California City Municipal Code Art. 5 Investments

(a) The Treasurer and Finance Director jointly may invest surplus monies of the City without first securing further Council approval in the Local Agency Investment Fund of the State of California or in the following additional types of investment:

(1) Time certificates of deposits issued by a nationally or state chartered bank or a state or federal association located within the State of California if secured by federal insurance or approved collateral at the required percentage of market value.

(2) United States treasury notes, bonds, bills, or certificates of indebtedness or those for which the full faith and credit of the United States are pledged for payment of principal and interest.

(3) Bonds issued by the City.

(4) Registered state warrants or treasury notes or bonds of the State of California or by a department board, agency or authority of the State.

(5) Bonds, notes, warrants for other evidences of indebtedness of any local agency within this state.

(6) Obligations issued by banks or 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, participation 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, participation or other instruments of, or issued by a federal agency, or a United States Government sponsored enterprise.

(7) Repurchase agreements of any securities authorized by this Code.

(8) Time certificates of deposit issued by a nationally or state chartered bank or a state or federal association located outside of the State of California if secured by federal insurance.

(b) No investment shall be purchased:

(1) On margin;

(2) "Forward" or "in the future";

(3) Which are based upon foreign currency;

(4) Which are shares of beneficial interest issued by diversified management companies as described in Government Code Section 53601(l);

(5) Which are inverse floaters, range notes, interest only strips derived from a pool of mortgages or any security resulting in zero interest if held to maturity.

(c) Investments may be short-term or long-term in nature. Long-term investments are those which comply with the requirements of Government Code Sections 53601 et seq. and with a stated maturity date greater than five years from the date of purchase. No long-term investment shall be made unless the Council has granted express authority to make the investment either specifically or as a part of an investment program no less than three months prior to the investment purchase date.

(a) Money in the SDI Fund shall be invested when not needed for the purposes as stated in this article. The money shall not be invested in notes issued by the City or the Redevelopment Agency of the City of California City except in connection with a project contemplated by the SDI Agreements.

(b) In making investments of money in the SDI Fund, the City shall comply with the limitations contained in the Government Code, including Section 53601, and this Chapter. If there is a conflict between State law and this Chapter, the most conservative investment rule shall prevail if the rule is permitted by State law.

(c) The City Treasurer and Finance Director shall select the proper mix of investments. The primary investment goal is to safeguard the principal of the fund. The secondary investment goal is to meet liquidity needs of the SDI Fund. The third investment goal is to achieve return on investment.

(d) When the investments mature or when other monies are available for investment, the monies may be invested in the Local Agency Investment Fund ("LAIF") pending more permanent investment.

(e) The investments shall be held in the name of the City as trustee for the SDI Fund. Investment documents shall be held for safekeeping in the City vault or in a depository approved by the City Council. The City Council shall, from time-to-time, execute such documents as are necessary to provide evidence of trading authority as set forth herein.

(a) In making the above investments the City shall observe the limitations contained in Government Code, including Section 53601, and stated in this Code.

(b) The Treasurer and Finance Director are responsible for selecting the proper mix of investments. The primary investment goal of the City is to safeguard the principal of the fund. The secondary investment goal is to meet liquidity needs of the City. The third investment goal is to achieve return on investment.

(c) When deposits or investments owned by the City mature or when other monies are available for investment or deposit, the monies may be deposited or invested in the Local Agency Investment Fund or other permitted investments.

(d) All investments shall be held in the name of the City. All investment documents shall be held for safekeeping in the City vault or in a depository approved by the Council. The Council shall, from time to time, execute such documents as are necessary to provide evidence of the Treasurer's trading authority as set forth in this Code.

(a) The Treasurer shall present quarterly reports on investments to the City Manager and Council. The report shall show: the type of investment; date of investment; how title is held; institution; date of maturity; par value; amount of each investment; current market value for all securities with a maturity of more than 12 months; rate of interest; confirmation that each investment is consistent with this investment policy; information showing expenditure requirements can be met in the following quarter and specify which investments were made pursuant to Government Code Section 53601(i), 53601.1 and 53635(i). For money managed by LAIF, a county investment pool or placed in FDIC insured accounts, the Treasurer may use the statement from these institutions in lieu of separate report.

(b) The City Manager, Finance Director and City Treasurer (hereinafter collectively "investment review committee") shall review all investments held by the City semi-annually on or about January 1 and July 1 of each year.

(c) This investment policy shall be reviewed annually or more often, as necessary. The Treasurer shall annually recommend a statement of investment policy. The Council shall consider the Treasurer's recommendation at a public meeting.

Investments held by the City as of the date of this Code which are contrary to the terms of this Code shall be divested by the Treasurer provided, investments which cannot be divested immediately without loss of earnings shall be divested at maturity.

(a) Except certificates of deposits and diversified management accounts, the investment securities of the City shall be placed in the care of a third party custodian qualified to facilitate transactions. The custodian shall be appointed by the Council pursuant to contract. No money or security shall be withdrawn from City custody except upon written order of the Finance Director. The Finance Director may authorize the transfer of money and securities to and from the custodian electronically, provided that the Council has approved an agreement with the depository concerning the wire transfer of funds.

(b) The custodian shall account for the receipt of income from such investments and deposit such revenue in the City's account with the Local Agency Investment Fund (LAIF). If accrued income cannot be immediately deposited with LAIF, the custodian shall obtain government guaranteed repurchase agreements for up to twenty four hours.

(c) The custodian shall also account for the receipt of principal and deposit such amounts in the City's account with the LAIF unless instructed to use the proceeds to purchase another investment security, provided, all investments shall be in accord with the City's investment policy.

(a) To the extent practicable and feasible, all investments shall be purchased direct from the entity or institution offering the investments. If a permitted investment can be obtained only through a broker-dealer, underwriter or other intermediary, the Treasurer may make the investment through the intermediary, provided the City Council approves a written agreement with the intermediary covering the transaction.

(b) Intermediaries must be pre-qualified as described in this section for the City to judge the integrity and competence of such persons and to familiarize such persons with the investment policies of the City.

(c) Any intermediary who desires to conduct transactions with, or on behalf of, the City shall file an application for pre-qualification with the Finance Director containing the following information:

(1) Name

(2) Name of account representative

(3) Assets

(4) Proposed depository of securities

(5) Last quarterly financial statement

(6) Amount of insurance coverage for each account

If the Finance Director determines that the application is accurate, the applicant shall be invited to make a presentation to the City Manager. At this presentation, the applicant shall be interrogated to determine qualifications and investment philosophy and the applicant shall be informed of the City's investment policies. If the City Manager determines that the applicant is capable of working within the City's investment policies, a Memorandum of Understanding concerning the applicant's role shall be presented to the Council for approval.

(d) The Memorandum of Understanding between the City and an intermediary shall set forth:

(1) A duration of the agreement;

(2) The types of investments which the investment broker is authorized to handle;

(3) The names of persons authorized to deal on behalf of the City with the intermediary and on behalf of the intermediary with the City;

(4) Any restrictions on the number of investments or maximum amount of investments; and

(5) The term of the investments.

The Memorandum of Understanding shall also include an acknowledgment by the intermediary as to the scope and content of the City's investment policy.

(e) When it is advantageous to the City to use the services of an intermediary, the Treasurer shall solicit proposals from all intermediaries who have entered into Memoranda of Understanding with the City. The Treasurer shall then deal with the intermediary which has made the most favorable proposal.

This investment policy shall be reviewed at least annually.