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HomeMy WebLinkAboutResolution - 2035 RESOLUTION NO. 2035 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN JACINTO IDENTIFYING VARIOUS POLICIES AND PROCEDURES TO ENSURE A PRUDENT AND SYSTEMATIC INVESTMENT POLICY AND TO ORGANIZE AND FORMALIZE INVESTMENT- RELATED ACTIVITIES. WHEREAS, it is the purpose of this Policy to identify various policies and procedures that enhance opportunities for a prudent and systematic investment policy and to organize and formalize investment-related activities. Related activities which compromise good cash management include accurate cash projections, the expeditious collection of revenue, the control of disbursements, cost-effective banking relations, and a short-term borrowing program which coordinates working capital requirements and investment opportunity. In concert with these requirements are the many facets of an appropriate and secure short-term investment program. WHEREAS, it is intended that this policy cover all funds and investment activities under the direct authority of the City of San Jacinto. WHEREAS, the objectives of this policy are: A. Safety: It is the primary duty and responsibility of the Treasurer to protect, preserve and maintain cash and investments placed in his/her trust on behalf of the citizens of the community. B. Liquidity: An adequate percentage of the portfolio should be maintained in liquid short-term securities which can be converted to cash if necessary to meet disbursement requirements. Since all cash requirements cannot be anticipated, investments in securities with active secondary or resale markets is highly recommended. Emphasis should be on marketable securities with low sensitivity to market risk. C. Yield: Yield should become a consideration only after the basic requirements of safety and liquidity have been met. D. Market-Average Rate of Return: The investment portfolio shall be designed to attain a market-average rate of return throughout budgetary and economic cycles, taking into account the City' s risk constraints, the cash flow characteristics of the portfolio, and State and Local laws, ordinances or resolutions that restrict investments. E. Diversification: The investment portfolio will be diversified to avoid incurring unreasonable and avoidable risks regarding specific security types or individual financial institutions. Investment Policy Page 2 F. Prudence: The City adheres to the guidance provided by the "prudent man rule" , which obligates a fiduciary to insure that: " . . . investment shall be made with the exercise of that degree of judgement and care, under circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation but for investment considering the probable safety of their capital as well as the probable income to be derived. " G. Public Trusts All participants in the investment process shall act as custodians of the public trust. Investment officials shall recognize that the investment portfolio is subject to public review and evaluation. The overall program shall be designed and managed with a degree of professionalism that is worthy of the pubic trust. In a diversified portfolio it must be recognized that occasional measured losses are inevitable, and must be considered within the context of the overall portfolio's investment return, provided that adequate diversification has been implemented. WHEREAS, Government Code Section 53607 permits the "Legislative Body" to delegate the authority to invest or reinvest the City funds or to sell or exchange securities so purchased, to the "Treasurer" of San Jacinto, who shall hereafter assume full responsibility for such transactions until such time as the delegation of authority is revoked by the legislative body. WHEREAS, the Treasurer or Finance Director shall submit a monthly investment report to the City Council. This report will include all required elements of the monthly report as prescribed by Government Code Section 53646 . Minimum required elements of the monthly report: a. type of Investment b. Institution C. Date of Maturity d. Amount of deposit or cost of the security e. Current market value of securities with maturity in excess of 12 months f. Rate of interest g. Statement relating the report to the Statement of Investment Policy h. Statement that there are sufficient funds to meet the next 30 days's obligations i. Effective January 1, 1991, Accrued Interest as prescribed by the California Code Section 53646, if required by the City Council. Investment Policy Page 3 Additional information may be included in the monthly report, but is not required by the Government Code. Some items that might be included are: Interest earned to date Average weighted yield Average days to maturity Actual transactions Percent distribution to each type investment WHEREAS, it is the Treasurer's option to submit a quarterly or Annual report of a Statement of Investment Policy to the City Council with a more detailed or expansion report of investments. WHEREAS, security purchases and holdings will be maintained within statutory limits imposed by the Government Code. WHEREAS, a System of internal control shall be established. The controls shall be designed to prevent losses of public funds arising from fraud, employee error, misrepresentation of third parties, unanticipated changes in financial markets, or imprudent actions by employees and officers of the City of San Jacinto. Controls deemed most important include: control of collusion, separation of duties, separating transaction authority from accounting and recordkeeping, custodial safekeeping, clear delegation of authority, specific limitations regarding securities losses and remedial action, written confirmation of telephone transactions, minimizing the number of authorized strategies, and code of ethics standards. WHEREAS, the Treasurer shall consider the creditworthiness of financial institutions in selecting for the deposit of investment of City funds. The Treasurer or Finance Director shall continue to monitor financial institutions, credit characteristics and financial history throughout the period in which City funds are deposited or invested. WHEREAS, the City recognizes that investment risks can result from issuer defaults, market price changes or various technical complications leading to temporary illiquidity. Therefore, Portfolio diversification will be employed as a way to control risk. The Treasurer and/or Finance Director is expected to display prudence in the selection of securities, and a way to minimize default risk. No individual investment transaction shall be undertaken which jeopardizes the total capital position of the overall portfolio. The Treasurer shall periodically establish guidelines and strategies to control risks of default, market price changes and illiquidity. Investment Policy Page 4 WHEREAS, in addition to these general policy considerations, the Treasurer and Finance Director will strictly observe the following specific policies. A. All transactions will be executed on a delivery versus payment basis. B. A Competitive bid process, when practical, will be used to place all investment purchases. WHEREAS, all securities owned by the City should be held by a third party except the collateral for time deposits in banks and savings and loans. Collateral for time deposits in banks and savings and loans will be held by the Federal Home Loan Bank. the collateral for time deposits in banks will be held in the name of the City of San Jacinto in the bankfs Trust Department or alternately, in the Federal Reserve Bank. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of San Jacinto adopts the Investment Policy. MOVED, PASSED AND ADOPTED the 19 day of May, 1992 by the following vote: AYES: Councilmembers Ford, Hafliger, Leahy, Richards and Mayor Boykin NOES: None ABSENT: None Mayor ATTEST: By Deputy City Clerk