior to sale.
b) The total of all reverse repurchase agreements and securities lending agreements
on investments owned by the local agency does not exceed 20% of the base value
of the portfolio.
c) The agreement does not exceed a term of 92 days, unless the agreement includes a
written codicil guaranteeing a minimum earning or spread for the entire period
between the sale of a security using a reverse repurchase agreement or securities
lending agreement and the final maturity date of the same security.
d) Funds obtained or funds within the pool of an equivalent amount to that obtained
from selling a security to a counter party by way of a reverse repurchase
agreement or securities lending agreement, shall not be used to purchase another
security with a maturity longer than 92 days from the initial settlement date of the
reverse repurchase agreement or securities lending agreement, unless the reverse
repurchase agreement or securities lending agreement includes a written codicil
guazanteeing a minimum earning or spread for the entire period between the sale
of a security using a reverse repurchase agreement or securities lending agreement
and the final maturity date of the same security. Investments in reverse
repurchase agreements, securities lending agreements, or similar investments in
which the local agency sells securities prior to purchase with a simultaneous
Adopted on March 2, 2010 by Resolution 20~L--~~
CITY OF CHULA VISTA
INVESTMENT POLICY AND GUIDELINES
agreement to repurchase the security shall only be made with primary dealers of
the Federal Reserve Bank of New York or with a nationally or state-chartered
-- bank that has or has had a significant banking relationship with a local agency.
e) For purposes of this chapter, "significant banking relationship" means any of the
following activities of a bank:
i. Involvement in the creation, sale, purchase, or retirement of a local
agency's bonds, warrants, notes, or other evidence of indebtedness.
ii. Financing of a local agency's activities.
iii. Acceptance of a local agency's securities or funds as deposits.
I. MEDIUM-TERM CORPORATE NOTES, maximum 20% of portfolio (30% with Council
approval), with a maximum remaining maturity of five years or less.
Notes eligible for investment shall be "A" rated or its equivalent or better as determined by a
nationally recognized rating service.
J. TIME DEPOSITS-CERTIFICATES OF DEPOSIT (non-negotiable certificates of deposit.)
Maximum of 3 years.
Deposits must be made with banks or savings & loan that have a short term rating of Al/Pl or
along term rating of at least a single A from a generally recognized authority on ratings.
K. OBLIGATIONS OF THE STATE OF CALIFORNIA
Obligations must be "A" rated or better from a nationally recognized authority on ratings.
L. MONEY MARKET FUNDS, maximum 15% of portfolio. (Requires Council approval for
each transaction)
No more than 10% of the agency's surplus funds may be invested in shares of beneficial
interest of any one Money Market fund. Local agencies may invest in "shares of beneficial
interest" issued by diversified management companies which invest only in direct obligations
in U.S. Treasury bills, notes and bonds, and repurchase agreements with a weighted average
of 60 days or less. They must have the highest rating from two national rating agencies, must
maintain a daily principal per share value of $1.00 per share and distribute interest monthly,
and must have a minimum of $500 million in assets under management. The purchase price
of the shares may not include commission.
M. THE LOCAL AGENCY INVESTMENT FUND (LAIF)
LAIF is a special fund of the California State Treasury through which any local government
may pool investments. The City may invest up to $40 million in this fund. Currently, the
City has established two (2) agency funds through which the Director of Finance/Treasurer
may invest the unexpended cash for all funds: The City of Chula Vista City Fund, and the
Chula Vista Redevelopment Agency Fund. Investments in LAIF are highly liquid and may
be converted to cash within 24 hours.
N. Investment Trust of California (Ca1TRUSTI
Adopted on March 2, 2010 by Resolution 20 ~q4~5
CITY OF CHULA VISTA
INVESTMENT POLICY AND GUIDELINES
The City may invest in shares of beneficial interest issued by the Investment Trust of
California (CaITRUST), a local government investment pool established by local entities as a
joint powers authority pursuant to California Government -Code Sections 6509.7 and
53601(p), provided:
• Ca1TRUST investments are limited to the securities and obligations authorized for
- local agency investment pursuant to Subdivisions (a) to (n), inclusive, of California
Government Code Section 53601; and
• CaITRUST shall have retained an investment adviser that:
Is registered or exempt from registration with the Securities and Exchange
- Commission;
Has not less than five years experience investing in the securities and obligations
authorized for local agency investment pursuant to subdivisions (a) to (n),
inclusive, of California Government Code Section 53601; and
Has assets under management in excess of five hundred million dollars
($500,000,000).
9.1 Investment Pools:
The City's Director of Finance/Treasurer or designee shall be required to investigate all local
government investment pools and money market mutual funds prior to investing and performing
at least a quarterly review thereafter while the City is invested in the pool or the money market
fund. LAIF is authorized under provisions in Section 16429.1 of the California Government
Code as an allowable investment for local agencies even though some of the individual
investments of the pool are not allowed as a direct investment by a local agency.
10.0 Portfolio Adjustments:
Should any investment listed in section 9.0 exceed apercentage-of-portfolio limitation due to an
incident such as fluctuation in portfolio size, the affected securities may be held to maturity to
avoid losses. When no loss is indicated, the Director of Finance/Treasurer shall consider
reconstructing the portfolio basing his or her decision on the expected length of time the
portfolio will be unbalanced. If this occurs, the City Council shall be notified.
11.0 Collateralization:
Under provisions of the California Government Code, California banks, and savings and loan
associations are required to secure the City's deposits by pledging government securities with a
value of 110 % of principal and accrued interest. California law also allows financial institutions
to secure City deposits by pledging first trust deed mortgage notes having a value of 150% of the
City's total deposits. Collateral will always be held by an independent third party. A clearly
marked evidence of ownership (safekeeping receipt) must be supplied to the City and retained.
The market value of securities that underlay a repurchase agreement shall be valued at 102% or
greater of the funds borrowed against those securities and the value shall be adjusted no less than
quarterly. Since the market value of the underlying securities is subject to daily market
fluctuations, the investments in repurchase agreements shall be in compliance if the value of the
Adopted on March 2, 2010 by Resolution 20 ~(L-~~5
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INVESTMENT POLICY AND GUIDELINES
underlying securities is brought back up to 102% no later than the next business day. The
Director of Finance/Treasurer, at his or her discretion, may waive the collateral requirement for
deposits that are-fully insured up to $100,000 by the Federal Deposit Insurance Corporation. The
right of collateral substitution is granted.
12.0 Safekeeping and Custody:
All City investments shall identify the City of Chula Vista as the registered owner, and all
interest and principal payments and withdrawals shall indicate the City of Chula Vista as the
payee. All securities shall be safe kept with the City itself or with a qualified financial
institution, contracted by the City as a third party. All agreements and statements will be subject
to review annually by external auditors in conjunction with their audit. In the event that the City
has a financial institution hold the securities, a separate custodial agreement shall be required.
All securities shall be acquired by the safekeeping institution on a "Delivery-Vs-Payment"
(DVP) basis. For Repurchase Agreements, the purchase may be delivered by book entry,
physical delivery or by third-party custodial agreement consistent with the Government Code.
The transfer of securities to the counter party bank's customer book entry account may be used
for book entry delivery.
13.0 Diversification:
The City's investment portfolio will be diversified to avoid incurring unreasonable and avoidable
risks associated with concentrating investments in specific security types, maturity segment, or in
individual financial institutions. With the exception of U.S. Treasury securities and authorized
pools, no more than 60% of the total investment portfolio will be invested in a single security
type or with a single financial institution. In addition, no more than 10% of the investment
portfolio shall be in securities of any one issuer except for U.S. Treasuries and U.S. Government
Agency issues.
A. Credit risk, defined as the risk of loss due to failure of the insurer of a security, shall be
mitigated by investing in those securities with an "A" or above rating and approved in the
Investment Policy and by diversifying the investment portfolio so that the failure of anyone
issuer would not unduly harm the City's cash flow.
B. Mazket risk, defined as the risk of market value fluctuations due to overall changes in the
general level of interest rates, shall be mitigated by structuring the portfolio so that securities
mature at the same time that major cash outflows occur, thus eliminating the need to sell
securities prior to their maturity. It is explicitly recognized herein, however, that in a
diversified portfolio, occasional measured losses are inevitable and must be considered
within the context of overall investment return. The City's investment portfolio will remain
sufficiently liquid to enable the City to meet all operating requirements which might be
reasonably anticipated.
14.0 Maximum Maturities:
Adopted on March 2, 2010 by Resolution 20 ~-~4f5
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INVESTMENT POLICY AND GUIDELINES
To the extent possible, the City will attempt to match its investments with anticipated cash flow
requirements. Unless matched to a specific cash flow, the City will not directly invest in
securities maturing more than five (5) years from the date of purchase,-unless, the-legislative
body has granted express authority to make that investment either specifically, or as a part of an
investment program approved by the City Council.
15.0 Internal Control:
The Director of Finance/Treasurer shall establish a system of internal controls designed to
prevent loss of public funds due to fraud, employee error, misrepresentation by third parties, or
unanticipated market changes. No investment personnel may engage in an investment
transaction except as provided for under the terms of this Investment Policy and the procedure
established by the Director of Finance/Treasurer.
The external auditors shall annually review the investments with respect to the Investment
Policy. This review will provide internal control by assuring compliance with policies and
procedures for the investments that are selected for testing. Additionally, account reconciliation
and verification of general ledger balances relating to the purchasing or maturing of investments
and allocation of investments to fund balances shall be performed by the Finance Department
and approved by the Director of Finance/Treasurer. To provide further protection of City funds,
written procedures prohibit the wiring of any Ciry funds without the authorization of at least two
of the following four designated City staff:
1. Director of Finance/Treasurer
2. Assistant Director of Finance
3. Treasury Manager
4. Fiscal Operations Manager
16.0 Performance Standards:
This Investment Policy shall be reviewed at least annually by the Director of Finance/Treasurer
to ensure its consistency with the overall objective of preservation of principal, liquidity, and
return, and its relevance to current law and financial and economic trends. All financial assets of
all other funds shall be administered in accordance with the provisions of this Investment Policy.
The monies entrusted to the Director of Finance/Treasurer will be held in a passively managed
("hold to maturity") portfolio. However, the Director of Finance/Treasurer will use best efforts
to observe, review, and react to changing conditions that affect the portfolio, and to do so in a
manner that is consistent with this Investment Policy.
16.1 Market Yield (Benchmark):
The investment portfolio shall be managed to attain amarket-average rate of return throughout
budgetary and economic cycles, taking into account the City's investment risk constraints and
cash flow. Investment return becomes a consideration only after the basic requirements of
Adopted on March 2, 2010 by Resolution 20 ~L-~~
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INVESTMENT POLICY AND GUIDELINES
investment safety and liquidity have been met. Because the investment portfolio is designed to
operate on a 'hold-to-maturity' premise (or passive investment style) and because of the safety,
liquidity, and yield priorities, the performance benchmark that will be used to determine whether
market yields are being achieved shall be the average of the monthly LAIF rate and the 12-month
rolling average 2 -Year Constant Maturity Treasury (CMT) rate. While the City will not make
investments for the purpose of trading or speculation as the dominant criterion, the Director of
Finance/Treasurer shall seek to enhance total portfolio return by means of ongoing portfolio and
cash management. The prohibition of highly speculative investments precludes pursuit of gain
or profit through unusual risk and precludes investments primarily directed at gains or profits
from conjectural fluctuations in market prices. The Director of Finance/Treasurer will not
directly pursue any investments that are leveraged or deemed derivative in nature. However, as
long as the original investments can be justified by their ordinary earning power, trading in
response to changes in market value can be used as part of on-going portfolio management.
17.0 Reporting:
The Director of Finance/Treasurer shall submit a quarterly investment report to the City Council
and City Manager following the end of each quarter. This report will include the following
elements:
• Type of investment
• Institutional Issuer
• Purchase Date
• Date of maturity
• Amount of deposit or cost of the investment
• Face value of the investment
• Current market value of securities and source of valuation
• Rate of interest
• Interest earnings
• Statement relating the report to its compliance with the Statement of Investment Policy or
the manner in which the portfolio is not in compliance
• Statement on availability of funds to meet the next six month's obligations
• Monthly and Year-to-date Budget Amounts for Interest Income
• Percentage of Portfolio by Investment Type
• Days to Maturity for all Investments
• Comparative report on Monthly Investment Balances & Interest Yields
• Monthly transactions
• Compaze portfolio yield to the yield attained by the County of San Diego and the five
largest Cities in the County for the same period.
This quarterly investment report shall be an information item for the City Council and City
Manager. In addition, a commentary on capital markets and economic conditions may be
included with the report.
Adopted on March 2, 2010 by Resolution 20 ~/J_gQ~S
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INVESTMENT POLICY AND GUIDELINES
18.0 Investment Policy Adoption:
By virtue of a resolution of the City Council of the City of Chula Vista, the Council shall
acknowledge the receipt and filing of this annual statement of Investment Policy for the
respective fiscal year.
Adopted on March 2, 2010 by Resolution 201~_0~5
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INVESTMENT POLICY AND GUIDELINES
GLOSSARY
AGENCIES: Federal agency securities.
ASKED: The price at which securities are offered. (The price at which a firm will sell a security
to an investor.)
BANKERS' ACCEPTANCE (BA): A draft or bill or exchange accepted by a bank or trust
company. The accepting institution guarantees payment of the bill, as well as the issuer. The
drafts are drawn on a bank by an exporter or importer to obtain funds to pay for specific
merchandise. An acceptance is a high-grade negotiable instrument.
BASIS POINT: One one-hundredth of a percent (i. e., 0.01 %)
BID: The price offered by a buyer of securities. (When you are selling securities, you ask for a
bid.)
BROKER: A broker brings buyers and sellers together for a commission. He does not take a
position.
CERTIFICATE OF DEPOSIT (CD): A time deposit with a specific maturity evidenced by a
certificate. Large-denomination CDs are typically negotiable.
COLLATERAL: Securities, evidence of deposit or other property, which a borrower pledges to
secure repayment of a loan. Also refers to securities pledged by a bank to secure deposits of
public monies.
COMMERCIAL PAPER: Short term unsecured promissory note issued by a corporation to
raise working capital. These negotiable instruments are purchased at a discount to par value or at
par value with interest bearing. Commercial paper is issued by corporations such as General
Motors Acceptance Corporation, IBM, Bank of America, etc.
COUPON: a). The annual rate of interest that a bond's issuer promises to pay the bondholder
on the bond's face value. b) A certificate attached to a bond evidencing interest due on a
payment date.
DEALER: A dealer, as opposed to a broker, acts as a principal in all transactions, buying and
selling for his own account.
DEBENTURE: A bond secured only by the general credit of the issuer.
DELIVERY VERSUS PAYMENT: There are two methods of delivery of securities: delivery
versus payment and delivery versus receipt. Delivery versus payment is delivery of securities
Adopted on March 2, 2010 by Resolution 20 ~Q:~S
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INVESTMENT POLICY AND GUIDELINES
with an exchange of money for the securities. Delivery versus receipt is delivery of securities
with an exchange of a signed receipt for the securities.
DISCOUNT: The difference between the cost price of a security and its maturity when quoted
at lower than face value. A security selling below original offering price shortly after sale also is
considered to be at a discount.
DISCOUNT SECURITIES: Non-interest bearing money market instruments that are issued at
a discount and redeemed at maturity for full face value (e.g., U.S. Treasury Bills).
DIVERSIFICATION: Dividing investment funds among a variety of securities offering
independent returns.
FEDERAL CREDIT AGENCIES: Agencies of the Federal government set up to supply credit
to various classes of institutions (e.g., S&Ls, small business firms, students, farmers, farm
cooperatives, and exporters).
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC): A Federal agency that
insures bank deposits, currently up to $100,000 per deposit.
FEDERAL FUNDS RATE: The rate of interest at which Federal funds are traded. This rate is
currently pegged by the Federal Reserve though open-market operations.
FEDERAL HOME LOAN BANKS (FHLB): The institutions that regulate and lend to savings
and loan associations. The Federal Home Loan Banks play a role analogous to that played by the
Federal Reserve Banks vis-a-vis member commercial banks.
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC): Created to promote
the development of a nationwide secondary market in mortgages. It does this by purchasing
residential mortgages from financial institutions insured by an agency of the federal government
and selling its interest in them through mortgage backed securities. The interest and principal
payments from the mortgages pass through to the investors either monthly, semiannually or
annually.
FEDERAL LAND BANK (FLB): Long-term mortgage credit provided to farmers by Federal
Land Banks. These bonds are issued at irregulaz times for vazious maturities ranging from a few
months to ten years. _
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA): FNMA, like GNMA was
chartered under the Federal National Mortgage Association Act in 1938. FNMA is a Federal
corporation working under the auspices of the Department of Housing and Urban Development
(HUD). It is the largest single provider of residential mortgage funds in the United States.
Fannie Mae, as the corporation is called, is a private stockholder-owned corporation. The
corporation's purchases include a variety of adjustable mortgages and second loans, in addition
to fixed-rate mortgages. FNMA's securities are highly liquid and are widely accepted. FNMA
Adopted on Mazch 2, 2010 by Resolution 201~_0~5
CITY OF CHULA VISTA
INVESTMENT POLICY AND GUIDELINES
assumes and guarantees that all security holders will receive timely payment of principal and
interest.
FEDERAL OPEN MARKET COMMITTEE (FOMC): Consists of seven members of the
Federal Reserve Board and five of the twelve Federal Reserve Bank Presidents. The President of
the New York Federal Reserve Bank is a permanent member, while the other presidents serve on
a rotating basis. The committee periodically meets to set Federal Reserve guidelines regarding
purchases and sales of Government Securities in the open mazket as a means of influencing the
volume of bank credit and money. --
FEDERAL RESERVE SYSTEM: The central bank of the United States created by Congress
and consisting of aseven-member Board of Governors in Washington, D.C.; 12 regional banks
and about 5,700 commercial banks aze members of the system.
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (GNMA OR GINNIE
MAE): Securities influencing the volume of bank credit guaranteed by GNMA and issued by
mortgage bankers, commercial banks, savings and loan associations and other institutions.
Security holder is protected by full faith and credit of the U.S. Government. Ginnie Mae
securities are backed by the FHA or VA mortgages. The term "pass-through" is ofen used to
describe Ginnie Maes.
LIQUIDITY: A liquid asset is one that can be converted easily and rapidly into cash without a
substantial loss of value. In the money mazket, a security is said to be liquid if the spread
between bid and asked prices is narrow and reasonable size can be done at those quotes.
LOCAL GOVERNMENT INVESTMENT POOL (LGIP): The aggregate of all funds from
political subdivisions that aze placed in the custody of the State Treasurer for investment and
reinvestment.
MARKET VALUE: The price at which a security is trading and could presumable be
purchased or sold.
MARKET REPURCHASE AGREEMENT: A written contract covering all future
transactions between the parties to repurchase-reverse agreements that establish each party's
rights in the transactions. A master agreement will often specify, among other things, the right
of the buyer-lender to liquidate the underlying securities in the event of default by the seller- _
borrower.
MATURITY: The date upon which the principal or stated value of an investment becomes due
and payable.
NEGOTIABLE CERTIFICATES OF DEPOSIT: Unsecured obligations of the financial
institution, bank or savings and loan, bought at par value with the promise to pay face value plus
Adopted on March 2, 2010 by Resolution 20130_0435
CITY OF CHULA VISTA
INVESTMENT POLICY AND GUIDELINES
accrued interest at maturity. They are high-grade negotiable instruments, paying a higher
interest rate than regular certificates of deposit.
OFFER: The price asked by a seller of securities. (When you aze buying securities, you ask for
an offer).
OPEN MARKET OPERATIONS: Purchases and sales of government and certain other
securities in the open market by the New York Federal Reserve Bank as directed by the FOMC
in order to influence the volume of money and credit in the economy. Purchases inject reserves
into the bank system and stimulate growth of money and credit: Sales have the opposite effect.
Open market operations are the Federal Reserve's most important and most flexible monetary
Policy tool.
PORTFOLIO: Collection of securities held by an investor.
PRIMARY DEALER: A group of government securities dealers who submit daily reports of
market activity and positions and monthly financial statements to the Federal Reserve Bank of
New York and are subject to its informal oversight. Primazy dealers include Securities and
Exchange Commission (SEC)-registered securities broker/dealers, banks and a few unregulated
firms.
PRUDENT PERSON RULE: An investment standard. In some states, the law requires that a
fiduciazy, such as a trustee, may invest money only in a list of securities selected by the custody
state-the so -called "legal list". In other states, the trustee may invest in a security if it is one that
would be bought by a prudent person of discretion and intelligence who is seeking a reasonable
income and preservation of capital.
RATE OF RETURN: The yield obtainable on a security based on its purchase price or its
current market price.
REPURCHASE AGREEMENT (RP OR REPO): A holder of securities sells these securities
to an investor with an agreement to repurchase them at a fixed date. The security "buyer" in
effect lends the "seller" money for the period of the agreement, and the terms of the agreement
axe structured to compensate him for this. Dealers use RP extensively to finance their position.
Exception: when the Fed is said to be doing RP, it is lending money that is, increasing bank
reserves.
SAFEKEEPING: A service to customers rendered by banks for a fee whereby securities and
valuables of all types and descriptions are held in the bank's vaults for protection.
STUDENT LOAN ASSOCIATION NOTES (SLMA or SALLIE MAE): A U.S. Corporation
and instrumentality of the U.S. Government. Through its borrowings, funds are targeted for
loans to students in higher education institutions. SLMA securities are highly liquid and are
widely accepted.
Adopted on Mazch 2, 2010 by Resolution 20§Q~5
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INVESTMENT POLICY AND GUIDELINES
SMALL BUSINESS ADMINISTRATION (SBA): The portion of these securities which are
guaranteed by the Federal government to provide financial assistance through direct loans and
loan guarantees to small businesses. -Cash flows from these instruments may not be in equal
installments because of prepayments.
SECONDARY MARKET: A market made for the purchase and sale of outstanding issues
following the initial distribution.
SECURITIES & EXCHANGE COMMISSION: Agency created by Congress to protect
investors in securities transactions by administering securities legislation.
SEC RULE 15C3-1: See "Uniform Net Capital Rule"
TENNESSEE VALLEY AUTHORITIES (TVA): A U.S. Corporation created in the 1930s to
electrify the Tennessee Valley area; currently a major utility headquartered in Knoxville,
Tennessee. TVA securities are highly liquid and are widely accepted.
TREASURY BILLS: Anon-interest bearing discount security issued by the U.S. Treasury to
finance the national debt. Most bills are issued to mature in three months, six months, or one
year.
TREASURY BOND: Long-term U.S. Treasury securities having initial maturities of more than
10 years.
TREASURY NOTES: Intermediate-term coupon bearing U.S. Treasury having initial
maturities of one year to ten years.
UNIFORM NET CAPITAL RULE: Securities and Exchange Commission requirement that
member firms as well as nonmember broker/dealers in securities maintain a maximum ratio of
indebtedness to liquid capital of 15 to 1; also called net capital rule and net capital ratio.
Indebtedness covers all money owed to a firm, including margin loans and commitments to
purchase securities, one reason new public issues are spread among members of underwriting
syndicates. Liquid capital includes cash and assets easily converted into cash.
YIELD: The rate of annual income return on an investment, expressed as a percentage. (a)
Income Yield is obtained by dividing the current dollar income by the current market price for
the security. (b) Net Yield or Yield to Maturity is the current income yield minus any premium
above par or plus any discount from par in purchase price, with the adjustment spread over the
period from the date of purchase to the date of maturity of the bond.
Adopted on Mazch 2, 2010 by Resolution 20~(L-~5
PROPOSED AMENDMENT TO
CITY OF CHULA VISTA
INVESTMENT POLICY AND GUIDELINES
SECTION 18.0
ATTACHMENT C
18.0 Investment Policy Adoption: -
1 .~ .] 1, .,r „„,7 F.I:.,...,P rh:~ .. ...I ~r~ro.,,e„r ..L' T,,.,o~r,,,o„r A.,1;..., f ,- rh
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Each fiscal year, the Finance Director shall provide a copy of the City's current
Investment Policy and Guidelines to the City Council. By virtue of a resolution of the
City Council of the City of Chula Vista, the Council shall acknowledge the receipt of the
Policy for the respective fiscal year.
3-26
RESOLUTION NO.2011-
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA ACKNOWLEDGING RECEIPT OF THE
CITY'S INVESTMENT POLICY AND GUIDELINES; AND
AMENDING SECTION 18.0 OF THE POLICY
WHEREAS, the City's Investment Policy and Guidelines (the "Policy") adopted on March
2, 2010 by Resolution 2010-045 intended to provide direction for the prudent investment of
temporarily idle cash, and for maximizing the efficiency of the cash management process; and
WHEREAS, the stated goal of the Policy is to enhance economic condition of the City
while ensuring the safety of funds invested; and
WHEREAS, the Policy includes a list of specific investment instruments available under the
relevant California Government Code sections, 53600 et seq. and 53635 et seg.; and
WHEREAS, each investment transaction is made in the context of first ensuring the safety
of principal, second, investing only for that timeframe that the cash is not needed for operational
purposes, and, last, welting the highest return possible provided that the first two factors aze met;
and
WHEREAS, in accordance with Section 17.0 of the Policy, staff has provided the City
Council and City Manager with the quarterly investment report for the quarter ending December
31, 2010; and
WHEREAS, in accordance with Section 18.0 of the Policy, staff has provided the City
Council with a copy of the City's Investment Policy; and
WHEREAS, in preparing this item for Council, City staff determined that Section 18.0
should be revised to more clearly state the Policy requirement and, as a result, staff recommends
that Section 18.0 be revised to read as follows:
"18.0 Investment Policy Acknowledgment
Each fiscal year, the Finance Director shall provide a copy of the City's current
Investment Policy and Guidelines to the City Council. By virtue of a resolution of the
City Council of the City of Chula Vista, the Council shall acknowledge the receipt of the
Policy for the respective fiscal year."
NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of Chula
Vista does hereby acknowledge receipt of the existing City Investment Policy and Guidelines.
BE IT FURTHER RESOLVED, that the City Council amends Section 18.0 of the
Investment Policy; a copy of the amended Policy is on file in the Office of the City Clerk.
3-27
Resolution No. 2011-
Page 2
Presented by
Maria Kachadoorian
Director of Finance
Approved as to form by
(~
Glen o m
~~ity,'Attorney
L\Anorney\PINAL RHSOS\2011\02 22 I I\Investment Policy and Guidelines Reso DOC
3-28