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COUNCIL AGENDA REPORT n-EMNeer:
FROM: Bill Statler, Director of Finance/City Treasurer Ih—
Prepared by: Linda Asprion, Revenue Managery#,191"
SUBJECT: INVESTMENT MANAGEMENT PLAN
CAO RECOMMENDATION
Adopt a resolution approving the investment management plan.
DISCUSSION
Background
As set forth in the Statement of Investment Policy, approved by the Council as part of the 1995-
97 Financial Plan, the City Treasurer is responsible for developing and monitoring an investment
management plan to guide administration of the City's portfolio, including investment strategies,
practices and procedures. Under this direction, the City's first investment management plan was
prepared and issued by the City Treasurer in December of 1989. As it was originally viewed
as an administrative "companion" to the Council adopted investment policy, the investment
management plan was not formally approved by the Council at that time, although it was
distributed to them. However, given legitimate public concerns regarding the stewardship of
funds arising from the unprecedented losses recently experienced by the Orange Courcy
investment pool, formal approval of the investment management plan by the Council is now
recommended in order to provide a broader awareness and understanding of the strategic
framework, policy guidelines, and administrative practices followed in managing the City's
investments.
As required under Government Code Sections 16481.2 and 53646, the Statement of Investment
Policy will be reviewed by the Council annually, which is incorporated into the financial
plan/budget process. The investment management plan will only be formally reviewed by the
Council when significant changes in strategies, practices or procedures are proposed. In the
interim, the City Treasurer will be responsible for keeping the investment management plan up-
to-date to reflect changes in legislation, organizational structure, Council approved policies and
administrative procedures.
Compliance with New State Requirements
In response to the Orange County's investment losses and subsequent bankruptcy, the State
Legislature adopted a number of more stringent investment disclosure requirements than those
previously in place(SB 564 and SB 866). However, our current Statement of Investment Policy
and investment management plan already meet or exceed virtually all of the new requirements;
as such, very few minor changes are necessary to meet these new legislative requirements.
����m►�►►�Illllllllll►I° �I�IU City of San -JIS OBISp0
COUNCIL AGENDA REPORT
Changes in the Investment Management Plan
Nonetheless, this new legislation, the Orange County investment losses, and the interest in
municipal investment practices in general, provided an excellent opportunity to review the 1989
investment management plan for possible changes that would further enhance our stewardship
of City funds. Other than recommending that the investment management plan be formally
adopted by the Council as discussed above, there is only one significant change recommended
in the investment management plan at this time: creation of a formal Investment Oversight
Committee. Consisting of the City Administrative Officer, Assistant City Administrative
Officer, Director of Finance/City Treasurer, Revenue Manager, and the City's Independent
Certified Public Accountant, this Committee would be responsible for:
■ Reviewing the City's portfolio at least quarterly to determine compliance with the
investment management plan; and
■ Reviewing and malting recommendations as appropriate regarding the City's investment
policies and practices at least annually.
This Committee is not required by the new State legislation, nor have we experienced any
fiduciary problems with our past organizational structure, which functions in a very similar but
less formal manner than what is being proposed. Nonetheless, given legitimate public concerns
about the investment of City funds, we believe that creating a more formal oversight fimction
is appropriate.
CONCURRENCE
The proposed investment management plan has bean reviewed by the City's independent
auditors, Glenn Burdette Phillips & Bryson(GBP&B), and they concur with its adoption by the
Council.
FISCAL IMPACT
There is no fiscal impact in approving the investment management plan.
ATTACHMENT
Resolution adopting the investment management plan
ENCLOSURE
Investment management plan
RESOLUTION NO. (1996 SERIES)
A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO
APPROVING THE INVESTMENT MANAGEMENT PLAN
WHEREAS, as set forth in the Statement of Investment Policy, the City Treasurer is
responsible for developing and monitoring an investment management plan to guide
administration of the City's portfolio, including investment strategies, practices and procedures;
and
WHEREAS, given legitimate public concerns regarding the stewardship of funds arising
from the unprecedented losses recently experienced by the Orange County investment pool,
formal approval of the investment management plan by the Council is recommended in order
to provide a broader awareness and understanding of the strategic framework, policy guidelines,
and administrative practices followed in managing the City's investments.
NOW THEREFORE BE IT RESOLVED by the Council of the City of San Luis Obispo
that the investment management plan dated April 1996 is hereby adopted.
On motion of , seconded by
and on the following roll call vote:
AYES:
NOES:
ABSENT:
the foregoing resolution was adopted this day of , 1996.
Mayor Allen K. Settle
ATTEST:
City Clerk
APPROVED AS TO FORM:
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INVESTMENT MANAGEMENT PLAN
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APRIL 1996
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INVESTMENT MANAGEMENT PLAN
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ALLEN SETTLE, MAYOR
DODIE WILLIAMS, VICE MAYOR
BILL ROALMAN, COUNCIL MEMBER
DAVE ROMERO, COUNCIL MEMBER
KATHY SMITH, COUNCIL MEMBER
John Dunn, City Administrative Officer
Prepared by the Department of Finance
William C. Statler, Director of Finance/City Treasurer
Linda Asprion, Revenue Manager
CITY OF SAN LUIS OBISPO, CALIFORNIA
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TABLE OF CONTENTS
Introduction
Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Primary Investment Objective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
fScope of Investment Management Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Use of State Guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1 Preparation and Administration of the Plan . . . . . . . . . . . . . . . . . . . . . . . . 3
Investment Authority and Responsibilities
Authorized Investment Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Internal Controls 4
Investment Management Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Evaluation of Investment Officer Actions . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Capital Preservation and Risk
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Portfolio Diversification Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Eligible Financial Institutions
Portfolio Diversification and'Credit-Worthiness Standards . . . . . . . . . . . . . . . . 8
Certification and Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . 8
Individual Placement of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Individual Placement of Deposits . 9
Investment Vehicles
State of California Limitations 10
City Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Investment Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Cash Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Evaluation of Investment Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Investment Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Investment Management Plan Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Appendix
Investment Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Sample Monthly Investment Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Broker/Dealer Questionnaire . . . . . . 24
Investment Authorization/Confirmation . . . . . . . . . . . . . . . . . . . . . . . . . . 29
List of Primary Government Securities Dealers . . . . . . . . . . . . . . . . . . . . . 30
Resolution No. 8477 Updating Payment Disbursement and Receipt Authority . . . 3.1
' INTRODUCTION
PURPOSE
The purpose of the investment management plan is to establish strategies, practices, and
I procedures to be used in administering the City's portfolio in accordance with the City's
Statement of Investment Policy. Included in the Appendix is a copy of the City's investment
policy, which was adopted by the Council in conjunction with their approval of the 1995-97
Financial Plan.
PRIMARY INVESTMENT OBJECTIVE
The City's primary investment objective is to achieve a reasonable rate of return on public funds
while minimising the potential for capital losses arising from market changes or issuer default.
Although the generation of revenues through interest earnings on investments is an appropriate
City goal, the primary consideration in the investment of City funds is capital preservation in
the overall portfolio. As such, the City's yield objective is to achieve a reasonable rate of return
on City investments rather than the maximum generation of income which could expose the City
to unacceptable levels of risk.
In determining individual investment placements, the following factors shall be considered in
priority order: safety, liquidity and yield.
Safety
Safety of principal is the foremost objective of the investment program. Investments shall be
undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio.
The objective is to mitigate credit risk and interest rate risk summarized as follows:
Credit risk. This is the risk of loss due to the failure of the security issuer or backer. Credit
risk may be mitigated by:
' ■ Limiting investments to the safest types of securities.
■ Pre-qualifying the financial institutions, broker/dealers, intermediaries, and advisors with
which an entity will do business.
' ■ Diversifying the investment portfolio so that potential losses on individual securities will
be minimized.
' Interest rate risk. This is the risk that the market value of securities in the portfolio will fall
due to changes in general interest rates. Interest rate risk may be mitigated by:
■ Structuring the investment portfolio so that securities mature to meet cash requirements
for ongoing operations, thereby avoiding the need to sell securities on the open market
prior to maturity.
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■ Investing operating funds primarily in shorter-term securities.
Liquidity
The investment portfolio shall remain sufficiently liquid to meet all operating requirements that
may be reasonably anticipated. This is accomplished by structuring the portfolio so that
securities mature concurrent with cash needs to meet anticipated demands (static liquidity).
Furthermore, since all possible cash demands cannot be anticipated, the portfolio should consist
largely of securities with active secondary or resale markets (dynamic liquidity).
Yield
The investment portfolio shall be designed with the objective of attaining a market rate of return
throughout budgetary and economic cycles, taking into account the investment risk constraints
and liquidity needs. Return on investment is of least importance compared to the safety and
liquidity objectives described above. The core of investments are limited to relatively low risk
securities in anticipation of earning a reasonable return relative to the risk being assumed.
Securities shall not be sold prior to maturity with the following exceptions:
■ A declining credit security could be sold early to minimize loss of principal.
■ A security swap would improve the quality, yield, or target duration in the portfolio.
■ Liquidity needs of the portfolio require that the security be sold.
■ A capital gain would be realized that better positions the overall portfolio in achieving
investment policy goals.
SCOPE OF INVESTMENT MANAGEMENT PLAN
Included in the scope of the City's investment management plan are the following major
guidelines and practices which are to be used in achieving the City's primary investment
objective:
■ Investment authority and responsibilities ,
■ Capital preservation and risk
■ Eligible financial institutions
■ Allowable investment vehicles '
■ Investment maturity
■ Cash management
■ Evaluation of investment performance '
■ Investment reporting
■ Investment management plan review
These guidelines apply to all cash-related assets included within the scope of the City's audited '
financial statements and held either directly by the City or held and invested by trustees or fiscal
agents. The only exception is funds invested in the City's deferred compensation plan, which
are controlled by federal law, specific provisions of the City's adopted plan, and individual
employee decisions.
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USE OF STATE GUIDELINES
Government Code Sections 16481.2, 53601, 53635, and 53646 of the State of California regulate
the investment practices. It is the policy of the City of San Luis Obispo to use the State's
provisions for local government investments in the developing and implementing the City's
investment policies and practices.
PREPARATION AND ADMINISTRATION OF THE PLAN
As set forth in the Statement of Investment Policy, the City Treasurer is responsible for
developing and monitoring the investment management plan. Under this direction, the City's
first investment management plan was prepared and issued by the City Treasurer in December
of 1989. As it was originally viewed as an administrative "companion" to the Council adopted
investment policy, the investment management plan was not formally approved by the Council
at that time, although it was distributed to them. However, given legitimate public concerns
regarding the stewardship of funds arising from the unprecedented losses recently experienced
by the Orange County investment pool, formal approval of the investment management plan by
1 the Council is now recommended in order to provide a broader awareness and understanding of
the strategic framework, policy guidelines, and administrative practices followed in managing
the City's investments.
As required under Government Code Sections 16481.2 and 53646, the Statement of Investment
1 Policy will be reviewed by the Council annually. The investment management plan will only
be formally reviewed by the Council when significant changes in strategies, practices or
procedures are proposed. In the interim, the City Treasurer is responsible for keeping the
investment management plan up-to-date to reflect changes in legislation, organizational structure,
Council approved policies and administrative procedures.
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INVESTMENT AUTHORITY AND RESPONSIBILITIES
AUTHORIZED INVESTMENT OFFICERS
Authority to manage the investment portfolio is granted to the Director of Finance/City
Treasurer pursuant to Resolution No. 8477. Responsibility for the operation of the investment
program is hereby delegated to the Revenue Manager, who shall carry out established written
procedures and internal controls for the operation of the investment program consistent with this
plan. Procedures should include references to: safekeeping, delivery vs payment, investment '
accounting, repurchase agreements, wire transfer agreements, collateral/depository agreements
and banking services contracts.
No person may engage in an investment transaction except as provided under the terms of this
plan and the procedures established by the Director of Finance/City Treasurer. Although the
Director of Finance/City Treasurer may delegate these duties to another official in the
Department of Finance, every investment transaction must be reviewed and approved by the
Director of Finance/City Treasurer. Additionally, the Director of Finance/City Treasurer shall ,
be responsible for all transactions undertaken and shall establish a system of controls to regulate
the activities of subordinate officials.
INTERNAL CONTROLS '
The Director of Finance/City Treasurer is responsible for ensuring compliance with the City's
investment policies as well as for establishing systems of internal control designed to prevent
losses due to fraud, employee error, misrepresentation by third parties, unanticipated changes
in financial markets, or imprudent actions by City officers and employees. Additionally, the
Department of Finance is responsible for the physical security of City investments and shall use
custodial safekeeping for negotiable and bearer instruments whenever possible.
INVESTMENT MANAGEMENT RESOURCES ,
The concept of reasonable assurance recognizes that (1) the cost of a control should not exceed
the benefits likely to be derived; and (2) the valuation of costs and benefits requires estimates
and judgements by management. Accordingly, the Director of Finance/City Treasurer shall
establish a process for annual independent review by an external auditor to assure compliance ,
with policies and procedures. The internal controls shall address the following points:
■ Separation of transaction authority from accounting and record keeping. By '
separating the person who authorizes or performs the transaction from the people who
record or otherwise account for the transaction, a separation of duties is achieved.
■ Custodial safekeeping. Securities purchased from any bank or dealer including
appropriate collateral (as defined by State Law) shall be placed with an independent third
party for custodial safekeeping.
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■ Avoidance of physical delivery securities. Book entry securities are much easier to
transfer and account for since actual delivery of a document never takes place. Delivered
securities must be properly safeguarded against loss or destruction. The potential for
fraud and loss increases with physically delivered securities.
1 Delivery vs payment. All trades where applicable will be executed by delivery vs
payment (DVP). This ensures that securities are deposited in the eligible financial
institution prior to the release of funds. Securities will be held by a third party custodian
as evidenced by safekeeping receipts.
■ Clear delegation of authority to subordinate staff members. Subordinate staff
' members must have a clear understanding of their authority and responsibilities to avoid
improper actions. Clear delegation of authority also preserves the internal control
structure that is contingent on the various staff positions and their respective
1 responsibilities.
■ Written confumution of telephone transactions for investments and wire transfers.
Due to the potential for error and improprieties arising from telephone transactions, all
telephone transactions should be supported by written communications and approved by
the appropriate person. Written communications may be via fax if on letterhead and the
safekeeping institution has a list of authorized signatures.
■ Development of a wire transfer agreement with the lead bank or third party
custodian. This agreement should outline the various controls, security provisions, and
delineate responsibilities of each party making and receiving wire transfers.
EVALUA'T'ION OF INVESTMENT OFFICER ACTIONS
The standard of prudence to be used by investment officials shall be the "prudent person"
standard and shall be applied in the context of managing an overall portfolio. Investment
officers acting in accordance with written procedures and this investment management plan, and
exercising due diligence shall be relieved of personal responsibility for an individual security's
credit risk or market price changes, provided deviations from expectations are reported in a
timely fashion and the liquidity and the sale of securities are carried out in accordance with the
1 terms of this plan.
Investments shall be made with judgment and care, under circumstances then prevailing, which
1 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.
Officers and employees involved in the investment process shall refrain from personal business
activity that could conflict with the proper execution and management of the investment
program, or that could impair their ability to make impartial decisions. Employees and
investment officials shall disclose any material interests in financial institutions with which they
conduct business. They shall further disclose any personal financial/investment positions that
could be related to the performance of the investment portfolio. Employees and officers shall
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refrain from undertaking personal investment transactions with the same individual with whom
business.is conducted on behalf of`their entity.
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CAPITAL PRESERVATION AND RISK
OVERVIEW
Some level of risk is inherent in any investment transaction. Losses may be incurred due to
I issuer default, market price changes, or technical cash flow complications such as investments
in non-marketable certificates of deposit. Diversification of the City's portfolio by institution,
investment vehicle, and maturity term is the primary tool available to the City in minimiing
investment risk and capital losses by safeguarding the overall portfolio from any individual loss.
PORTFOLIO DIVERSIFICATION PRACTICES
' The following sections summarize the City's major portfolio diversification practices and
guidelines in determining:
' ■ Eligible financial institutions
1 ■ Investment vehicles
■ Investment maturity
Portfolio limitations included in these guidelines are to be based on the portfolio composition
1 and investment management plan policies in effect at the time of placement; the actual
composition of the City's investments may vary over time from plan limitations due to overall
portfolio changes from when the individual placement was made as well as changes in the City's
investment management plan.
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ELIGIBLE FINANCIAL INSTITUTIONS ,
PORTFOLIO DIVERSIFICATION AND CREDIT-WORTHINESS STANDARDS
The following general criteria relating to portfolio diversification and credit-worthiness will be
used in selecting depositories and broker/dealers (financial institutions) in the placement of City
investments:
■ . The financial capacity and credit-worthiness of the financial institution shall be
considered prior to the placement of City investments.
■ Current financial statements shall be maintained for each institution in which or through '
which cash is invested.
■ No more than 25% of the City's portfolio (exclusive of government agency issues) shall '
be placed with any financial institution.
■ No more than 25% of the City's portfolio shall be invested in collateralized certificates ,
of deposit issued by savings and loan institutions.
■ Certificates of deposit (negotiable and collateralized) placed by the City shall not
constitute more than 15% of the total assets of the institution; and negotiable certificates
of deposit will only be placed with institutions with total assets in excess of$200 million '
and that maintain a ratio of equity to total assets of at least 5%.
CERTIFICATION AND REPORTING REQUIREMENTS ,
The City shall establish a list of qualified securities dealers based on a certification submitted
by all financial institutions with which the City has an investment relationship. The certification
shall state that the institution has reviewed the City's investment management plan and that it ,.
will:
■ Exercise due diligence in monitoring the activities of its officers and employees engaged
in transactions with the City.
■ Ensure that all of its officers and employees offering investments to the City are trained
in the precautions appropriate to public sector investments.
■ Submit audited financial statements prepared by an independent certified public
accountant to the City on an annual basis within 180 days after the end of the institution's
fiscal year.
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INDIVIDUAL PLACEMENT OF INVESTMENTS
Individual placement of investments with eligible financial institutions shall be based on the
following practices and procedures:
' ■ Investments shall be placed with three institutions selected from an established list of
qualified Primary Dealers in U. S. Government Securities. A copy of this list is included
in the Appendix. The performance of the selected institutions shall be continually
monitored and a new institution selected if determined to be in the best interest of the
City. A formal selection process requesting proposals from eligible institutions shall be
conducted every three years.
t ■ Investments shall only be placed with financial institutions maintaining offices within the
State of California.
■ Except for repurchase agreements and placements with the State's local agency
investment pool (LAIF), investments shall be awarded based on competitive bids.
I Documentation relating to investment quotes shall be maintained by the Department of
Finance for six months.
■ Within the context of the City's policies regarding competitive bidding and portfolio
limitations, investments shall be distributed as evenly as possible between financial
institutions.
' ■ Negotiable investments shall not be purchased or sold from the institution which provides
custodial safekeeping for City investments.
' INDIVIDUAL PLACEMENT OF DEPOSITS
Individual placement of negotiable, collateralized, and other time certificates of deposit with
eligible financial institutions shall be based on the following practices and procedures:
' ■ Deposits shall only be placed with financial institutions maintaining offices within the
City of San Luis Obispo.
' ■ Unless collateralized by eligible securities as provided in Sections 53651 and 53652 of
the Government Code, the maximum amount of Certificates of Deposit to be placed with
any single institution is $100,000.
■ Reasonable efforts will be made to place deposits of less than$100,000 with each eligible
institution. Any deposits in excess of this amount shall be awarded based on competitive
bids. Documentation relating to rate quotes shall be maintained by the Department of
Finance for six months.
■ Within the context of the City's policies regarding competitive bidding and portfolio
limitations, deposits shall be distributed as evenly as possible between financial
' institutions.
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INVESTMENT VEHICLES ,
STATE OF CALIFORNIA LEMTATIONS '
As provided in Sections 53601, 53635, and 16429.1 of the Government Code, the State or
California limits the investment vehicles available to local agencies as summarized by the ,
following:
Government Agency Issues
As authorized in Government Code Sections 53601(a) through (e), this category includes a wide
variety of government securities. There are no portfolio limitations on the amount; however, '
the maturity term for these investment vehicles may not exceed five years unless approved by
the Council. As discussed below, special authority is granted to the Director of Finance/City
Treasurer to invest proceeds from debt issues (reserve funds) for a period not to exceed the term '
of the debt. These securities include the following:
■ Local government bonds or other indebtedness '
■ State bonds or other indebtedness '
■ U. S. Treasury notes or other indebtedness secured by the full faith and credit of the
federal government ,
■ Other federal agency securities such as issues by the Government National Mortgage
Association (GNMA's), Federal National Mortgage Association (FNMA's), and Small '
Business Administration.
Banker's Acceptances ,
As provided in Government Code Section 53601(f), 40% of the City's portfolio may be invested
in Banker's Acceptances that are eligible for purchase by the Federal Reserve System, although
no more than 30% of the portfolio may be invested in Bankers' Acceptances with any one
commercial bank. Additionally, the maturity period cannot exceed 270 days; however, Bankers'
Acceptances are seldom marketed with maturities in excess of 180 days. ,
Commercial Paper
As authorized in Government Code Section 53601(g), 15% of the City's portfolio may be
invested in "prime" commercial paper as rated by Moody's or Standard and Poor's, with
maturities not to exceed 180 days. This percentage may be increased to 30% if the dollar
weighted average maturity does not exceed 31 days. There are a number of other qualifications
regarding investments in commercial paper based on the financial strength of the corporation and
the size of the investment.
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Negotiable Certificates of Deposit
1 As authorized in Government Code Section 53601(h), the City may invest 30% of its portfolio
in negotiable certificates of deposit issued by commercial banks. The maturity period for this
investment vehicle may not exceed five years unless approved by the Council.
' Repurchase and Reverse Repurchase Agreements
1 As authorized in Government Code Section 53601(1), repurchase agreements are agreements
between the local agency and seller for the purchase of government securities to be resold at a
specific date and for a specific amount. Repurchase agreements are generally used for short
term investments varying from one day to two weeks. The legal limitation on the maturity
period for a repurchase agreement is for one year with the required market value underlying the
agreement at 102% of the funds borrowed with the value adjusted quarterly. Reverse repurchase
agreements are agreements between the local agency and buyer for the sale of government
securities to be repurchased at a specific date and for a specific amount. As provided in
Government Code section 53635(1), reverse repurchase agreements require the prior approval
I of the Council. Repurchase agreements and reverse repurchase agreements can only be made
with primary dealers of the Federal Reserve Bank of New York. There are no portfolio
limitations on the amount for these investment vehicles.
Corporate Notes and Diversified Management Companies (Mutual Funds)
As authorized in Goverment Code Sections 53601(k) and (1), local agencies may invest in
corporate notes issued by corporations organized and operating in the United States with a
maximum maturity period of five years in an amount not to exceed 15% of the agency's
portfolio. Local agencies are also authorized to invest in shares of beneficial interest issued by
diversified management companies (DMC's) as defined in Section 23701(m) of the Revenue and
Taxation Code in an amount not to exceed 15% of the agency's portfolio. There are a number
of other qualifications and restrictions regarding allowable investments in corporate notes and
share of beneficial interest issued by DMC's.
Financial Futures and Financial Option Contracts
' As authorized in Government Code Section 53601.1, local agencies may invest in financial
futures or option contracts in any of the above investment categories subject to the same overall
portfolio limitations.
Time Certificates of Deposit
As authorized in Government Code Section 53635, Certificates of Deposit are fixed term
investments which are required to be collateralized 110% by eligible pooled securities. The pool
is administered by the State, and is composed of a wide variety of government securities,
including those indicated above (except municipal bonds), as well as promissory notes secured
by first mortgages on improved residential property located in the State. There are no portfolio
limits on the amount, however the maturity period for this investment vehicle may not exceed
' five years unless approved by the Council.
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Local Agency Investment Fund ,
As authorized in Government Code Section 16429.1, local agencies may invest in the Local '
Agency Investment Fund(LAIF), a money market fund which allows local agencies to pool their
investment resources. Current policies of LAW set minimum and maximum amounts of monies
that may be invested as well as maximum numbers of transactions that are allowed per month.
CITY POLICIES
Allowable Investment Vehicles ,
The Director of Finance/City Treasurer is authorized to invest in any of the investment vehicles
allowed by Sections 53601, 53635 and 16429.1 of the Government Code with the exception of
financial futures or option contracts. Exclusion of these vehicles is consistent with the City's
overall objective of achieving reasonable yields on public funds while minimizing risk and '
capital losses. Although the potential exists for greater interest yields with these vehicles, it is
believed that the potential level of risk exceeds their benefits except in very limited
circumstances. Accordingly, Council approval is required on a case-by-case for any investments '
in financial futures or option contracts.
Term
Reserve funds from the proceeds of debt issues may be invested by the Director of Finance/City
Treasurer in government agency securities with terms exceeding five (5) years if the maturity
of such investments are made to coincide as nearly as practicable with the life of the debt issue.
In all other cases, Council approval to make investments with terms in excess of 5 years is
required on a case-by-case basis.
Deferred Compensation '
These policies do not apply to deferred compensation plans. Individual investment policies are
adopted by each deferred compensation plan and approved independently by Council. Further,
individual investments are directed solely by the employee.
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' INVESTMENT MATURITY
' In addition to the risks associated with the credit-worthiness of the financial institution and the
security of the investment vehicle, the maturity period of investments is also a significant
consideration in the management of the City's portfolio. In order to minimize the impact of
market risk, it is intended that all investments will be held until maturity. Under this practice,
long-term investments (over one year) will be limited to 30% of the total portfolio. In
implementing this policy, the following guidelines will be used:
■ Projected cash flow requirements are the primary factor to be used in determining
investment maturity terms. After cash flow needs have been met, yield considerations
1 will be the next factor used in determining maturity terms, with the expectation that
longer maturity periods will generally yield greater returns on investments.
■ Investments may be sold prior to maturity for cash flow or appreciation purposes;
however, no investment shall be made based solely on yields resulting from anticipated
capital gains.
■ Investments longer than one year may be made if consistent with the City's cash flow
needs and related intent of holding until maturity.
In accordance with the guidelines above, the following targets will be used in guiding the
' maturity mix of the overall portfolio exclusive of longer-term investments of debt service
reserves:
Within 1 month 10%
Within 1 month to 1 year 60%
Within 1 to 5 years 20%
' Greater than 5 years 10%
TOTAL 100%
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CASH MANAGEMENT
To achieve a reasonable return on public funds, the following cash management practices will
be followed:
■ Maintain maximum investment of all City funds not required to meet immediate cash
flow needs while maintaining adequate compensating balances as required under the
City's banking services agreement.
■ Pool resources available for investment from all City-administered funds, with interest
earnings allocated to each of the funds in accordance with generally accepted accounting
principles. 1
■ Maximize the City's cash flow through the immediate deposit of all cash receipts, use
of direct deposits and wire transfers when available, and appropriate timing of payments
to vendors.
■ Maximize the cash flow information available through the use of only one operating bank
account.
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1
EVALUATION OF INVESTMENT PERFORMANCE
' As indicated in the Introduction section of this document, it is the City's primary investment
objective to achieve a reasonable rate of return on public funds while minimising risks and
preserving capital. In evaluating the performance of the City's portfolio in achieving this
objective, it is expected that yields on City investments will regularly meet or exceed the average
return on three month U. S. Treasury Bills.
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INVESTMENT REPORTING ,
Consistent with Sections 16481.2 and 53646 of the Government Code, the Department of
Finance shall submit an annual Statement of Investment Policy to the Council for consideration
at a public meeting. This statement will generally be reviewed by the Council in conjunction
with the Financial Plan review and approval process. In accordance with this statement of
investment policy, the City Treasurer is responsible for developing an maintaining this
investment management plan.
In addition to the submittal of an annual Statement of Investment Policy and the preparation of
an Investment Management Plan, the Department of Finance shall provide the Council, City
Administrative Officer, and Department Heads with a monthly investment report providing the
following information for each investment or security:
■ Issuer or broker/dealer (financial institution) ,
■ Type of investment '
■ Certificate or other reference number if applicable
■ Percentage yield on an annualized basis '
■ Purchase date '
■ Maturity date for each investment and the weighted average maturity of all the
investments within the portfolio
■ Current book value
■ Current market value
■ Total cost and market value, including source of this valuation, of the City's portfolio ,
■ A description of the compliance with the Statement of Investment Policy
■ Information demonstrating that the City's expenditure requirements can be met in the
following six months
■ Other informationregarding the City's portfolio as appropriate
The Monthly Investment Report shall include all investments as of the end of the month from
all funds held in the City's portfolio, including funds held and invested by trustees exclusive of
deferred compensation plan funds; and shall be issued within 30 days after the end of the
monthly reporting period. A sample report is included in the Appendix of this document.
16
INVESTMENT MANAGEMENT PLAN REVIEW
The Department of Finance shall review the City's Statement of Investment Policy and
Investment Management Plan on an ongoing basis to ensure its continued value in administering
the City's portfolio. Additionally, the City shall form an Investment Oversight Committee
' whose membership shall consist of the City Administrative Officer, Assistant City Administrative
Officer, Director of Finance/City Treasurer, Revenue Manager, and the City's Independent
Certified Public Accountant. The Investment Oversight Committee is responsible for:
' ■ Reviewing the City's portfolio at least quarterly to determine compliance with the
investment management plan; and
' ■ Reviewing and making recommendations as appropriate regarding the City's investment
policies and practices at least annually.
It is important to note the distinction between the committee's oversight responsibility in
ensuring compliance with the policies and overall framework established in this plan, and the
responsibility of the Director of Finance/City Treasurer in managing the City's investment
portfolio in accordance with this plan.
' This distinction between management and oversight is especially important to make as it applies
to the role of the City's independent auditors on this committee. The committee's oversight
function is consistent with the scope of the auditor's engagement duties, which includes
reviewing for compliance with City financial policies and procedures, and for making
recommendations for improvements in the City's fiscal operations. However, in this oversight
' context, they retain their independence from responsibility for managing any aspects of the
City's operations; this responsibility lies solely with the City's elected leadership and staff.
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APPENDI_X
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' B-9 and B-10 i he 1995-97 Financial Plan
POLICIES AND OBJE_ JVES and Approved 1. ,-96 Budget
GENERAL BUDGET POLICIES (continued)
' alternative transportation programs - in conjunction with other state or federal grants for this purpose -will be self-
supporting from TDA revenues.
' D. Twenty percent (20%) of transient occupancy tax (TOT) revenues should be allocated for cultural activities,
community promotion, and economic development activities; remaining TOT revenues (80%) should be unrestricted
within the General Fund and used in funding programs or projects that benefit our residents as well as visitors.
' E. All parking fine revenues will be allocated to the Parking Fund.
F. A minimum of$50,000 annually shall be designated in the Capital Outlay Fund for Mission Plaza improvements and
expansions.
INVESTMENTS
A. Investments and cash management will be the responsibility of the City Treasurer or designee.
B. The City's primary investment objective is to achieve a reasonable rate of return while minimizing the potential for
capital losses arising from market changes or issuer default. Accordingly, the following factors will be considered
in priority order in determining individual investment placements:
I. Safety
2. Liquidity
3. Yield
C. There is an appropriate role for tax and revenue anticipation rates (TRANS) in meeting legitimate short-term cash
needs within the fiscal year. However, many agencies issue TRANS as a routine business practice, not solely for
cash flow purposes, but to capitalize on the favorable difference between the interest cost of issuing TRANS as a tax-
preferred security and the interest yields on them if re-invested at full market rates.
As part of its cash flow management and investment strategy, the City will only issue TRANS or other forms of
short-term debt if necessary to meet demonstrated cash flow needs; TRANS or any other form of short-term debt
financing will not be issued for investment purposes. As long as the City maintains its current policy of maintaining
fund/working capital balances that are 20% of operating expenditures, it is unlikely that the City would need to issue
TRANS for cash flow purposes except in very unusual circumstances.
D. The City will strive to keep all idle cash balances fully invested through daily projections of cash flow requirements.
To avoid forced liquidations and losses of investment earnings, cash flow and future requirements will be the primary
consideration when selecting maturities.
E. As the market and the City's investment portfolio change, care will be taken to maintain a healthy balance of
' investment types and maturities.
F. The City will invest only in those instruments authorized by the California Government Code Section 53601. The
City will not invest in stock, will not speculate, and will not deal in futures or options. The investment market is
highly volatile and continually offers new and creative opportunities for enhancing interest earnings. Accordingly,
the City will thoroughly investigate any new investment vehicles prior to committing City funds to them.
G. Current financial statements will be maintained for each institution in which cash is invested. Investments will be
limited to 20 percent of the total net worth of any institution and may be reduced further or refused altogether if an
institution's financial situation becomes unhealthy.
' H. In order to maximize yields from its overall portfolio, the City will consolidate cash balances from all funds for
investment purposes, and will allocate investment earnings to each fund in accordance with generally accepted
accounting principles.
' 18
POLICIES AND OBJL..(IVES ,
GENERAL BUDGET POLICIES (continued) '
I. Ownership of the City's investment securities will be protected through third-party custodial safekeeping.
J. The City Treasurer will develop and maintain a comprehensive, well documented investment reporting system which
will comply with Government Code Section 53607. This system will provide the Council and Department Heads '
with appropriate investment performance information.
K. The City Treasurer will develop and maintain an Investment Management Plan which addresses the City's
administration of its portfolio, including investment strategies, practices, and procedures.
APPROPRIATIONS LIMITATION
A. The Council will annually adopt a resolution establishing the City's appropriations limit calculated in accordance with
Article XIIIB of the Constitution of the State of California, Section 7900 of the State of California Government Code,
and any other voter approved amendments or state legislation that affect the City's appropriations limit. ,
B. The supporting documentation used in calculating the City's appropriations limit and projected appropriations subject
to the limit will be available for public and Council review at least 10 days before Council consideration of a ,
resolution to adopt an appropriations limit. The Council will generally consider this resolution in connection with
final approval of the budget.
C. The City will strive to develop revenue sources, both new and existing, which are considered non-tax proceeds in '
calculating its appropriations subject to limitation.
D. The City will annually review user fees and charges and report to the Council the amount of program subsidy, if any, '
that is being provided by the General or Enterprise Funds.
E. The City will actively support legislation or initiatives sponsored or approved by League of California Cities which
would modify Article XIIIB of the Constitution in a manner which would allow the City to retain projected tax
revenues resulting from growth in the local economy for use as determined by the Council.
F. The City shall seek a vote of the public to amend its appropriation limit at such time that tax proceeds are in excess
of allowable limits.
FUND BALANCE DESIGNATIONS AND RESERVES '
A. The City will maintain fund or working capital balances of at least 20% of operating expenditures in the General
Fund and Enterprise Funds (Water, Sewer, Parking, Transit and Golf). This is considered the minimum level ,
necessary to maintain the City's credit worthiness and to adequately provide for:
1. Economic uncertainties, local disasters, and other financial hardships or downturns in the local or national
economy. ,
2. Contingencies for unseen operating or capital needs.
3. Cash flow requirements.
B. For General Fund assets, the City will establish and maintain an Equipment Replacement Fund to provide for the '
timely replacement of vehicles and capital equipment. Under the City's current definition of capital outlay, this
includes items with an individual replacement cost of$5,000 or more. The City will maintain a minimum fund
balance in the Equipment Replacement Fund of at least 20% of the original purchase cost of the items accounted for
in this fund. The annual contribution to the Fund will generally be based on the annual use allowance which is
determined based on the estimated life of the vehicle or equipment and its original purchase cost. Interest earnings
and sales of surplus equipment as well as any related damage and insurance recoveries will be credited to the '
Equipment Replacement Fund.
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MEMORANDUM
March 21, 1996
TO: City Council, City Administrative Officer, and Department Heads
FROM: Bill Statler, Director of Finance/City Treasurer
Prepared by: Linda Asprion, Revenue Manager
' SUBJECT: MONTHLY INVESTMENT REPORT - FEBRUARY 1996
This memorandum transmits to you the monthly investment report for February 1996 which discloses the type of
' investment,institution,maturity date,book value,current market value,and rate of interest for all securities managed
by the City as well as those held by trustees. As of February 29, 1996, the investment portfolio was in compliance
with all State laws, the City's Statement of Investment Policy, and the Investment Management Plan.
' CURRENT PORTFOLIO SUMMARY
Short-term excess cash is currently invested primarily in the Local Agency Investment Fund (LAIF) administered
by the State Treasurer,which is a very high quality investment available in terms of safety,liquidity, and yield. In
some instances,the City may have investments with a current market value that is greater or less than book value.
This is due to fluctuations in the marketplace and has no effect on yield as the City intends to hold the securities
to maturity.
The following is a summary of the liquidity of the City's cash and investments as of February 29, 1996:
Maturity Date Hook Value 1/31/96 Book Value 2/29/96 Percent of
(In Millions) (In Millions) Portfolio
Held By City
On Demand(Cash&LAIC $19.0 $19.0 61.5%
' Within I Month 1.0 1.0 3.2%
Within 1 Month to 1 Year 5.8 4.8 15.5%
Within 1 to 5 Years 4.0 4.0 15.9%
Over 5 Years 1.2 1.2 3.9%
Total $31.0 130.0 100.0%
Held By Trustees
On Demand(Within I Year Less Than$100,000 Less Than$100,000
Within I to 5 Years $ 1.0 $ .9 35.7%
Over 5 Years 1.8 1.8 64.3%
' Total $2.8 $2.7 100.00°/a
TOTAL $33.8 $32.7 100.00%
CURRENT ACTIVITY
Overall,there were no significant changes in the City's total cash and investments which were$32.7 million at the
end of February, 1996 compared with $33.8 million at the end of January, 1996. During the month a$1.0 million
Banker's Acceptance was purchased which will mature on August 7, 1996. Funds for this purchase were provided
from a matured Banker's Acceptance.
' If you have any questions concerning this report,or require additional information,please do not hesitate to contact
US.
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CIT. -,eF SAN LUIS OBISPO — PORTFOLIO S__AMARY
PERIOD ENDING FEBRUARY 29, 1996
ACCRUED '
BOOK %OF CURRENT MONTHLY MARKET
VALUE PCitTFOUO YIELD 1NPITRFST VALUE '
FIELD BY THE MY
Local Agencylnvesm=t Funds $18,695,609.94 62.93% 5.6491b $87,916.11 $18,695,609.94
Banker's Acceptance $5,837,312.77 19.65% 5.75% $27,958.98 $5,896,202.50 '
Federal Agency Issues $3,998,707.53 13.46% 5.30% $17,660.96 $3,949,360.00
Treasury Issues $1,178,719.45 3.979/b 9.25% $9,085.96 $1,294,690.00
IWAL INVESSTl�+1M
HEIR BY THE CITY $29,710,349.69 100.00% 5.76% $142,622.01 $29,835,862.44
HELD BY TRUSTEES ,
Pacific Horizon Treasury Fund $66,478.24 2.43% 4.86% $269.24 $66,478.24
Federal Agency Issues $904,709.38 33.06% 8.749/b $6,586.48 $984,046.00 '
Treasury issues $1,765,329.69 64.51% 7.20% $10,588.79 $1,888,875.58
TOTAL MVESTMENTS
HELD BY TRUSTIES 2,736,517.31 100.001yo 7.65% $17,444.51 $2.939.399.82 ,
CASH IN C HECE3VG ACODUNTB $287,494.62
TU T'AL CASH&MVES IGEN IS $32,734,361.62 '
Joint Powers Authority Cash $11,949,241.21 ,
Gty,Cash&Invcstrnerits $20,785,120.41
IWAL CASH&RiVFSIMEtM $32,734,361.62 '
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CTPY OF SAN LUIS OBISPL
MONTHLY STATEMENT OF INVESTMENTS
INVESTMENTS AS OF FEBRUARY 29, 1996
HELD BY THE CITY
3/21/96
AGENCY INVESTMENT COUPON CURRENT PURCHASE MATURITY PURCHASE BOOK MARKET
(BROKER) DESCRIPTION RATE YIELD DATE DATE PRICE VALUE VALUE
LOCAL AGENCY MONEY MKT FUND ON
INVESThIENTFUND CITYACC'T#9840812 NA 5.64% VAR DEMAND $7,223,059.36 $7,223.059.36 $7?.23.059.36
LOCAL AGENCY MONEY MKT FUND ON
INVESIMENTFUND JPAACCT#4040001 NA 5.64% VAR DEMAND $2.314,288.88 $2.314.288.88 $2,314.288.88
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LOCAL AGENCY MONEY MKT FUND ON
WVESIM NT FUND CIBACCT#1640006 NA 5.64% VAR DEMAND $9,158261.70 $9.15861.70 $9.158.261.70
OF A SAFEKEEPING BANKER'S ACCEPTANCE
SMITH BARNEY #8650619 NA 1 5,90% 9/6/95 3/6/96 $1.000.000.00 $971.190.83 $1.000.000.00
H OF A SAFEKEEPING BANKER'S ACCEPTANCE
adERRILL LYNCH) A650875 NA 6.14% 10/17/95 4/17/96 $1,000,000.00 $969,919.44 $1,000.000.00
B OF A SAFEKEEPING BANKER'S ACCEPTANCE
LYNCH) #500800% NA 1 5.99% 11/15/95 5/6/96 $1.000.000.00 $972.19333 $972,193.33
B OF A SAFEKEEPING BANKER'S ACCEPTANCE
(DEAN WITTFR #IINOB0067 NA 5.72% 12/12/95 6/7/96 $1.000,000.00 1 $973.00750 $973,007.50
OF A SAFEKEEPING BANKER'S ACCEPTANCE
(DEAN WITTIZt #BHY080071 NA 5.72% 1/10/96 7/1/96 $1,000.000.00 $974,821.11 $974,821.11
OF A SAFEKEEPING BANKER'S ACCEPTANCE
SMTIH #%M080087 NA 5.02% 2/14/96 8/7/96 $1.000,000.00 $976,18036 $976.18056
OF A SAFEKEEPING FEDERAL HOME WAN
SMTIII #31359CA14 5.30% 5.30% 12/10/93 12/10/98 $3.998.125.00 $3.998.707.53 $3.949.360.00
OF A SAFEKEEPING U.S.TREASURY BOND
#912810DV7 9.25%1 9.25%1 4/18/86 1 2/15/16 1 $1.258.437.50 $1.178,719.45 1 $1.294,690.00
' TOTALS 529.952.172.44 $29.710.349.69 $29.835.862.44
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CITY OF SAN LUIS OB,_ J I
MONTHLY STATEMENT OF DWESTMENTS
INVESTMENTS AS OF FEBRUARY 29, 1996 '
HEA BY THE TRUSTEES
3/21/96 ,
AGENCY INVESTMENT COUPON CURRENT PURCHASE MA11BUTY PURCHASE BOOK MARKET
(BROKER) DESCRIPTION RATE YIELD DATE DATE PRICE VALUE VALUE
1988 Water Fund Certificates of Participation '
BANK OF NEW YORK PACIFIC HORIZON
WESTERN TRUST CO. TREASURY FUND NA 4.86% VAR VAR $434.10 $434.10 5434.10 ,
BANK OF NEW YORK FEDERAL NATIONAL
WESTERN TRUST CO. MORTGAGE ASSOC. 9.15% 9.15% 4/11/88 4/10/98 $493.600.00 $488.800.00 $524,944.00
1990 General Fund Certificates of Participation ,
BANK OF NEW YORK PACIFIC HORIZON
WESTERN TRUST CO. TREASURY FUND NA 4.86% VAR VAR $237.40 $237.40 S237.40
BANK OF NEW YORK FEDERAL NATIONAL '
WESTERN TRUST CO. MORTGAGE ASSOC. 8.25% 8.25% 12/17/90 12/18/00 $420.000.00 $415,909.38 $459.102.00
1993 Water Fund Revenue Bonds
BANK OF NEW YORK PACIFIC HORIZON '
WESTERN TRUST CO. TREASURY FUND NA 4.86% VAR VAR $25,631.33 $25,631.33 $25,631.33
BANK OF NEW YORK UNTIED STATES '
WESTERN TRUST CO. TREASURY BONDS 7.12% 7.12% 2/15/93 2/1523 $698,000.00 $736.717.19 $740.968.88
1994 Refunding Lease Revenue Bonds
BANK OF NEW YORK PACIFIC HORIZON ,
WESTERN TRUST CO. TREASURY FUND NA 4.86% VAR VAR $40,175.41 $40,175.41 $40,175.41
BANK OF NEW YORK UNITED STATES '
WESTERN TRUST CO. TREASURY NOTES 7.2595 7.25% 5/16/94 5/15/04 $1.070.000.00 $1.028.612.50 $1.147.906.70
TOTALS $2.748.078.24 $2.736.517.31 $2,939,399.82 ,
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CITY OF SAN LUIS OBISPO
DEALER QUESTIONNAIRE AND CERTIFICATION
' 1. Name of Firm
Local National Headquarters
' 2. Address
' 3. Telephone No. ( ) ( )
4. Primary Representative Manager/Partner-in-Charge
Name
Title
Phone No.
' Yrs. in Institutional Sales Yrs. in Institutional Sales
Years with Firm Years with Finn
5. Are you a Primary Dealer in U. S. Government Securities? [ ] YES [ ] NO
6. If so, how long has your firm been a primary dealer?
7. What was your firm's total volume in U. S. Government and agency securities trading last year?
Firm-wide No. of Transactions?
Local Office No. of Transactions?
' 8. Is the Finn owned by a Holding Company? If so, what is its name and net capitalization?
' 9. Please provide your Wiring and Delivery Instructions
24
10. Which instruments are offered'regWAtly by your local desk?
[ ] T=Bill"s [ j BAs-(domestic)
[ ] Treasury notes/bonds [ ] BAs (foreign)
[ ] Agencies(specify) [ ] Commercial paper
Bank CDs
-- ] S & LCDs
[ ] Instrumentalities(specify) [ ] Other(specc—ify)
11. Which of the above does the Firia specialize in Marketing?
I
12. Identify all personnel who will be trading with or quoting securities to.our City's employees.
Name Title Phone No.
(ATTACH RESUMES OF ALL THE ABOVE PERSONS)
13, Which of the above Persopael have reviewed our'Cit Invesmrent Management Plan?
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14. Please indicate which agents of the firm's local offices are currently licensed,certified or registered,and
by whom.
Agent Licensed or Registered by
' 15. Please identify your public-sector clients in our geographical area who are most comparable to our City.
Enti Contact Person Phone no. Client Since
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' 16. Have any of your public-sector clients ever sustained a loss on a securities transaction arising from a
misunderstanding or misrepresentation of the risk characteristics of the instrument?
[ ] NO [ ] YES Attach Explanation
17. Has your firm ever been subject to a regulatory or state or federal agency investigation for alleged improper,
fraudulent, disreputable or unfair activities related to the sale of government securities or money market
' instruments? Have any of the Firm's employees ever been so investigated?
[ ] NO [ ] YES Attach Explanation
18. Has a public-sector client ever claimed in writing that your firm was responsible for investment losses?
' [ ] NO [ ] YES Attach Explanation
19. Please provide certified financial statements and other indicators regarding the Firm's capitalization on an
annual basis.
20. What portfolio information do you require from your clients?
' 26
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21. What reports, transactions,confirmations and paper trail will we receive?
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22. Enclose a complete schedule of fees and charges for various transactions. '
23. How many and what percentage of your transactions failed last month? Last Year?
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24. Describe the precautions taken by your firm to protect the interests of the public when dealing with '
governmental agencies as investors.
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' - CERTIFICATION -
I hereby certify that I have personally read the Investment Management Plan of the City of San Luis Obispo and
' have implemented reasonable procedures and a system of controls designed to preclude imprudent investment
activities arising out of transactions conducted between our Firm and the City of San Luis Obispo. All sales
personnel will be routinely informed of your investment objectives and policies whenever we are so advised. We
' will notify you immediately by telephone and in writing in the event of a material adverse change in our financial
condition. We pledge to:
■ Exercise due diligence in monitoring the activities of its officers and employees engaged in transactions with
the City.
■ Ensure that all of its officers and employees offering investments to the City are trained in the precautions
' appropriate to public sector investments.
■ Submit audited financial statements prepared by an independent certified public accountant to the City on
an annual basis within 180 days after the end of the institution's fiscal year.
' I attest to the accuracy of our responses to your questionnaire.
Signed: Date:
Countersigned: Date:
(Person in charge of government securities operations.)
NOTE: Completion of Questionnaire is only part of the City of San Luis Obispo's Certification process and does
Mot guarantee that the applicant will be approved to do business with the City of San Luis Obispo.
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SAN LUIS OBISPO INVESTMENT AUTHORIZATION
TRADE DATE:
SETTLEMENT DATE: '
TRANSACTION: POOL/ID #: N/A
FROM: BROKER: ,
FACE AMOUNT:
PAR AMOUNT: '
PRINCIPLE AMOUNT: COUPON: '
EARNED INTEREST: YIELD:
TOTAL WIRED: ,
MATURITY DATE:
WIRING INSTRUCTIONS: Physical delivery to Bank of New York,One Wall Street Third Floor,Window A,New '
York, New York 10286, City of San Luis Obispo Acct 9060927
Bank of America will pay(name of financial institution)$X}0000{XXXX from City bank account#00610-80249 '
BY:
COMMENTS:
1
APPROVED BY: '
DIRECTOR OF FINANCE/CITY TREASURER '
29 ,
PRIMARY GOVERNMENT SECURITIES DEALERS
BA Securities, Inc.
Barclays de Zoete Wedd Securities Inc.
Bear, Steams & Co., Inc.
BT Securities Corporation
' Chase Securities Inc.
Chemical Securities Inc.
Citicorp Securities Inc.
' CS First Boston Corporation
Daiwa Securities America Inc.
Dean Witter Reynolds Inc.
Deutsche Bank Securities Corporation
Dillion, Read & Company Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
' Eastbridge Capital Inc.
First Chicago Capital Markets Inc.
Fuji Securities Inc.
Goldman, Sachs & Company
Greenwich Capital Markets Inc.
HSBC Securities Inc.
Aubrey G. Lanston & Company Inc.
Lehman Government Securities Inc.
Merrill Lynch Government.Securities Inc.
J. P. Morgan Securities Inc.
Morgan Stanley & Company Inc.
NationsBanc Capital Markets Inc.
Nesbitt Burns Securities Inc.
The Nikko Securities Company International Inc.
Nomura Securities International Inc.
Paine Webber Incorporated
Prudential Securities Incorporated
Salomon Brothers Inc.
Sanwa Securities (USA) Company L. P.
Smith Barney Inc.
SBC Capital Markets Inc.
UBS Securities Inc.
Yamaichi International (America) Inc.
' Zions First National Bank
Source: Market Reports Division
Federal Reserve Bank of New York
July 27, 1995
' (212) 720-6132
30
RESOLUTION NO. 8477 (1996 SERIES) '
A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO '
UPDATING PAYMENT DISBURSEMENT AND RECEIPT AUTHORITY
WHEREAS, it is the policy of the City of San Luis Obispo for the Director of Finance '
to concurrently hold the position of City Treasurer; and
WHEREAS, Resolution No. 6148 designates specific positions to act on behalf of the '
Director of Finance/City Treasurer that no longer exist.
NOW, THEREFORE, be it resolved by the Council of the City of San Luis Obispo as '
follows:
SECTION 1. The Director of Finance is hereby appointed to concurrently hold the '
position of City Treasurer.
SECTION 2. The Director of Finance/City Treasurer is hereby authorized to sign all '
checks, drafts, wire transfers and other orders for and on behalf of the City for deposit,
payment or investment in accordance with Government Code Section 53601.
SECTION 3. The Director of Finance/City Treasurer is hereby authorized to designate '
the following positions with signature and representation authority.to act in her or his.behalf '
on the matters set forth above in Section 2 of this Resolution: Revenue Manager, City
Administrative Officer, Assistant City Administrative Officer, and other officials formally
designated by the Director of Finance/City Treasurer to serve in her or his absence on a case-
by-case basis.
SECTION 4. Resolution No. 6148 (1987 Series) is hereby rescinded. '
On motion of Vice Mayor Williams , seconded by Council Member Romero
and on the following roll call vote; ,
AYES: Vice Mayor Williams, Council Members Romero, Roalman,Smith, Mayor Settle
NOES: None ,
ABSENT: None
the foregoing Resolution was passed and adopted this 4 day f June, 1995. '
ayor Allen Settle '
ATTES
ity Cler '
b Assistant City Clerk Kim Condon
APPROVED: '
91tyoo;�Y'?,��
31 R-8477