Resolution No. 8384I RESOLUTION NO. 8384
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3 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
VERNON ADOPTING AN ANNUAL STATEMENT OF INVESTMENT.
4 POLICY FOR 2004 AND DELEGATING INVESTMENT AUTHORITY
TO THE CITY TREASURER
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6 WHEREAS, pursuant to California Government Code Section
7 53646(a)(2), the City Treasurer shall annually render to the City
8 Council an Annual Statement of Investment Policy which the City
9 Council shall consider at a public meeting; and
10 WHEREAS, pursuant to Resolution No. 8162, the City Council
11 approved the 2003 Annual Statement of Investment Policy which
12 delegated investment authority to the City Treasurer, and granted the
13 City Treasurer express authority, as limited by Section 5.1 of the
14 Policy, to make investments of City funds in securities with a term,
15 or term remaining to maturity at the time of investment, in excess of
16 five years, as part of an investment program; and
17 WHEREAS, the City Council desires to approve a new 2004
18 Annual Statement of Investment Policy as required by California law so
19 that the Investment Policy conforms with recent changes in the
20 California Government Code concerning the types of investments in
21 which the City may invest its funds for deposit, the form of the
22 statements which report the investment of City funds, and the filing
23 of the Investment Policy and investment reports with the appropriate
24 state agency.
25 NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
26 CITY OF VERNON AS FOLLOWS:
27 SECTION 1: The City Council of the City of Vernon hereby
28 finds and determines that the recitals contained hereinabove are true
l and correct.
2 SECTION 2: The City Council of the City of Vernon hereby
3 adopts the Annual Statement of Investment Policy (the "Investment
4 Policy"), for the calendar year 2004, a copy of which is attached
5 hereto as Exhibit "A" and made a part hereof.
6 SECTION 3: The City Council of the City of Vernon hereby
7 delegates to the City Treasurer, his deputy or to his authorized
8 designee, the authority to implement the Investment Policy and select
9 the instruments for the City's investment portfolio in accordance with
10 the Investment Policy.
11 SECTION 4: The City Council of the City of Vernon hereby
12 grants, as part of the City's investment program, to the City
13 Treasurer, his deputy and to his authorized designee, express
14 authority, as limited by Section 5.1 of the Policy, to invest in
15 securities with a term, or term remaining to maturity, at the time of
16 investment, in excess of five years, and this authority shall become
17 effective no less than three months from the effective date of this
18 Resolution.
19 SECTION 5: The City Council of the City of Vernon hereby
20 directs the City Clerk, his deputy or his authorized designee, to
21 transmit a copy of this Resolution, the Investment Policy, and a copy
22 of the Report of Cash and Investments for the Quarters ended June 30,
23 2004 and December 31, 2004, when such become due and are prepared by
24 the Treasurer's Office, pursuant to the California Government Code, to
25 the following state agency:
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California Debt and Investment Advisory Commission
Attention: Local Agency Investment Reports
at
915 Capitol Mall, Room 400
Sacramento, CA 95814
or
P.O. Box 942809
Sacramento, CA 94209-0001
SECTION 6: If any section or part of this Resolution is found
to be unenforceable by operation of law, the remaining sections or
parts of this Resolution shall be in full force and effect.
SECTION 7: This Resolution shall become effective
immediately.
SECTION 8: 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 7th day of April, 2004.
ATTEST •
BRUCE V. MALKENHORST, City Clerk
c�1.c1LA�r
�(�LEON�ISC. MALB RG, Ma or
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I STATE OF CALIFORNIA )
ss
2 COUNTY OF LOS ANGELES )
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4 I, BRUCE V. MALKENHORST, City Clerk of the City of Vernon, do
5 hereby certify that the foregoing Resolution, being Resolution No.
6 8384, was duly adopted by the City Council of the City of Vernon at a
7 regular meeting of the City Council duly held on Wednesday, April 7,
8 2004, and thereafter was duly signed by the Mayor of the City of
9 Vernon.
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11 BRUCE V. MALKENHORST, City Clerk
12 (SEAL)
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EXHIBIT
0
CITY OF VERNON
ANNUAL
STATEMENT OF
INVESTMENT POLICY
Bruce V . Malkenhorst
Treasurer
MARCH 2O04
Approved by the City Council
April 7, 2004
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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 or international 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
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surplus funds of the Treasury, and to improve communications at all levels between those
involved and those interested in the process of investing and administering the idle or surplus
funds of the Treasury.
3.0 OBJECTIVE
3.1 Legal Compliance
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 Prudence
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, all governing bodies of the City, including the Finance Committee, 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 Criteria Goals
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:
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3.3.1 Safe -- Safety of capital shall mean the safeguarding of capital through the
selection of investments and investing procedures to best protect against loss
arising from default, fraud, or error.
3.3.2 Li uidi -- 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 specified 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.
3.5 Maintenance of Public Trust
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 City Treasurer's authorized designee.
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 or the Treasurer's Office in order to
insure full and complete compliance with this Investment Policy and the Government Code of
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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.
5.0 INVESTMENT PROGRAM
5.1 Investment in Long Term Securities
The investment program of the City shall require the City Treasurer, the Deputy City
Treasurer and the authorized designees of the City Treasurer, 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.
Notwithstanding anything contained in this Investment Policy to the contrary, it is the policy
of the City to limit the investment of money in the Light and Power Department Fund,
including operating, reserve and surplus funds, in an amount up to one hundred million dollars
($100,000,000), to investments otherwise permitted for such Fund under this Investment
Policy which mature no later than five years from the time of such investment.
5.2 Active Portfolio Management
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
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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, and by Section 53601
of the California Government Code, that has at the time of investment, 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 and the provisions of the California
Government Code.
The following section titles are for reference only. Refer to the complete section text for the
permitted investment description.
6.1 Bonds Issued by the City
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,
board, agency, or authority of the City.
6.2 United States Treasury Bonds
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.
6.4 Bonds of State of California Local Agencies
Bonds, notes, warrants, or other evidences of indebtedness of any local agency within this
state, including bonds payable solely 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.
6.5 Obligations Issued by Federal Agency or United States Government - Sponsored
Enterprises
Federal agency or United States government -sponsored enterprise obligations, participations,
or other instruments, issued by, or fully guaranteed as to principal and interest by federal
agencies or United States government -sponsored enterprises.
6.6 Bills of Exchange
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Bankers acceptances otherwise known as bills of exchange or time drafts that are drawn on and
accepted by a commercial bank. Purchases of bankers acceptances may not exceed 180 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 money may be invested in the
bankers acceptances of any one commercial bank pursuant to this Investment Policy.
6.7 Commercial Paper
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. ("Moody's"), or the
Standard & Poor's Corporation ("S&P") or Fitch Financial Services, Inc. ("Fitch"). The
corporation that issues the commercial paper shall be organized and operating within the
United States, shall have total assets in excess of five hundred million dollars ($500,000,000)
and shall issue debt, other than commercial paper, if any, that is rated "A" or higher by
Moody's, S&P or Fitch. Eligible commercial paper shall have a maximum maturity of 270
days or less. The City may invest no more than 25 % of its money in eligible commercial
paper. The City may purchase no more than 10 percent of the outstanding commercial paper
of any single corporate issue.
6.8 Negotiable Certificates of Deposit
Negotiable certificates of deposit issued by a nationally or state -chartered bank, savings
association or a federal association (as defined by Section 5102 of the California Financial
Code), a state or federal credit union, 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 money
which may be invested pursuant to this Investment Policy. For purposes of this Section 6.8,
negotiable certificates of deposit 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.
The City Council of the City and the City Treasurer or other official of the City having legal
custody of the money are prohibited from investing City funds, or funds in the custody of the
City, in negotiable certificates of deposit issued by a state or federal credit union if a member
of the City Council of the City, or any person with investment decision making authority in
the City Administrator's Office, Budget -Auditor's Office, Treasurer's Office or Finance
Department of the City, also serves on the board of directors, or any committee appointed by
the board of directors, or the credit committee or the supervisory committee of the state or
federal credit union issuing the negotiable certificates of deposit.
6.9 Repurchase, Reverse Repurchase and Securities Lending Agreements
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.
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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 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 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 all of the following conditions are met:
6.9.3.1 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.
6.9.3.2 The total of all reverse repurchase agreements and securities
lending agreements on investments owned by the City does not
exceed 20 percent of the base value of the portfolio.
6.9.3.3 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.
6.9.3.4 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, 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.
6.9.4 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
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prior approval of the City Council of the City and 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 the City.
6.9.4.1 For purposes of this Section 6.9, "significant banking
relationship" means any of the following activities of a bank:
6.9.4.1.1 Involvement in the creation, sale, purchase, or retirement
of the City's bonds, warrants, notes, or other evidence of
indebtedness.
6.9.4.1.2 Financing of the City's activities.
6.9.4.1.3 Acceptance of the City's securities or funds as deposits.
6.9.6 Definitions
6.9.6.1 Repurchase Agreement
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
Securities means securities of the same issuer, description, issue
date, and maturity.
6.9.6.3 Reverse Repurchase Agreement
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.
6.9.6.4 Securities Lending Agreement
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 parry. At the conclusion of the agreement, the securities
are transferred back to the City in return for the collateral.
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6.9.6.5 Base Value
Base Value of the City's pool portfolio shall be that dollar
amount obtained by totaling all cash balances placed in the pool
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 Spread
Spread means 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 under this
Section 6.10 shall be rated "A" 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 Management Company 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. 80a-1, et seq.).
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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 five hundred million
dollars ($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.
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.
6.12 Moneys Pledged to Payment or Security of Bonds of the Cif
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 a local
agency, or certificates of participation in those bonds, indebtedness, or lease installment sale,
or other agreements, may be invested in accordance with the statutory provisions 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 local agency
providing for the issuance.
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6.13 Bonds Secured by Government Code Section 53651 Eligible Securities
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 Pass -Through Security
Any Mortgage pass -through security, collateralized mortgage obligation, mortgage -backed or
other pay -through bond, equipment lease -backed certificate, consumer receivable 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 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 DESIGNATED ENTITIES FROM WHOM THE CITY MAY PURCHASE
AUTHORIZED INVESTMENTS
The purchase by the City of any investment authorized pursuant to California Government
Code Sections 53601 or 53601.1, not purchased directly from the issuer, shall be purchased
either from an institution licensed by the state as a broker -dealer, as defined in Section 25004
of the California Corporations Code, or from a member of a federally regulated securities
exchange, from a national or state -chartered bank, from a savings association or federal
association (as defined by Section 5102 of the California Financial Code) or from a brokerage
firm designated as a primary government dealer by the Federal Reserve Bank.
8.0 PROHIBITED INVESTMENTS
8.1 The City shall not invest any funds pursuant to this Section 8.0 or pursuant to
California Government Code, Article 2, Deposit of Funds (commencing with Section 53630)
in inverse floats, range notes, or mortgage -derived, interest -only strips. The City shall not
invest any funds pursuant to this Section 8.0 or pursuant to the California Government Code,
Article 2 (commencing with Section 53630) 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 limitations in this Section 8.0 shall not apply to City investments in shares
of beneficial interest issued by diversified management companies registered under the
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Investment Company Act of 1940 (25 U.S.C. Sec. 80a-1 et seq.) that are authorized for
investment pursuant to the California Government Code, subdivision (k) of Section 53601
8.2 The City shall not invest any funds pursuant to this Section 8.0 or pursuant to
California Government Code, Article 2, Deposit of Funds (commencing with Section 53630)
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 8.0
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.
9.0 STATEMENTS OF INVESTMENT ACTIVITIES
9.1 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.
9.2 Quarterly 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.
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
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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.
The City shall submit copies of its second and fourth quarter reports to the California Debt and
Investment Advisory Commission within 60 days after the close of the second and fourth
quarters of each calendar year.
The City shall not be required to submit a quarterly report to the Commission if, during the
entire reporting period, the City has maintained 100 % of its investment portfolio in (1) the
treasury of Los Angeles County, (2) the Local Agency Investment Fund of the State of
California, (3) National Credit Union Share Insurance Fund -insured accounts in a credit union,
in accounts insured or guaranteed pursuant to Section 16429.1 of the Financial Code, or in
Federal Deposit Insurance Corporation -insured accounts in a bank or savings and loan
association, or (3) in any combination of these.
If the City is not required to submit a report to the Commission, then the City shall file with
the Commission a certification within 60 days of the end of the second and fourth quarters of
the calendar year stating the distribution and amount of its investment portfolio and that it is
therefore not subject to the reporting requirement.
9.3 Monthly Investment Transaction Report
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.
10.0 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.
11.0 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.
12.0 ANALYSIS OF PROSPECTIVE INVESTMENTS
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. 4 a
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.
13.0 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.
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
custodial account with any one or more institutions licensed by the state as a broker -dealer, as
defined in Section 7.0 hereof and use the wire transfer of funds purchase procedure for
securities bought from that firm or firms.
14.0 BROKER/DEALER AND DEPOSITORY INSTITUTION RELATIONSHIPS
14.1 Approved List 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.
14.2 Broker/Dealer Commissions and Fees Chargeable to the City
All broker/dealers who transact with the City and buy and sell securities on the City's behalf
shall earn a commission or charge a fee not to exceed an amount deemed prudent and
reasonable by the National Association of Securities Dealers (the "NASD") and what is
customary in the industry for the types of securities being purchased by the City.
14.3 Deposit and Investment of Funds of the City
All depository institutions that do business with the City shall be in compliance with the
requirements of Article 2, commencing with Section 53630, of the Government Code of the
State of California, concerning the deposit of funds, including the overall creditworthiness and
credit ratings requirements of the sections of that Article.
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V
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s�`ELY IN9J
4305 Santa Fe Avenue, Vernon, California 90058
Telephone (323) 583-8811
February 23, 2005
California Debt and Investment Advisory Committee
Attn: Robert Ingenito
915 Capitol Mall, Room 400
Sacramento, CA 95814
To Whom It May Concern:
Transmitted herewith are copies of the documents listed below.
1) Copy of the Report of Cash and Investments for Quarter Ended December 31,
2004.
2) Copy of the currently effective investment policy of the City of Vernon.
If you have any questions regarding this matter, please call Bruce V. Malkenhorst at
(323) 583-8811 ext. 273.
Very truly yours,
CITY OF VERNON
3 %
Sharon Johnson
Deputy City Treasurer
cc: Eric Fresch
Investment Policy File
4
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5
rGs��LY:1N9J �
4305 Santa Pe Avenue, Vernon, California 90058
Telephone (323) 583-8811
August 2, 2004
California Debt and Investment Advisory Committee
Attn: Robert Ingenito
915 Capitol Mall, Room 400
Sacramento, CA 95814
To Whom It May Concern:
Transmitted herewith are copies of the documents listed below
1) Copy of the Report of Cash and Investments for Quarter Ended June 30, 2004.
2) Copy of the 2004 Annual Statement of Investment Policy which includes
Delegation of Investment Authority to the City Treasurer.
If you have any questions regarding this matter, please call Bruce V. Malkenhorst at
(323) 583-8811 ext. 266.
Very truly yours,
CITY OF VERNON
Jr�a�
Sharon Johnson
Deputy City Treasurer
cc: Eric Fresch
Investment Policy File
i
4305 Santa Fe Avenue, Vernon, California 90058
Telephone (323) 583-8811
April 8,2004
California Debt and Investment Advisory Committee
Attn: Robert Ingenito
915 Capitol Mall, Room 400
Sacramento, CA 95814
To Whom It May Concern:
Transmitted herewith are copies of the documents listed below.
1) Copy of the Report of Cash and Investments for Quarter Ended December 31,
2003.
2) Copy of the 2004 Annual Statement of Investment Policy which includes
Delegation of Investment Authority to the City Treasurer.
If you have any questions regarding this matter, please call Bruce V. Malkenhorst at
(323) 583-8811 ext. 266.
Very truly yours,
CITY OF VERNON
Sharon Johnson
Deputy City Treasurer
cc: Eric Fresch
Investment Policy File