HomeMy WebLinkAboutAgenda Statement 1977/02/15 Item 05
ITEM TITLE
CITY OF CHULA VISTA
COUNCIL AGENDA STATEMENT
ITEM NO
5
FOR MEETING OF: 2/15/77
Resolution 850 7: Authorizing the Use of the Local Agency Invest-
ment Fund under the Office of the California State Treasurer as
an alternate Investment Media
SUBMITTED BY~ Director of Finance
C.~~
ITEM EXPLANATION
During the 1975-76 State Legislative Session AB 3107 was passed by the Legislature
and signed by the Governor. AB 3107 provided fora local agency investment fund
as a special fund in the State Treasury and the establishment of a Local Investment
Advisory Board. This bill authorizes local agencies to remit money to the State
Treasurer for deposit in the Fund as an investment media alternative. Some of the
advantages of this new legislation for local government agencies are as follows:
1. A Voluntary Program
This legislation offers local government units the opportunity to voluntarily
invest temporarily idle funds more advantageously. Local government officials
have complete discretion as to whether or not they desire to deposit their
surplus monies with the State Treasurer, In addition, the City determines the
term of investment.
2. Higher Interest Rates
The new legislation permits the pooling of surplus cash balances of the State
with the surplus cash (deposited for the purpose of investment) of the local
government agencies creating a multi-billion dollar money pool and enabling
the investment in diversified instruments. Some of these instruments have
minimum denominations of one hundred thousand dollars ($100,000) and because
of their size usually provide higher yields than instruments with smaller
EXHIBITS ATTACHED (continued)
Agreement Resolution X Ordinance Plat Other
Environmental Document: Attached Submitted on
STAFF RECOMMENDATION:
Approval.
BOARD/ COMMISSION RECOMMENDATION
N/A
COUNCIL ACTION
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Form A-113 (Rev. 5-75)
Agenda Item No. 5
denominations. At the present time local government units do not have the
authority to take advantage of higher rates of return offered by these large
denomination instruments.
3, More Liquidity
Local government agencies will be able to convert their deposits in the Local
Agency Investment Fund to cash in twenty-four hours or less depending on time
of notice. No interest earnings are lost because an investment is withdrawn
sooner than the term originally contemplated.
4, Investment Expertise
The State Treasurer's Office is in constant touch with investment markets and
currently has average daily investment transactions of approximately three
hundred million dollars ($300,000,000) a day. The City will be able to take
advantage of the investment experts already available in the Treasurer's Office
at no additional expense to the taxpayers.
5. Lower Investment Cost
By pooling cash balances and buying instruments in large amounts the charges
generally placed on small-lot purchases are eliminated. The State charge for
handling our investments is one-quarter of 1 percent of the earnings of the
fund..
6. No Minimum Investment Period
There will be no minimum investment period. Monies deposited for investment
one day may be withdrawn the next. Also, monies could be deposited on Friday
and withdrawn on Monday to earn three days interest.
It is my recommendation that we use the State Treasurer's Office as an additional
source for investments and that a resolution be prepared authorizing the Director
of Finance-Treasurer and the Chief Accountant to order the deposit or withdrawl
of money in the fund.