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Resolution No. 74751 RESOLUTION NO. 7475 2 A RESOLUTION OF THE CITY COUNCIL OF 3 THE CITY OF VERNON AMENDING RESOLUTION NO.7272 WHICH APPROVED 4 THE ANNUAL STATEMENT OF INVESTMENT POLICY OF THE CITY AND DELEGATED 5 INVESTMENT AUTHORITY TO THE CITY TREASURER 6 7 WHEREAS, pursuant to California Government Code 8 Section 53646-(a)_(2), the City Treasurer shall annually render to 9 the City Council an Annual Statement of Investment Policy; and 10 WHEREAS, pursuant to Resolution No.7272, the City 11 Council approved the Annual Statement of Investment Policy which 12 delegates investment authority to the City Treasurer, and grants 13 the City Treasurer express authority to make investments of City 14 funds in securities with a term or term remaining to maturity at 15 the time of investment in excess of five years as part of an 16 investment program; and 17 WHEREAS, the.City Council desires to amend said City 18 Investment Policy so that it conforms with recent changes in the 19 California Government Code concerning both the types of 20 investments in which the City may invest its funds for deposit 21 and the statements which report the investment of City funds. 22 NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF 23 THE CITY OF VERNON AS FOLLOWS: 24 SECTION 1: The City Council of the City of Vernon does 25 hereby find and determine that the recitals contained hereinabove 26 are true and correct. 27 SECTION 2: The City Council of the City of Vernon 28 hereby adopts the amended City investment policy, entitled -1- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 "Annual Statement of Investment Policy," (the "Investment Policy"), a copy of which is attached hereto and incorporated herein as Exhibit "A" to this Resolution. SECTION 3: The City Council of the City of Vernon hereby delegates to the City Treasurer, his deputy or to his authorized designee of the Finance Department of the City the authority to implement the Investment Policy and select the instruments for the City's investment portfolio in accordance with said Annual Statement of Investment Policy. SECTIQH 4: The City Council of the City of Vernon hereby grants ,as part of the City's investment program, to the City Treasurer, his deputy and to his authorized designee of the Finance Department of the City, express authority to invest in securities with a term, or term remaining to maturity, at the time of investment, in excess of five years. SECTION 5: The City Clerk of the City of Vernon shall certify to the passage of this Resolution and thereupon and thereafter the same shall be in full force and effect. APPROVED AND ADOPTED this 1st day of February, 2000. ATTEST: BRUCE V. MALKENHORST, City Clerk ' r O�EOIIS C. MA G, May r -2- STATE OF CALIFORNIA } 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. 7475, was duly adopted by the City Council of the City of Vernon at a regular meeting of the City Council duly held on Tuesday, February 1, 2000, and thereafter was duly signed by the Mayor of the City of Vernon. ( SEAL) BRUCE V. MALKENHORST, City Clerk -3- 0 SUPPORTING DOCUMENTS EXHIBIT A ANNUAL STATEMENT OF INVESTMENT POLICY CITY OF VERNON ANNUAL STATEMENT OF INVESTMENT POLICY Bruce V. Malkenhorst Treasurer FEBRUARY 2000 Approved by the City Counc0 February 1, 2000 0.0 PREFACE This Annual Statement of Investment Policy (the "Investment Policy") sets forth the course' of action necessary to guide the decision -making of the City Treasurer and all persons authorized to make investment decisions on behalf of the City in the administration of the City's investment portfolio. This Investment Policy has been researched, prepared and written by an outside consultant under the direction of the City Treasurer and the Treasurer's Department. While some portions of this Investment Policy are a restatement of the laws of the State of California, it is viewed that these restatements are integral to the. purpose and flow of this Investment Policy. In most instances the use of future tense throughout this Investment Policy is intended to mean a continued practice or a practice which shall be continued with the aid of automation. The following statements are intended to ensure the achievement of the purpose, the goals and objectives in an orderly and accurate manner. However, there is no guarantee that problems, errors or losses will not arise in the course of administering the investment of idle or surplus funds. Among the obstacles and deterrents in achieving the goals and objectives of the portfolio are: unforeseen national' orinternational events or crises, deviation of actual cash flow from forecasted cash flow, unforeseen demands on cash flow, policies made with regard to investment in local depositories, errors in data or advice used to make decisions, as well as any other inconceivable aberration or event that may have an effect on local, national or international financial markets, economies or politics which in turn has a decided effect upon the portfolio. This Investment Policy is designed to achieve, keeping in mind the obstacles and deterrents in pursuing portfolio goals and objective, a reasonable rate of return over an economic cycle, consistent with limited risk and prudent investment practices. 1.0 SCOPE This Investment Policy governs the deposit, safekeeping and investment of the idle or surplus funds of the Treasury, as well as all related transactions and investment activities. The investment of bond proceeds will be governed by the provisions of the relevant bond documents. 2.0 PURPOSE The purpose of the Investment Policy is to facilitate accomplishment of the goals and objectives of the Treasurer with regard to the investment of idle or surplus funds, to provide a framework within which to carry out the business of administering and investing the idle or surplus funds of the Treasury, and to improve communications at all levels -1- between those involved and those interested in the process of investing and administering the idle or surplus funds of the Treasury. 3.0 OBJECTIVE � .' All investments shall be made in accordance with this Investment Policy, California Government Code Section 53600 et seq., and any forthcoming amendments or additions to the California Government Code in relation to the investment of local agency idle or surplus funds. 3.2 Effl ence The administration of idle or surplus funds of the City Treasurer, as a fiduciary trustee, shall be performed in accordance with the prudent investor standard pursuant to California Government Code Section 53600.3. The City Treasurer and all persons authorized to make investment decisions on behalf of the City are "trustees" and therefore fiduciaries subject to the prudent investor standard. When investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public funds, a trustee of the City 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 City, 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 City. Within the limitations of this Investment Policy and Section 53600.3 of the California Government Code and considering individual investments as part to an overall strategy, the City Treasurer is authorized to acquire investments as authorized by law. As prudence shall be applied in the context of portfolio management, investment officers and their advisors, acting in accordance with written procedures and exercising due diligence, shall be relieved of personal responsibility for an individual security's credit risk or market price changes, provided that deviations from expectation are reported to the Treasurer in a timely fashion and appropriate action is taken to control adverse developments. 3.3 Investment + rikda gQWs The Treasurer's primary goals for the investment of idle or surplus funds (in the City's Treasury or monies in a sinking fund) are, in order of priority pursuant to California Government Code Section 53600.5: 3.3.1 Safety -- Safety of capital shall mean the safeguarding of capital through the selection of investments and investing procedures to best protect against lass arising from default, fraud, or error. -2- 3.3.2 W -- The City's portfolio shall be invested so as to always have the ability to convert sufficient securities in the portfolio to cash, with little or no loss in value, to cover cash flow needs of the City to meet contingency needs. 3.3.3 Yield -- Yield refers to earning a reasonable rate of return and shall take into consideration current market conditions, the present phase of the market cycle, both present and future cash flow needs, and the other primary goals of Safety and Liquidity. 3.4 Performance Measurement The investment portfolio will be managed in accordance with the parameters specked within this investment Policy. The methods of measuring investment performance and performance benchmarks shall be articulated in the internal policies of the City Treasurer's Department. As the Treasurer has been entrusted with the safekeeping of public monies received from public sources, the Treasurer in managing the investment portfolio shall exercise a high degree of professionalism to ensure and sustain public confidence, remembering that both the investment instruments and the methods of transacting investment business are subject to public review and scrutiny. 4.0 DELEGATION OF AUTHORITY The management responsibility for the City's investment program is hereby delegated to the City Treasurer in accordance with California Government Code Section 53607. Pursuant to California Government Code Sections 53601 and 53635, the City Treasurer shall be responsible for the investment of the City's funds (including the purchase, sale, or exchange of securities), the monitoring and reviewing of all investments for consistency under this Investment Policy, and the establishment of a system of controls to regulate the activities of subordinate officials. The Treasurer shall have the responsibility to execute investment transactions on a day to day basis. When circumstances warrant, the responsibility to execute investment transactions may be delegated to the Deputy City Treasurer or to the Treasurer's authorized designee of the Finance Department. However, each and every transaction must be approved by the City Treasurer. Any persons authorized to make investment decisions on behalf of the City, shall be subject to daily oversight and monitoring by the City Treasurer, the Treasurer's Department or the Finance Department in order to insure full and complete compliance with this Investment Policy and the Government Code of the State of California, relating to the deposit and investment of funds and local agency finances. NO PERSON MAY ENGAGE IN AN INVESTMENT TRANSACTION: EXCEPT AS PROVIDED UNDER THE LIMITS OF THIS POLICY. -3- 5.0 INVESTMENT PROGRAM ' The investment program of the City shall require the City Treasurer, the Treasurer's Department and the Finance Department to actively manage the City's portfolio of investments in order to take advantage of changing economic conditions and to insure that the liquidity needs of the City are satisfied. As part of the City's investment program, the City Treasurer has the express authority to make investments in securities that have a term, or a term remaining to maturity, at the time of investment, in excess of five years, as long as such investments, taken in the aggregate in relation to the City's entire investment portfolio, do not adversely impact the liquidity needs of the City and its funds and enterprises. The City Treasurer has the express authority to sell, as he deems prudent, any securities in the City's portfolio of investments prior to the maturity date of the particular security. The City Treasurer has the express authority to invest in, as he deems prudent, any security authorized by this Investment Policy with the objective of selling that same security prior to its maturity date. The City Treasurer's authority to buy and sell securities for investment on behalf of the City includes the authorization to buy and sell the same security on the same trading day. 6.0 INSTRUMENTS AUTHORIZED FOR INVESTMENT The City, having money in a sinking fund of, or surplus money in, its treasury not required for the immediate needs of the City may invest any portion of the money that it deems wise or expedient in those investments set forth below. If the City purchases or obtains any securities prescribed in this Section 6.0, in a negotiable, bearer, registered, or nonregistered format, the City shall require delivery of the securities to the City, including those purchased for the City by financial advisors, consultants, or managers using the City's funds, by book entry, physical delivery, or by third party custodial agreement. The transfer of securities to the counterparty bank's customer book entry account may be used for book entry delivery. For purposes of this Section 6.0 "counterparty" means the other party to the transaction.. A counterparty bank's trust department or separate safekeeping department may be used for the physical delivery of the security if the security is held in the name of the City. Investments may be made in any security authorized by this Section 6.0, including a security underlying a repurchase or reverse repurchase agreement authorized by Section 53601 of the California Government Code, that at the time of investment has a term or a term remaining to maturity in excess of five years as long as such investment comports with the policies and objectives of this Investment Policy. The following section titles are for reference only. Refer to the complete section teat for the permitted investment description. -4- Bonds issued by the City, including bonds payable solely out of the revenues from a revenue -producing property owned, controlled, or operated by the City or by a department, bard, agency, or authority of the City. 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. 6.3 Bonds of the State of California Registered state warrants or treasury notes or bonds of this state, including bonds payable solely out of the revenues from a revenue -producing property owned, controlled, or operated by the state or by a department, board, agency, or authority of the state. Bonds, notes, warrants, or other evidences of indebtedness of any local agency within this state, ineluding bonds payablesolely out of the revenues from a revenue -producing property owned, controlled, or operated by the local agency, or by a department, board, agency, or authority of the local agency. 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 obligations, participations, or other instruments of, or issued by, a federal agency or a United States government -sponsored enterprise. 6.6 Bills of Fadam Bills of exchange or time drafts drawn on and accepted by a commercial bank, otherwise known as bankers acceptances. Purchases of bankers acceptances may not exceed 270 days maturity or 40 percent of the City's surplus money that may be invested pursuant to this Section 6.6. However, no more than 30 percent of the City's surplus funds may be invested in the bankers acceptances of any one commercial bank pursuant to this section. 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 -5- Poor's Corporation. Eligible paper is further limited to issuing corporations that are organized and operating within the United States and having total assets in excess of five hundred million dollars ($500,000,000) and having an "A" or higher rating for the issuer's debt, other than commercial paper, if any, as provided for by Moody's Investors Service, Inc., or Standard and Pooes Corporation. Purchases of eligible commercial paper may not exceed 180 days maturity nor represent more than 10 percent of the outstanding paper of an issuing corporation. Purchases of commercial, paper may not exceed 40 percent of the City's surplus money that may be invested pursuant to this Section 6.7. No more than 10 percent of the City's surplus money that may be invested pursuant to this Section 6.7 may be invested in the outstanding paper of any single issuing corporation. Negotiable certificates of deposits issued by a nationally or state -chartered bank or a state or federal association (as definedby Section 5102 of the California Financial Code) or by a state -licensed branch of a foreign bank. Purchases of negotiable certificates of deposit may not exceed 30 percent of the City's surplus money which may be invested pursuant to this Section 6.8. For purposes of this Section 6.8, negotiable certificates of deposits do not come within Article 2 of the California Government Code (commencing with Section 53630), except that the amount so invested shall be subject to the limitations of California Government Code Section 53638 concerning maximum deposits. 6.9.1 Investments in repurchase agreements or reverse repurchase agreements or securities lending agreements of any securities authorized by this Section 6.9, as long as the agreements are subject to this Section 6.9, including, the delivery requirements specified in this Section 6.9. 6.9.2 Investments in repurchase agreements may be made, on any investment authorized in Section 6.0, when the term of the agreement does not exceed one year. The market value of securities that underlay a repurchase agreement shall be valued at 102 percent or greater of the funds borrowed against those securities and the value shallbeadjusted 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 underlying securities is brought back up to 102 percent no later than the next business day. 6.9.3 Reverse repurchase agreements or securities lending agreements may be utilized only when either of the following conditions are met: 6.9.3.1 The security was owned or specifically committed to purchase by the City prior to December 31, 1994, and was sold using a reverse repurchase agreement on December 31, 1994. Um 6.9.3.2 The security to be sold on reverse repurchase agreement or securities lending agreement has been owned and fully paid for by the City for a minimum of 30 days prior to sale; the total of all reverse repurchase agreements or securities lending agreement on investments owned by the City not purchased or committed to purchase, prior to December 31, 1994, does not exceed 20 percent of the base value of the portfolio and 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. 6.9.4 After December 31, 1994, a reverse repurchase agreement or securities lending agreement may not be entered into with securities not sold on a reverse repurchase agreement or securities lending agreement and purchased, or committed to purchase, prior to that date, as a means of financing or paying for the security sold on a reverse repurchase agreement or securities lending agreement, but may only be entered into with securities owned and previously paid for a minimum of 30 days prior to the settlement of the reverse repurchase agreement or securities lending agreement, in order to supplement the yield on securities owned and previously paid for or to provide funds for the immediate payment of a City obligation. Funds obtained or funds within the pool of an equivalent amount to that obtained from selling a security to a counterparty by way of a reverse repurchase agreement or securities lending agreement, on securities originally purchased subsequent to December 31, 1994, 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 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. Reverse repurchase agreements or securities lending agreement specified in Section 6.9.3.2 may not be entered into unless the percentage restrictions specified in that Section 6.9.3.2 are met, including the total of any reverse repurchase agreements or securities lending agreements specified in Section 69.3.1 6.9.5 Investments in reverse repurchase agreements, securities lending agreements or similar investments in which the City sells securities prior to purchase with a simultaneous agreement to repurchase the security, may only be made upon prior approval of the City Council and shall only be made with primary dealers of the Federal Reserve Bank of New York. -7- 6.9.6 Definitions 6.9.6.1 "Repurchase agreement" means a purchase of securities by the City pursuant to an agreement by which the counterparty seller will repurchase the securities on or before a specified date and for a specified amount and the counterparty will deliver the underlying securities to the City by book entry, physical delivery, or by third party custodial agreement. The transfer of underlying securities to the counterparty bank's customer book -entry account may be used for book -entry delivery. 6.9.6.2 "Securities," for purpose of repurchase under this Section 6.9, means securities of the same issuer, description, issue date, and maturity. 6.9.6.3 "Reverse repurchase agreement" means a sale of securities by the City pursuant to an agreement by which the City will repurchase the securities on or before a specified date and includes other comparable agreements. 6.96.4 "Securities Lending Agreement" means an agreement under which the City agrees to transfer securities to a borrower who, in turn, agrees to provide collateral to the City. During the term of the agreement, both the securities and the collateral are held by a third party. At the conclusion of the agreement, the securities are transferred back to the City in return for the collateral. 6.9.6.5 For purposes of this Section 6.9, the base value of the City's pool portfolio shall be that dollar amount obtained by totaling all cash balances placed in the pod by all pool participants, excluding any amounts obtained through selling securities by way of reverse repurchase agreements or other similar borrowing methods. 6.9.6.6 For purposes of this Section 6.9, the spread is the difference between the cost of funds obtained using the reverse repurchase agreement and the earnings obtained on the reinvestment of the funds. 6.10 Medium -Term Notes Medium -term notes, defined as all corporate and depository institution debt securities with a maximum remaining maturity of five years or less, 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. Notes eligible for investment 13 under this Section 6.10 shall be rated W or better by a nationally recognized rating service. Purchases of medium -term notes shall not include other instruments authorized by Section 6.0 and may not exceed 30 percent of the City's surplus money which may be invested pursuant to this section. 6.11 Diversified hjgMent CompW Shares 6.11.1 Shares of beneficial interest issued by diversified management companies that invest in the securities and obligations as authorized by Sections 6.1 to 6.10, inclusive, or Sections 6.13 or 6.14 and that comply with the investment restrictions of Article 1 (commencing with Section 53600 of the California Government Code) and Article 2 (commencing with Section 53630 of the California Government Code). However, notwithstanding these restrictions, a counterparty to a reverse repurchase agreement is not required to be a primary dealer of the Federal Reserve Bank of New York if the company's board of directors finds that the counterparty presents a minimal risk of default, and the value of the securities underlying a repurchase agreement may be 100 percent of the sales price if the securities are marked to market daily. 6.11.2 Shares of beneficial interest issued by diversified management companies that are money market funds registered with the Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. Sec. 80aa, et seq.). 6.11.3 If investment is in shares issued pursuant to paragraph (1), the company shall have met either of the following criteria: 6.11.3.1 Attained the highest ranking or the highest letter and numerical rating provided by not less than two nationally recognized statistical rating organizations. 6.11.3.2 Retained an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years' experience investing in the securities and obligations authorized by Sections 6.1 to 6.10, inclusive, or Sections 6.13 or 6.14 and with assets under management in excess of live hundred million dears ($500,000,000) 6.11.4 If investment is in shares issued pursuant to Section 6.11.2, the company shall have met either of the following criteria: 6.11.4.1 Attained the highest ranking or the highest letter and numerical rating provided by not less than two nationally recognized statistical rating organizations. -9- 6.11.4.2 Retained an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years' experience managing money market mutual funds with assets under management in excess of five hundred million dollars ($500,000,000). 6.11.5 The purchase price of shares of beneficial interest purchased pursuant to this Section 6.11 shall not include any commission that the companies may charge and shall not exceed 20 percent of the City's surplus money that may be invested pursuant to this Section 6.11. However, no more than 10 percent of the City's surplus funds may be invested in shares of beneficial interest of any one mutual fund pursuant to Section 6.11.1. Notwithstanding anything to the contrary contained in Section 6.0, Section 53601 and Section 53635 of the California Government Code, or any other provision of law, moneys held by a trustee or fiscal agent and pledged to the payment or security of bonds or other indebtedness, or obligations under a lease, installment sale, or other agreement of the City, or certificates of participation in those bonds, indebtedness, or lease installment sale, or other agreements, may be invested in accordance with the statutory prevision governing the issuance of those bonds, indebtedness, or lease installment sale, or other agreement, or to the extent not inconsistent therewith or if there are no specific statutory provisions, in accordance with the ordinance, resolution, indenture, or agreement of the City providing for the issuance. Notes, bonds, or other obligations that are at all times secured by a valid first priority security interest in securities of the types listed by Section 53651 of the California Government Code as eligible securities for the purpose of securing local agency deposits having a market value at least equal to that required by Section 53652 of the California Government Code for the purpose of securing local agency deposits. The securities serving as collateral shall be placed by delivery or book entry into the custody of a trust company or the trust department of a bank which is not affiliated with the issuer of the secured obligation, and the security interest shall be perfected in accordance with the requirements of the Uniform Commercial Code or federal regulations applicable to the types of securities in which the security interest is granted. 6.14 Mortgage-PMs-DMgh Securill Any Mortgage pass -through security, collateralized mortgage obligation, mortgage -backed or other pay -through bond, equipment lease -backed certificate, consumer recede pass -through certificate, or consumer receivable -backed bond of a maximum of five years maturity. Securities eligible for investment under this subsection shall be issued by an issuer having an "A," or higher rating for the issuer's debt as provided by a nationally -10- recognized rating service and rated in a rating category of "AA" or its equivalent or better by a nationally recognized rating service. Purchase of securities authorized by this Section 6.14 may not exceed 20 percent of the City's surplus money that may be invested pursuant to Section 6.0. 7.0 INELIGIBLE SECURITIES The City shall not invest any funds pursuant to this Section 7.0 in inverse floaters, range notes, or interest -only strips that are derived from a pool of mortgages. The City shall not invest any funds pursuant to this Section 7.0 in any security that could result in zero interest accrual if held to maturity. However, the City may hold prohibited instruments until their maturity dates. The limitation in this Section 7.0 shall not apply to City investments in shares of beneficial interest issued by diversified management companies registered under the Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1, and following) that are authorized for investment pursuant to Section 6.11. 8.0 STATEMENTS OF INVESTMENT ACTIVITIES 8.1 Annual Statement of Investment Policy The City Treasurer shall annually render to the City Council and the Finance Committee of the City a statement of investment policy, which the City shall consider at a public meeting. Any changes in the investment policy shall also be considered by the City Council of the City at a public meeting. 8.2 Ouart & Report of Investments The City Treasurer shall render a quarterly report to the Finance Committee of the City and City Council. The quarterly report shall be so submitted within 30 days following the end of the quarter covered by the report. This report shall include the type of investment, issuer, date of maturity par and dollar amount invested on all securities, investments and moneys held by the City and shall additionally include a description of any of the City's funds, investments, or programs, that are under the management of contracted parties, including lending programs. With respect to all securities held by the City and under management of any outside party that is not also a local agency or the State of California Local Agency Investment Fund, the report shall also include a current market value as of the date of the report, and shall include the source of this same valuation. For local agency investments that have been placed in the Local Agency investment Fund, in National Credit Union Share Insurance Fund -insured accounts in a credit union, in accounts insured or guaranteed pursuant to Section 14858 of the California Financial Code, or in Federal Deposit Insurance Corporation -insured accounts in a bank or savings and loan association, in a California County investment pool, or any combination of these, the City Treasurer and the Treasurer's Department may supply to the City Council and Finance Committee the most recent statements received by the City from these institutions. -11- The quarterly report shall state compliance of the portfolio to the statement of investment policy, or manner in which the portfolio is not in compliance. The quarterly report shall include a statement denoting the ability of the City to meet its budgeted expenditure requirements for the next six months, or provide an explanation as to why sufficient money shall, or may, not be available. .In the quarterly report, a subsidiary ledger of investments may be used in accordance with accepted accounting practices. 8.3 Monthty Investment Trawaction Rejm The authority of the City Council to invest or to reinvest funds of the City, or to sell or exchange securities so purchased has been delegated for a one-year period by the City Council to the City Treasurer, who shall thereafter assume full responsibility for those transactions and shall make a timely monthly report of those transactions to the City Council. 9.0 CONFLICT OF INTEREST No City employee shall, outside of regular working hours, engage in any professions, trade, business or occupation which is incompatible or involves a conflict of interest with his/her duties as a City Officer or employee, or which may reflect unfavorably on the City or on fellow employees. 10.0 PUBLIC INQUIRY The City Treasurer's portfolio and related transactions are a matter of public record. Any member of the public may receive a copy of the portfolio or Investment Policy by requesting a copy at the Treasurer's Office. The Treasurer may charge a fee for the copy, as allowed by law. 11.0 ANALYSIS OF PROSPECTIVE INVESTMENTS Due to the complexity of the various investment instruments available and uncertainty of market conditions the Treasurer may seek professional advice in making investment decisions in order to optimize investment selections. 12.0 SAFEKEEPING As required by California Government Code Section 53601 and Section 53635 all investment instruments in a negotiable, bearer, registered, or nonregistered format, shall be delivered to the City's custodial bank by using book entry or physical delivery. The "delivery vs. payment" purchase procedure shall be used. Securities will be held by a third party custodian designated by the Treasurer and evidenced by safekeeping receipts. No securities will be held by the broker/dealer from whom they were purchased. Notwithstanding the above requirement for the delivery and safekeeping of investment instruments to the City's custodial bank, the City shall maintain an investment instruments -12- custodial account with First Union Securities Inc. and use the wire transfer of funds purchase procedure for securities bought from that firm. 13.0 BROKTRJDEALER AND DEPOsnoRY INSTMMON RELATIONSHIPS 13.1 Approved Llst of Broker/Dealer Institutions The City Treasurer shall approve and maintain a list of broker/dealers and depository institutions authorized to provide investment and other services to the City. All investments must be made with institutions that have been approved by the City Treasurer prior to investing. i-POUCY.00 OFFICE OF THE CITY ADMINISTRATOR/CITY CLERK INTER -OFFICE MEMORANDUM DATE: February 7, 2000 TO: Sharon Johnson, Deputy City Treasurer Martha Valenzuela, Office Manager/Finance Dept. FROM: Gloria J. Oro c ief Deputy City Clerk RE: Annual Statement of Investment Policy Transmitted herewith is a copy of Resolution No. 7475 that was approved by City Council on February 1, 2000.