06 Staff Report - Accepting Investment Policy Dated August 9, 2005wemt-~t .XXIM
" Q7 ~77E
4ratte SQ
r m
s
a y
c
MAYO P, AND TOWN COUNCIL- g'
SUBJECT: i-V)O RESOttj'I'ION° AC:CEI'TI-NG. iM5~
AUGUST 2005
Au-ust 9,'2f)05
Ss not aproiect defined under CF;QA, and no'f iaker!action':ts~xc. Mired'.; -
jISCAT AQ'T: Nom '
~ ttacillnents: i.. R_esolatioll acceptirzg e4l.iue ~t;
Exhibit A - Divestment Policy c~afcc~. ~u txst; ~~~?(l~#5i ~ -
Distrihutioa ' gNVU Ccounc i-I~ ,I'Q«-rn _Nbnac,,er; F T~ar~4~ r ire. tv ;
-
a
.
a
06
W
m t
a 6 If
1'
b
96i
se
f
s _
A
Aft F
a
a m.
Nno 4 ~
~ p 3
iQ i'
d
W
F _
ti - c a
d -Y
C,! A
A W ~
6 t Y
Lg*l s~
« 4, M V
W a
r
;y
I
I
R'
A
,m
Fj
w
4
r
p
A
jpegft&,Lrchdej *4a ift n
h
' , _ - - - - -
MAPS
a
Via,
&met
0
f
I
w
IA 4
e
twin
7
WOW la
lq~
LtS
f
'i
.
M
A
10
n
a
I
I
Iti . Safekeeping and Custo(lY
1, Authorized Financial ,healers and Institutions. y
A. )Rroher/Dealers. Ju order to do'busilzess with.tl eLTwvn,,F a'.secttritiesECiokr/l l Yolierag `f it v.
nhhhst he designated as a primary
over-nit~et~t' c ea er, i y't lei eleca`lOes,er_},el3azitt'91,111eet,-
one of the other requirements of California Citver nxerit~Ciid'e.~SeE: 53601.15., T io,
® institution n-tust have assets of at least $1 hellion:. fell and,
broker/ dealers who desire to become qualified,foh'xn~esttzh'en~: t~~n~sac~ti°oris~~ns~~l~c~ ~
supply ,the following:
_ Audited financial statements
Proof of National Association t '~c4tnitie~~Zlealers~xe~i~tE:alt"
Proof of state registration
Certification. of having read tlw%mn:st'wstment:policy, iihcludi~r ;'a:
statement that'the dealer haOuiaTei
a police..
a I3. Financial. ~nstitutiohhs. ~'lte titFrn shall mai~'iie~tand;~eposit'si aacl::~~rleposits orhi~~
,with commercial ranks and savings banks t1;:f~e~eeti'1; }ufaYirYls[fpi'~sfet;
. and soundness. Specifically, all banks that awept'deposits Jk ,Ifie.L-Uwn.slialf-tupef,
standards with regard to capital strength, asscl%, sy~Aho.l tjbidity,`WfReli all~~~~ Ylieffia
to earn the highest ran if rating (blue/three stars firohathediank: ratino'conipanN , Yeritiant;
Ine. In addition, the institution nest have . h #li ~ia~.fi'a hf and. tfiat offi~ermnsf
g
perform all transactions with the Town.
2. Internal Controls. The Town Treasurer;, in conjnncjti~;nr~~~aX~tta~'riotri~~7~#tatic'c~nl~i'rectq~
shall establish and hnaintain an internal eontrol!4ruct'u_rt desfgnuc : o~~ehi ►xre that; li fn pest t>~
assets of the Town are protected from loss, theft: her'niisase'.'i'li'e'~i~tern~d ~ontrui stt~rict~t~et
shall be designed to provide reasonable assurance'-that;tl'keseiobjectiF.es; art,,metC lefvoncept
of reasonable assurance recognizes that (1) the-costume ►troif h'oug not (ex-ad! thmWaefii's;-
likety to be derived and (2) the valuation of costslnud,benef (N:rec tikes!.Cstihlat.'Cg and
judgments by nhanagment. Accordingly, the Teoiv,o: rt~~asthncr: sli ilf.fakili~t~a tl z~iza~
independent review by an eternal auditor to assYxre~~coh ~pl7ancelw Ejr 1?thll~c lest ns ,p ivedures:~
The internal' controls shall address the folloNviq.VpoiMs::
Separation of frausaction autborl ot7~~ i nnti g~ anc :a eke r'd: t i
.
`Custodial safekeeping
Avoidance of physical deliNfery W'satiritr" n
Clear delegation of autbority to su)YttrtlinaterstafT.!rnetnil3ersE
E.
Written conlirnation, of'tran5action~.fvrfh~~c~simerzt~ az~d NyTreqran4rsf
.I
g
3. Delivery vs. Payment All securities €racles whereiao~lxcalil'etwill~'e~
patimem (DVP) to ensure that securities are delrveie ,info' saf~c~keepin; w,Ttl~ thei'> o~i.n''stt}iiatcl'
party custodian prior to the release of finds. 1411] T 43, n.isI-iliErt-; pat ~x,' us, oc ;~i~i~tiv }icy
ilidependeut. from the trot-er/dealer bandlinl; t}ie!~ecuri~j;{~r~uzsaction.lftt~~iYSUxcy]jrol~er,,
tinnily delivery and payment
CallateraIizatiau. Callateralization s required or~,.tll r i caY bf~ll si 4 n~1. ~l d-~ifsi iii:
excess of FDIC uistmwce limits. Per Governtent; U de; S,eev.,53 52t..~ etr gpir,.01
collateraliration level is 110%, of markel value
tiovernment securities, pledged as collateral, or 15Mi~ fi3i-,;Virsf;deed ;-otLf'r i,;tlpfedgg ,d.as!
collateral. Siaelt collateral will be held by an
ii~d enc'}en hir~l at l;~ a ¢c~i
'V. Suitable and Authorized Investments
Investment Typpes. California GovernmOt Code: Sect R ass;53,601,,- fYA-1.5,T-and:53(35I)Iiwer
Amitations an allowable. investments by heal goyernmenL.. This] investirieii ppli4g,441irthec
estrie aIlvwable est +t.l he fdl}oian~vestix~ei~'ill `}t :€zaitte t pp]iic~
Investment Type
Maximum, .
xlhx; ~ 4mf`
ualit.
Maturity
portfoli r
Regis remo fst
U5 Treasury Obltgativns
~°-'eats _
I1'.on
N/, j4..,
US Agency Obligations
~ years
None-
4f cti
Bankefs acceptances
0 day,
Commercial Paper. g A
200 clays,
5,'~~
See t?c~kaGV,'(a~~
Medium te-nu notes
years
C,ollatsralizea D s
5 yearS
15 r/4
~J'ee, tie IjpN , }E
CA LA-IF
:N& R
n
Money Market Funds
I/ A
I5~ 1
Seer bvzow, J,
(2) Limited to US Agency Obli,,fitions
value, iricludiribol~libatio~~s issttedby the Fc~l'eral,Flt~rn~;~f~~a~3'aP~t~.~~~3.E~ .tliet~~c~ezal,
National Mo-rtgage Asso iat oii (FNI 'M the,iF~cl~er: I. i~xlxe~l }in, Icrjttga r ;ss ~x atio
(Freddie Mac), the Federal Fa zip Credit €~ati f ~ ►~~~t c+Ft~ cral~~a~ci~. an . z l ~ t e,~
Y
Teiirtessee Valley Authority (TVA)
(3) Cortuxaerciai Vaper n- ust li-e "prin-ie" quahty of; l c ~Z 4'_gAeq ralTo-rrg as;. r~?{4 1~ ~ 1 ~~yt y s.or,.
S & P and is limited to corporations «-itli as et ,e~£~a S~Easx ~f : LUI 'ot~~ flbrz : as.:
represealt more Ilum tO o c?t ilic outsta~~~lina ~t~;ii~tner~ial,pappr,~f.;'fZ4
(4) Must hu collatcralized per the requirements
jru,titution inust meet the Vorihanc hltie4hreej:stftr!Mtif%
gisrcred
(5) Money market fun3 s must here
1940, must havc assets under management
investznerit advisor registeredwith the SEC
l'~~z'e tt pt:lresKa:ic islxat'ou1i~ xtli~nc~l~lcs ~fi7 rah
5,yceaz,s e; pujicii ;e snlinaging irianty mit ut lr~uft l' f~tnds'j.1~zCltl~a tat aitiet3 h1z `lia f t
ranking provided by not less than two n ttior~ll ~}re~c~gni~~cl:stati`sti'ea[.ralin~~~t'Dini~at c~tis!
Q
d el
II
%
I
~'7 w
2. Prohibited Investments,`Prohibited inve5tjnents arNi~~li~,' Yn~ estiilentsl riot: ~ifie~llj; iEl~ntif}tt]
above, iucluding but not limited to: m
.
Reporting
5
1. Methods. Tlxe FY own Ireasurer shall prepare I ino64MV iu7 xsfnlenf, report, tich~ojnhgr A~
rnaytagement _summary that provides an, anal sis 4-~lie,status~ of, th~~u~ren~,i~i~ est:uteAf
portfolio. This management summary cvi}l be pt: epl ;et1, n 1 giy'dxutevtbA ' l.al108,w th ] T oiv fog
ascertain whether -hivestment activities during theZoportHi peici A.hawconfor."it to; thec
inv estruent policy. The report should be submitted fo] t1m Tkvi~ .u Clerl1 x, i'tli'~n; 45; dad si'ufter, thei
end of each month for inclusion as an al enrla itert~ t t~thei"ne~t.scl~er ed<~ tt ~Ol~(t~~Ftia~et%ngi~
The report slialf includt the followingT
® DeiaAW,listing 41adividuaL securitiesd elk ,at,;tli ~ en's # fhb r pc~Y tiu, peri cl'
incTudil g, liurehase.date, bl; ur fi~ ffate~ ahd.yftW(kmatiuri y~,
u Renfized t nnreafzzed gains oij d,S tre ~I ` 4n a lit ti' 'r ep~re iatjrrii
iby ;listing the amortized cost and maAet; vaine±ooek s.ecuriij
average weighted yield to maturity", offhetpodWU)i m
W, eighted.Average 'A aturity' of therpo e► la.atxd.pvrcenfag~ breal db.wa,);rof'ttW- t~rhr
pord'o io by maturity (+e.g. .Less dttrtE.l~earr,3.-=~ty~~r~i 3~- ~ ~ears~
a SdWWAq of iutereSt iueo e ror tha-MOUth'ati-dSm . yeartO dat'e'.,
stateinent of compliance with thc~fxr~;esfnteuti;~olicv,:.e
c~ ~ statement regsti~cling tl~e acle~i~at?~'ril{c~~kr fta~;s;-for' flYeC~ext~lsi'r'~Jt~bntl~ss.
.
2. 'Marlong to Market. W5en "jnarking the porlfibl o: try mac et;e ~.et, cast ulatulg;the~nta et;
value of the portfolio), the Treasurer shall obtak'inde~e~ittent'vati~atio~,of'tlie'i~~t~'ctlio'~1; onxi
the Town's safekeeping or custody°,service. iYestinent:4.izY, slia`i~~l3e, va~uerl,as~siiown~r~r~,
Derivatives of the above instrudnenist kepurehaseagreernents}
Reverse repurchase agreements,hre,,,,,ptfabforc-ertifibies bfAe(.(jsiY
Inyerse flaaters ,
`Range notes
Interest only strips
,Any security which could vo nlt is zeroiinf reskfacscrt~a ]f. e}tl: tol laturi
R ~
- the month-ejtd statements received from tile Cal'rOru'
• reliable market value data, investments in Certirl,oatestlof
provided that the fair market value of the Certigcatt-5 a~'.I~elwsit; ai~~ndt' szrnirc:~t~lyi' aWc'ted,
b the impairment of the credit standing of the Zssuer'..
VIII. Policy- Cons Werations a
® . Exemption. Any Investmeut currently held that ~dQesl~ol,; nee€-~lierwitleline~ OVtMSI potii_Y'
shall be exempted f'runa the requirements of ibiSi polf , M; ilia SUC-li.
monies shall be re nvrested only, as }provided by tlustpofici -i;
I. Adoption. The. Tmvn"s investment policy shalt lm opts , - wso u owm 'the `I; g -
- Council at a public meeting.
I- Amendnnents. This policy shall be Teviewed oo[:au' annuafhas3s., And,+clialigeslnnx wl~e:~ -
j approved by the Tovtiii -easurer and the'Town C.o.1 cil,
-
1