HomeMy WebLinkAboutResolution - 2227 RESOLUTION NO. 2227
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 Trust: 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 bank' s 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 6th day of September, 1994
by the following vote :
AYES : Councilmembers Solorio , Oaks , Williams , Mayor Hafliger
NOES : None
ABSENT: Councilmember Leahy
'May r t
ATTEST:
BY r l' .t'
e�puty Citfy Clerk