Resolution No. 5895
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RESOLUTION NO. 5895
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF VERNON AMENDING RESOLUTION NO. 5814 WHICH
APPROVED THE CITY INVESTMENT POLICY
WHEREAS, pursuant to Resolution Number 4810, the City
Treasurer has been delegated investment authority by the City
Council; and
WHEREAS, the City has approved the City Investment
POlicy, as amended, dated February 28, 1989; and
WHEREAS, the City'S investment portfolio may include,
pursuant to the City Investment POlicy, other suitable instru-
ments as authorized by law and in compliance with sections 53601
and 53635 of the California Government Code; and
WHEREAS, the City desires to amend the City Investment
Policy to set forth additional instruments the City may invest
in pursuant to the California Government Code and to set forth
policy concerning investments held in the trading account por-
tion of the City's portfolio.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL
OF THE CITY OF VERNON AS FOLLOWS:
SECTION 1:
The City Council of the City of Vernon
hereby adopts the City Investment POlicy, attached hereto as
Exhibit "A" to this Resolution.
SECTION 2:
The City Council of the City of Vernon
hereby delegates to the City Treasurer the authority to imple-
ment the City Investment Policy and select the instruments for
the City's investment portfolio in accordance with City Invest-
ment Policy.
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CITY INVESTMENT POLICY
Introduction
Monies-not required for immediate expenditure by the city of
Vernon shall be invested in compliance with governing provisions
of law and this policy. The city will maintain adequate cash
availability and strive for maximum yield on invested idle funds
while insuring that principal invested is protected from loss.
This Investment policy shall be in compliance with sections 53601
and 53635 of the Government Code of the State of California,
relating to local agency finances.
I. DELEGATION OF AUTHORITY
Pursuant to Resolution No. 4810 the city Treasurer has
been delegated investment authority by the city council.
II. INVESTMENT CRITERIA
The criteria for selecting investments are, in order of
priority:
- safety of principal
- Liquidity
_ Maximization of total return on overall portfolio
In general, the city intends to manage its investments
in such a way to ensure meeting these criteria. Investments will
be made in a range of instruments-to lessen risk by diversifying
the city's portfolio. Investments purchased with the intent to be
traded are to be held in the trading account portion of theCity's
portfolio.
III. POLICIES AND OBJECTIVES
The basic premise underlying the city's investment
policy is to ensure that money is always available when needed.
It shall also be the policy of the city to diversify its
investment portfolio to ensure the maximum safety of city assets.
Staff actively manages the city's portfolio in order to
take advantage of changing economic conditions. Through daily
projected cash flow analysis, the city will attempt to fully
invest all idle cash.
IV. ACCEPTABLE INVESTMENT VEHICLES
The city's investment portfolio may include the
following instruments: .
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a. Bonds issued by a local agency as defined in
section 53630 of the Government Code.
b. united states Treasury notes, bonds, bills,
certificates of indebtedness, zero coupon bonds, stripped treasury
bonds or similar or related instruments, or those securities for
which the faith and credit of the united states are pledged for
the payment of principal and interest.
c. Registered state warrants or treasury notes or
bonds of the State of California.
d. Bonds, notes, warrants, or other evidences of
indebtedness of any local agency as defined in section 53630 of
the Government Code within the state of California.
e. Obligations issued by banks for cooperatives,
federal land banks, federal intermediate credit banks, federal
home loan banks, the Federal Home Loan Bank Board, the Tennessee
Valley Authority, or in obligations, participations, or other
instruments of, or issued by, or fully guaranteed as to principal
and interest by, the Federal National Mortgage Association; or in
the guaranteed portions of Small Business Administration notes; or
in the obligations, participations, or other instruments of, or
issued by, a federal agency or a United states government-
sponsored enterprise.
f. Bills of exchange or time drafts drawn on and
accepted by a commercial bank, otherwise known as bankers
acceptances, which are eligible for purchase by the Federal
Reserve system.
g. Commercial paper of "prime" quality of the highest
ranking or of the highest letter and numerical rating as provided
for by Moody's Investors Service, Inc. or standard and poor's
corporation.
h. Negotiable certificates of deposits issued by a
nationally or state-chartered bank or a state or federal
association (as defined by section 5102 of the Financial Code) or
by a state-licensed branch of a foreign bank.
i. Investments in repurchase agreements or reverse
repurchase agreements of any securities authorized by section
53601 of the Government Code.
j. Medium-term notes of a maximum of five years
maturity issued by corporations organized and operating within. the
United states or by depository institutions licensed by the United
States or any state and operating within the United states.
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k. Shares of beneficial interest issued by diversified
management companies, as defined in section 23701m of the Revenue
and Taxation Code.
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sections 53601
securities, at
to maturity in
All other permitted instruments as
and 53635 of the Government Code.
the time of investment, may have a
excess of five years.
authorized by
These
term remaining
Most of the city's short-term investments will be in
securities which pay principal and interest upon maturity, while
most of its long-term investments will be in securities which pay
interest monthly, quarterly or on coupons semi-annually.
V. TRADING ACCOUNT
All investments meeting the following definitions shall
be maintained in the trading account portion of the city's
portfolio.
a. Investments purchases with the intent to be sold
prior to maturity.
b. Pair-Off transactions.
c. In-Out transactions.
d. Government National Mortgage Association (GNMA)
forward transactions.
e. When Issued securities with a known interest rate
where the days from trade to issuance exceeds 15
calendar days, except for municipal obligations
where the number of calendar days will be 30 days.
Investments in the trading account portion of the city's
portfolio will generally consist of:
a. united states Treasury notes, bonds, bills,
certificates of indebtedness, zero coupon bonds, stripped t;easury
bonds or similar or related instruments, or those securities for
which the fa-ith and credit of the United states are pledged for
the payment of principal and interest.
b. Obligations issued by banks for cooperatives,
federal land banks, federal intermediate credit banks, federal
home loan banks,. the Federal Home Loan Bank Board, the Tennessee
Valley Authority, or in obligations, participations, or other
instruments of, or issued by, or fully guaranteed as to principal
and interest by, the Federal National Mortgage Association; or in
guaranteed portions of Small Business Administration notes; or in
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obligations, participation, or other instruments of, or issued by,
a federal agency or a united states government-sponsored
enterprise.
In no event shall investments be purchased for trading
which do not meet the Acceptable Investment Vehicles described
elsewhere in the Policy.
In the eVent that a decision is made to hold a security
originally purchased for trading, it may be transferred to the
non-trading portion of the investment portfolio account at cost;
however, the difference between the market value, exclusive of
interest, at the time of transfer and the purchase price,
exclusive of interest, will be computed and posted to the
unrealized trading profits and loss summary.
At no time shall the cost value of the trading account
portion of the investment portfolio exceed $25 million without
approval of the Finance Committee. The trading account
investments will be considered in the overall maturity limit
guidelines. Long-term trading account investments will be
included within maturity limits addressed in Section IV.
VI. REPORTS OF INVESTMENT ACTIVITIES
The city Treasurer is required to file monthly
statements of investment activity with the city council and the
city Administrator. The statement must include the following
details of every investment:
- Purchase date
_ Description (type of investment)
- Maturity date
_ Par value (face value of security)
_ Book value (purchase price plus or minus amortization
of premium, discount and purchased interest)
original cost (amount paid by city for investment)
_ Principal cost (same as book value)
- Market rate (face rate)
_ Market value (worth of securities at a particular
date)
Unrealized gains or losses on trading activities
_ Realized gains or losses on trading activities
9012/002
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STATE OF CALIFORNIA )
) ss
COUNTY OF LOS ANGELES)
I, BRUCE V. MALKENHORST, City Clerk of the City of
Vernon, do hereby certify that the foregoing Resolution, being
Resolution No. 5895, was duly adopted by the City Council of the
City of Vernon, and was approved by the Mayor of said City at a
regular meeting of the City Council held on Tuesday, March 19th,
1991.
(SEAL)
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SECTION 3: The City Clerk of the City of Vernon
2 shall certify to the passage of this Resolution and thereupon
3 and thereafter the same shall be in full force and effect.
4 APPROVED AND ADOPTED on this 19th day of March,
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1991.
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ATTEST:
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Bruce V. Malkenhorst
City Clerk