2007 09 12 IAB�E
AGENDA
INVESTMENT ADVISORY BOARD
Finance Conference Room
78-495 Calle Tampico- La Quinta, CA 92253
September 12, 2007 - 4:30 P.M.
I CALL TO ORDER
a. Pledge of Allegiance
b. Roll Call
11 PUBLIC COMMENT- (This is the time set aside for public comment on any matter not scheduled on the agenda.)
III CONFIRMATION OF AGENDA
IV CONSENT CALENDAR
Approval of Minutes of Meeting on August 15, 2007 Special Meeting for the
Investment Advisory Board
V BUSINESS SESSION
A. Transmittal of Treasury Report for July, 2007
B. Distribution of RFP for Banking Services
C. October Meeting
VI CORRESPONDENCE AND WRITTEN MATERIAL
A. Investment of City Moneys and Deposit of Securities
B. Month End Cash Report - August 2007
C. Pooled Money Investment Board Reports - June 2007
VII BOARD MEMBER ITEMS
Vill ADJOURNMENT
P.O. Box 1504 • LA QIl)NF�, CALIiORNl1 92247-1504
78-495 CALLS, TAMPICO • LA QUIN)A, CALIFORNIA 92253 i
(760) 777-7000 -FAX (760) 777-7101 C�
INVESTMENT ADVISORY BOARD Business Session: A
Meeting Date: September 12, 2007
ITEM TITLE:
Transmittal of Treasury Report
for July 2007
BACKGROUND:
Attached please find the Treasury Report for July 2007.
RECOMMENDATION:
Review, Receive and File the Treasury Report for July 2007.
John M. Falconer, Finance Director
MEMORANDUM
TO La Quinta City Council
FROM John M Falconer, Finance Director7Treasurer
SUBJECT Treasurers Report for July 31, 2007
DATE August 31, 2007
Attached is the Treasurer's Report for the month ending July 31, 2007 The report is submitted to
the City Council each month after a reconciliation of accounts is accomplished by the Finance Department.
The following table summarizes the changes in investment types for the month:
ent
BeginningPurchased
Notes
Sold/Matured
Other
EndingChange
3)
$ (2,339,673)
$ 831,018
(1)
$ (1,508,655)
$ 831,018
2
I)
51,526,296
95,627,476
3,826,789
(6,900,000)
(0)
48,453,085
(,073,211)
3suries
't Sponsored Enterprises (2)
[ST
29,618,152
37,500,000
(31,000,000)
(7,500,000)
378,141
(258,387)
65,005,617
59,359,765
(30,621,859)
29,741,613
rcial Paper(2)
te Notes
28,842,689
26,000,000
(28,900,000)
(107,911)
25,834,778
(3,007,911)
Funds
2,943,260
6,683,837
1
3718
2 946978
3 718
I
$ 212,902,037
1 $ 68,157,807
940,329
$ 75,240,329
$ 15,561
5,743,508
$ 205,835,076
940,329
$ 7,066,961
I certify that this report accurately reflects all pooled investments and is in compliance with the California
Government Code, and is in conformity with the City Investment Policy
As Treasurer of the City of La Quints, I hereby certify that sufficient investment liquidity and anticipated
revenues are available to meet the pools expenditure requirements for the next six months. The City of
La Quinta used the Bureau of the Public Debt, U S Bank Monthly Statement and the Bank of New York
Monthly Custodian Report to determine the fair market value of investments at month end.
A4/"t 4—-Xt� � o7
John M Falconer Finance Director/Treasurer Date
Footnote
(1) The amount reported represents the net increase (decrease) of deposits and withdrawals from
the previous month.
(2) The amount reported in the other column represents the amortization of premium/discount for the
month on US Treasury, Commercial Paper and Agency investments.
(3) The cash account may reflect a negative balance. This negative balance will be offset with transfers from other investments
before warrants are presented for payment by the payee at the bank
F,
Treasurer's Commentary
For the Month of July
Cash Balances - The portfolio size decreased by $7.1 million. The major reasons for the
decrease was $940,000 in mutual funds used toward housing activities, $1.8 annual warrant
to Burrtec Waste for trash and disposal services, $1.5 million warrant for Sheriff services, and
a $1.3 million warrant to Davis Reed for the Vista Dunes Courtyard Homes project.
Investment Activity - Approximately 30% of the Investment Portfolio was reinvested during
the month with the average maturity increasing to 129 days, which is the highest since
December 2004. As has been discussed, the Treasurer has increased the maturities based
upon the additional GSE limits which increased from $10 to $20 million and the Treasurer's
belief that near term interest rates would decline (sub -prime Housing impacts). With the
increased limits granted by the City Council in GSE's, the Treasurer is not investing in US
Treasuries, except for bond proceeds. $31 million in US Treasuries which would have been
previously reinvested in US Treasuries were invested in higher yielding GSE's during the
month under the new Investment Policy. The sweep account earned $ 9,525 and the bank
fees for the month were $1,515 which resulted in a net increase of $ 8,010 in real savings.
Portfolio Performance - The overall portfolio performance increased two basis points from the
prior month and ended at 5.12% for the month. The portfolio yield was thirty-two (32) basis
points over the benchmark which had decreased by one (1) basis point from June. With the
average maturity of 129 days, the portfolio yield should remain at these levels. The Treasurer
has more of a barbell maturity schedule with the longer term investments helping to keep
yields higher as interest rates may be falling. At this time last year, the portfolio was yielding
4.96% and the benchmark was at 5.06% for a 16 point difference so we have made
progress in meeting our benchmark. In the short term, the Treasurer has been investing more
in LAIF because its rate declines slower in a declining rate environment and in high quality
Commercial Paper. The Treasurer has not been investing in Treasury securities because of
their low yield, except for bond proceeds to ensure that the funds are available for capital
projects, e.g. SilverRock and Vista Dunes Courtyard Homes and the CVHC project at 48' and
Adams.
Future Thoughts
The Treasurer will continue to invest in short term maturities to take advantage of the yield
curve - Commercial Paper with 30 to 90 day maturities and Bond proceeds will be laddered in
three- and six-month Treasury bills as they mature. Maturing GSE's will be rolled over to the
highest yield on curve taking into consideration cash flow needs.
3
E
E
E
EE
c
G
d
C
0
C
O
d
O
d
d
O
d
d
d
d
C
y
Z
Z
O
2
Z
Z
Z
Z
Z
Z
W
Q 12
y
pr = N
a
SEn
m
16
v
Q
N U
U
4
1°
y
ao�
9
m
d
d >
c_
d
m �
E
w
a
y
v
o
y
d
w
y
m
d
y
�
N
�
d
o a
° E E EE
E
� n
n❑
n— O
O
O
E d
E
f N N N N
O
C
r
FI
O
O
p
fa J
x 'E
w
ci
0
0
z
N `d
W
o
S
o
o'
Ooo
O 000
N
N
O
y°
O
O
rp
m
q
O 000
P
m
O
O
N N N
N
N
J�
m
r0
O
O O O O
p
Z
N
r O �•
p
r 0 r r
O
O
y
O
O
O O
O
O
00
p
LL
2
n
r
J
O
N
O
H N
P
O N
N
1p
Z
d
0
0 000
0000000
\
\
m
o
m
o
0 oop
H000000o
inoo
n
n
a
ii�
m
rh
cE
000000
�
o
o0000o
y000000o
Noo
m
N
N
0
11
x
J
-y ZZZ2Z222Z2
E y C C C s C C C yN
C
m EmE�0m0mm
O` N -OOd
Y jQ � N N h f YNNI uONi ' uNNi
c�gn4�n4 nn.-'nry
O �
N omo^nm
="'smm 000000
gyQQQP
as
NhNN
E mTWQQ
o�oJ
gl000soo
0000avnCCC
O O O O O O O
O
S-08
...
O O O S
O O
888 8o�
0
toN0�<'5oa
LL�
pZ vp`Z $ZZ2ZZZ
OUryS
f m BEoRm as
OT
_e d'3'yeCpe e
EV
Y�4 TEN >�NnNnNn
N r`
c 0
- -«f0
E�O1 ��n c���NN�vnN
?qN ?qh NSSOO�Q
« N l C ^ ft
;'"slog C
E
_ E
c o
Ea. Eve E^'ido3o Eis `m
�Ery _Ee _Byaq ,NC sags
y vi N fVnont�N r"�$ m mom od
jLL
Q N
So mo OSOUSS 96
Jo O
£?SocES o
O 0' M nj U1 yN N p
yN L C
V q N d
Llee
¢ `o s
N N
J " C
AR
om a o a o� 44 o mNN o
N too mN10CI t7
rvTN _ 1`I` Np'ryNO�ryry
°1 '�mv
omdmn '��mm �jN Z`-'a'rvarvvvN �-Zz
w ww w
V�u-S 1�m4mON mfN NON NN �N00mOm
d N N N O
w
- mnv mm
¢C ��N Ne el� ii« u`m uN UN
a� ¢=
m w
m 0 Onl S m N m W S r rnp O O m m d N O N O O m O N N
m mmN�mmNn mm $ mm v NmN�mm� non
m' i "oiNnrim v mai " ma mmmm
c' m'm $"�mmw$^< N=m`8i Amyy Nw se$e
Q�NOi �-d f-TOibN Ojpi pi E�Nry O�dVdN4CN m00
¢ ¢E E n .-
¢ ¢
N H
ryyryp^po�h��ryryo �. a d'e e
N VN
llRm mN^OOINO K N l0 O¢N N CAS LLNNN
O 4 Nrl NnNNN O O fl ('S N�fj wNIN - wN
q----------
ry•-
lly V V U
�Y�0114�m9lO Qli -�� C" V
t 10 n -_ "�DLLLL dIlLLLLLL a NF j � f: J iY ESt�QQ -d.
N
(9
N h N H N
N d
e ooaaoo�aam a a o�aoaov � €
W n o ....... E EE E WES o_ 0000a z�v0! Ric of �f EnEEg %ro
a a
E > > > > > > o c 14 c
v m o J E c 3 U
a ZZZZ2ZZZZZU -a m
o v v o
sz m$?'3 voo� U8ZZ2ZZ2E yEU�m UU
o soggy o oo�?
sss ccc"J ci"o "tic= E"`0605`o Sa` ¢zgg 95
U c s J o 0
� m"gym"m"m"gym"m"m"m"�� m""� aUm""r8 = ��
J
5
XXX
aoeoo
_m
iJSooSS
N N d
N N
mm
tid®�I
1.1
D o m
0 0 0 0 0 0 0 0
'
a o 0 0 o 0 0 0 0 0 0 0
0 0 0 0 0 0
n n m
o m
y Z N Yl cJ Yl N N O O O h C1
- m O O
a
pOj
d NON`l.`
2
N0
O
N N YI N h N N N
i�
O
N N N N N N N N N h YI N N N t[I
n n n n n n n
,'n
\
n n n n
n �^\ \ N n N N N
n nnnn nn n nnn
g
O O O O O O O O O O O O 0 N_ O O
OO O o 0 0 OO p O 0 0
O
- B O
O O - O O O O O O O O CN1
lNO
N
C
p
m O O O O N O N O O O O n O
C'1m �J
n
6
O O O O_
O
OOOOOONOOOOHOOOOOOC
N NNth NN ONE
L
yH
LL LL LL LL d LL o O p OZ3>
A A _
O O
�Tm
� AV](nNV1 VlR4LL2 �
6MUN
s3
NNN N ww—a°aa°a°
F
N N:�C7UU(7B 49B9 7
s E E EE EE EE E
Fd0Eaia0�m�a��mFmmAmLU
h ti w m m
x E E E E E E a B n 9
E E E E
m U U U U U U @
t o o o o o o o o o o
N
N
O
A
G
V
m
m
c
rn
d
m
Z m
A
"
m m tmmi
u
rn
q
i
U U
�
m u 9� u
ymj
mwN`"E`m
Uwc�Eam
c
E
c_ uo om@o
a�¢yy
t
E o a m Q IL LLQ_ LL
m
ry E
o'E o @ F U K K K q_
m E
5 5 m r
c
_UE�-�UQUlL4
i LL
LLLL�Q�J E
O
E
>
z
v` u U
Om m? m m E OLL �NNNtCL QY. IL aIy
0» z G i x a x LL LL 7 J 7 J J J
AO
C ;
S ac
p ? N o
a- D m
�rv�mory
a
m Na�
e
d
Egovrc�Emrc�
E
E8t_
` yrcu'n` o�Su
LLz-
_
F
^�mrvm�nn
^
wwwa
$42$m.$n4e
F
N�Nrvw
Frvbw�m
imm"�
"'$
- 112
om
n
R
=avi
¢
a^
w w
¢_ -w
�8
¢0
moaammm
ry
mS
Emil
1
a
F
F w
^a
F`�cmi�m
F^'von_
d"s.mns�e��
�aa
2
'm $r namm`n�m
WHOM!
w
ry
.2� A Oe
m�
mrvm� mPm
v
E�UWSM"_no
3 a$mmSm
gNmg
xa m_m oN
1
w11d
wholw
ow -
s°s���mm�
gmou�$mrv�'ry
`am mn o.
gn
^
`am $mmm
n
v
vs
Ewvmi_mm
Enno�n
2 w
Z
Z'
w
nn
�iN �uni_ryry�u
^nee gn
1111 ea
zan<a
O
O z R wAB8m^v^i
w w
O" w
O`nm�ry
�mm��o
v�nem
E
Ed �'em3�m
Enmmo
EmNrve �$
�mNy$
¢
wrva
1.
MOIR -
w
482
m-ym
Wit
r mly"gym
.lU'r
ri�m»n`u
E]
CINgU MUWIa
Cky,R kBwgAUWWen Suryxean
CkY.1. W07 Rrt PBnw.YvM Fwnory PNMMy
JIF/31, A0]
BWax w AMdlM Fu 105.835.076
inn Petly uN Fw 11,W3)
Im Nw.3u Fulls (2,841,]BB)
Bal.—q SuoAm Fu 3202,889,Sb
BanXM.dM
NaMs-AvWatll3u
T
Brck
Wab Fago-Dmwd
NO
CM1e I]p
S (1, 11,058)NO
S p
2T0,10BNO
=.s
WA
1,=
WebF -C cl
Yw
CM1etldn
$31295S
1SOB.
U S Tewy
CUMMaI-AwMa[tlXY
BwCku
IuuerRYCa
NnaW)eO
Vtlw
Surpw
Yw
M
Surpl.
Vw
Bankd Vwk-Bamwtl
Yw
US, THasu SA
BB6B8A
9969820
909920
Trial-UB Trs
9939920
9939920
9.C89 B20
Us Gvrtmmvk 6pom Entagbw
Nnptlaed
BulYu
SuMu
-Avila
..1
Vtlu
Vw
Mi
Yw
By Uri YOR-DH
Y.
FaWdW Mac
2,e95,184
2,895,104
3,893,184
Bankol New Yok-OsmaM
Y.
FMB
1,we,B95
1.OSSe"
two.695
BeN[d New Tak-Odnvtl
Y.
FFCB
4.9681M
4,968960
4,WO,950
eakd New Tak-D "
Y.
'WOW Mac
4.M,M
4,3%880
4.358,00
BOK.q Nax Ywk-Danartl
Yw
FMB
7,w6523
7.993523
],w5,523
W.WNew Yp -O Aw
Y.
FFCB
11,S42m
9,84;M
9.892,9w
'Okw wTmk-DNO"
Yu
FMd. Mec
2433671
203,571
3433571
T41-UB EaaNu
341947w
34491799
34.494)99
MelMmTlMe
Boot
Budu
Sv us
CUYcdw-Zfi
I ,T
Val.
Yw
ME
Yea
BaW.d Naw Tak-DemaM
Yw
GemN Ekcln0G
28189)B
2M978
29489)8
Taal-MC6Om iew Pa
2.946W9
1 1 2,945,97S
2,W69]B
PM1mO uOO.WP
CUMa w-AvallatO
8u M
--
I Ol a
Boot
Value
S.M.
Y.
At
Surqua
Vn
BSIY1q New Yak-BemaM
Yw
IMa.M lL.M
4193;914
4.W2.114
4,982,914
B OtWwYak-N...
Yw
30en Deere
2,w2,BT1
2,Z;
2992.812
SaMWNew Tak-O "
Y.
NOW LYM
4.562.950
4.w2.950
4,WS50
Barkd New Yak -Gm»]
Ltlkoup Falmp
,91Yn
2,9954520
244..ww98022,981455200
NwVwtl
Yw
A. n
4M, SO
4,W290
Cao CeW
4,%S602..142
TtlBBMYer4- PqOMI pCanme-mpeamlPv
3459Q
8N ]
3694)0
LodlgMryNrveMmeNFUM
SurpM
SuNu
Nuw-Avail
T a
Sxk
Yw
Tes
WF-Gry-CanaE
Vw
&Itle Pad
30,40I,.3
3'1.1..
(4,3..>18)
'340z!B45
MF-MA-Se—Ou
Yw
Sb1e POOl
100155Y1
; 5532
100/5523
TOW -Sue Pae
18,a53,005
48153.085
1,3S5,]le
4AO6),35]
81NF1w
No
bLglw
Ne
NI FUM
Adual%
8uppn
Yw
81Ai1,058)
S 4,655,928
f 2.BN,78B
n9,tw
(00,100)
-
000
tOOD
1539B50
$ 438571S
3 284576B
L.e356%
0.01]B%
wqM
NO
Adl
SNP.
Na
NI FrFtls
AWwI%
SUFM
Yw
19 C610%
193558%
6xqu
Na
NI
9u8pg
Na
NlFutls
NNaI%
Sudu
Yw
-
16204%
1 b8M%
Surplus
No
PO
6uNw
Na
NIFWs
Ac4ul%
-
-
u 2151%
14.].
Swpw
No
SuplNO u
MFUMs
Ad.l%
a=
Tas
-
ze nn%
z4 ]393%
TqY CRY 1.bwnb 121,e00,Y0 1216w,580 1 (4Ae5]10) I I.313,e42 0].2484% OSFWO%
TdN CNY Case l lnvsse b 120,183,00.1
Po W-u ImYN.ft
anomue
suq.
Surplw
Cue1WM-AvaAaNM
. ks
lee.rrt
Val.
Yes
Ad
vas
htl2R�—A USBed W
Yee
USTNOOA"B
19.)N.579
,],1
13,]N.,5]9
137384579
Bs*GP
Tw
»BM
VSury
1w0
1BtMMAUS
,w
1,9],100
WWN8l.By SIP
Y.
USTry8
L
59.443
EN543
5.955A43
AIMaMy
FF
P21pN4
Tn
USTBp
11.765.3M
11.765.3R
11,M.3RS
YWbMrcvee
Y.
210195
YMISS
21589195
Tcbl-US Tn
55035697
55035897
55,035697
IVdotlp-MNuaIFUMs
T-Avghbl
Mary Mah
MIbaI FUM
Bzk
V.I.
Sum
Yn
IA
6urplu
Yn
CAICC .usBu*-WOJM
YES
IYMMIkan
307
N]
307
CM NAOUSBenk-NMSvc
YES
ld ImHlWkn
IMMAUS BankAM&
YES
1MNn O
IMMAUSB -CIP
YES
1%AwMWw
1995BBAU 68vnX-6pWIFW
YES
1NNnNWHn
20N F%NM-18w US Bali-EwOw
YE3
1Myunw®I
19SOMAUSSeM-CIP
YES
1M ANO0OOn
19w MAUS8 -WM
YES
1b Anwdwn
1w8RMUSBank-SpeoUFUM
YES
1M Amerkw
19PoRMV.SEUM-GIP
YES
11 Nnetval
A MAUS. BOM-w Ss
YES
1M Nn.0
=I MAUS Bald.-CIP
YES
1tl Nnwlun
2 MAUBSaOk-DM fire
YES
1M Mbrlun
21 MAUS,Bank-CIP
YES
W..—
1,N4,769
"ImM.769
1.384.769
20WT.WWMAUS Bank-DS
YES
1Y AOOr
2009TaNvWRDAV.SBSM l
YES
1M NneMsn
2 TuaLM MAU S SaOkM 1p
YES
1qM On
-
-
2WdFMAOO,W nk-CIP
YES
WAONl
4,376.432
4,3I8,4M
a,370.4n
WMRn NMUSBwk-COI
YES
14 N. n
BUIkdM-Mdual F.
5143.Sw
5743,508
5,)43.509
4m9 vs9 4,NS,ne 2845]ae ae.n4ex 6s.na2x
S,Mus
NO
Adi
6uplu
Na
AxFWa
PAUM%
tumN.
Yea
304115%
30w73%
S,Op.
kp
OG
Suplw
NO
NI FurEs
MU01%
S.Fpe
Yw
3nnx
32zux
trial Flwd Oyentlnvx6nanb W,TIB%05 SO T/9.A3 OO,T19,205� 33.3333% N.1313%
Sand TdM 1800M.110 18;6100e0 Il.fe$]tel 1Te f34 ]02j 16N 9S0 I,NS.TN 2,N5,]6e 100 t00.OW0%
E
�
\
/
\CQ
\
}
}
:§!#!
\\REIk
\
\0-
\\\
°\)Id
\
)(\\\\
\
\
(
|
\\\\\}\{(
ww
10
Cyf
N
N
N
C y
N N
E E
E E
E E
E E
E E
E E
E
mE
E&E
@mE
Em
EmE
@mE
NE,E
�QE
VQ
E
"QE
UQE
UQE
�QE
"QE
m
D. LL at
O. LL a K_
LL Q LL'
U. LL a K
R LL d K
16
O. LL a K_
4. LL Q K
N_N
O O O= T
O O O- N
O O O- T
O O O= j
y_
0 0 0 T
N
0 0 6- N
W N
O O O- j
m@
CO
O] @ m
ao?a
Ol N
�mw =v
N m@
��� %a
f0 @
...
�'
a
c�cN—
cccjo
EE-EEE
ccc�o
cN�
�€
E E E @
EEE'"�
EEE �'
@ `
EEc
@ j
E - @
@ @ @ d
@ @ N
WOW
q @
IOW
@ @ @
WWWFA
@ M
WWWFq
ryry ryry
WWW��
J
WWW�N
WWW��
Q N
d d N L m
yW
m y
N d N L m
t m
N N y 5
0 m N L m
d N d L m
JE
NNNC0N
�@
N
Mi
.S�.y N0Cm
N N N
WK
N
R'
-12
O OM
@ NO IY
7 J� icy
NNNO�
J � LL
RNNOOOK
J� qIL
NRNO
C C C� qLL
NNW �W
C E C�
NNNOOi
J g NLL
C C
NN @K
7�
C
C @ a
� CC G C N Q
C C C @
@
dLL
Q
C K m
C C dLL
QQQVIQa11
UZi
QQQNQJ
QQQNQJ
Q`Q`¢i4a'3
a`Q`a`wQ'S
QQQNQJ
QQQNQa
m
_T
7
M
�
T1N
I
�C
y
41
a
E
wg
P
m
c'
6
•
CT
L
C
N
d
g
�
,C
a
LL
5
Q
�
E
m
w
m
c
U
N
_
W
C
�W
y
V
f0
L.
d L
°q
J C
c
LL
O C
pp
5
V
t
w e
C) ,0 0
o
0
0 a o
0
0 0 00
0 0
0 0
0 0
> o
` M
o
N
O o
.- O
0 o C 0
O CO m F,
0 0
to
In
vi
ui L6
v 4 a
v v
1iIL
1
•
I
�I
11
i
�1
'
I
I
I
•
I
i
i
I I
I
I i
I I
I
I
1
i
i
i
i
i
I
I
1
1 •
I
I
i
�I
i
I I
1 �
12,
INVESTMENT ADVISORY BOARD MEETING Business Session: B
Meeting Date: September 12, 2007
ITEM TITLE
Distribution of RFP for Banking Services
BACKGROUND:
Attached please find a banking service RFP that has been utilized in the past and has been
updated.
The four year banking services contract with Wells Fargo Bank expires on December 31,
2007. Wells Fargo has provided exceptional customer service to the City through its
Government Services Groups in San Francisco and Los Angeles and through its two La
Quints branch locations. In addition, during the current contract period Wells Fargo has
assisted the City in implementing positive pay to reduce instances of check fraud, full
account bank reconciliation services with our accounting software to reduce staff time in
the monthly reconciliation process, Check 21 deposit services to reduce deposit float
times and save costs on armored car services, and setting up a Zero Balancing Account
through Landmark Golf for the SilverRock resort operations to manage the daily Golf
Course bank deposits.
Based upon the IAB comments at the last meeting, Staff has contacted our Wells Fargo
Government Services Vice President Mark Hewlett, who has stated that the bank is willing
to maintain the current bank costs for the next four years.
RECOMMENDATION:
Recommend to the City Council the negotiation of a four year banking contract with Wells
Fargo Bank.
3John M. Falconer, Finance Director
October 2, 2007
REQUEST FOR PROPOSAL FOR BANKING SERVICES
The City of La Quinta is seeking proposals for Banking Services for its bank accounts
and the related cash management services. The enclosed Request for Proposal (RFP)
outlines the scope of the engagement, information required, evaluation criteria, and
other relevant information.
If your Bank would like to be considered as a potential provider of Banking Services,
please respond by no later than 12:00 p.m. (Noon) on October 31, 2007. Seven (7)
copies of the proposal must be submitted. Any proposals received after the above
date and time may be disqualified. All proposals must be sealed, marked "Banking
Services Proposal," and submitted to the City at the following address:
City of La Quinta, California
78-495 Calle Tampico
P. O. Box 1504
La Quinta, CA 92247
Attention: John Falconer, Treasurer
Phone: 760 777-7150
Fax: 760 777-7105
The Bank will be notified if they are required to meet with the City Treasurer and the
Investment Advisory Board (IAB►, a City Council appointed Board, to answer questions
pertaining for the RFP.
Questions relating to the RFP may be submitted in writing only (mailed or faxed to the
attention of the Treasurer by 12:00 p.m. (Noon) before October 24, 2007.
Sincerely,
John M. Falconer
Treasurer
1
Table of Contents
Description
City of La Quinta
Banking Services RFP
Page No.
INTRODUCTION.................................................................
3
RFP AND PROPOSAL SCHEDULE ......................................
4
PROPOSAL PROCEDURES ...............................................
4
SELECTION CRITERIA ...............................................
4
BANKING SERVICES PROPOSAL CONTENT AND FORMAT
5
Tab A - Table of Contents
6
Tab B - Bank Profile
6
Tab C - References
6
Tab D - Demand Deposit Accounts
6
Tab E - Collateral ization of Deposit
7
Tab F - Bank Compensation
7
Tab G - Deposit Activity
7
Tab H - Wire Transfers
8
Tab I - Account Reconcilement
8
Tab J - State Activity
9
Tab K - Overnight Sweep
9
Tab L - Payroll Tax Processing
10
Tab M - Direct Deposit of Payroll
10
Tab N - Credit Cards
10
Tab 0 - Balance Reporting
11
Tab P - Implementation Plan and Costs
11
Tab Q - Service enhancements
12
Exhibits to Attach:
Tab S - Banking Services Bid Form 13
Tab T - Standard Bank Fee Schedule for Government/Corporate Clients 13
Tab U - Sample Account Analysis Statement and users Guide 13
Tab V - Relevant Cash Management Agreements 13
Tab W - Bank Credit Ratings - Most Current Annual Report, Call Report 13
INTRODUCTION
2
City of La Quinta
Banking Services RFP
The City of La Quinta (City) is located in Riverside County with a population of
approximately 43,000 residents. It was incorporated as a general law city under the
provisions of the Government Code of the State of California and it became a Charter
City in November 1996. The City operates under the Council -Manager form of city
government. The City Currently has approximately 93 full-time and part-time
employees.
The City's primary banking relationship currently resides with Wells Fargo Bank and
consists of general depository and cash management services. The City had
previously banked with First Interstate Bank and converted to Wells Fargo through the
acquisition of First Interstate Bank in 1996. The City utilizes PC Internet software for
various on-line banking transactions. The City is in the process of reviewing its cash
management and treasury operations and has determined that it is appropriate at this
time to formally bid out its banking arrangements and seek proposals for various
financial services based upon a mandatory 4 year bidding requirement. The City
wishes to create efficiencies, make improvements where possible, and take advantage
of new, applicable technologies. This RFP does not cover any other services, such as
custody, investments, or bond trustee services.
The intent of this RFP is to identify a financially secure federal or state chartered
banking institution that can offer the highest quality of service at the lowest overall
cost to the City of La Quinta with the establishment of a four (4) year contract
estimated to commence January 1, 2008. The City requires fixed pricing for the four
years of the contract.
The City will make every effort to administer the proposal process in accordance with
the terms and dates outlined in this RFP; however, the City reserves the right to
modify the activities, timeline, or any other aspect of the process at any time and as
deemed necessary by City staff. By requesting proposals, the City is in no way
obligated to award a contract or pay the expenses of proposing banks in connection
with the preparation or submission of a proposal. The awarding of a contract shall be
contingent on the availability of funds and the requisite staff and Council approvals.
The decision to award any contract to a particular financial institution will be based on
many factors to include, but not limited to, products available, service levels, cost to
the City, financial strength of bank, etc. No single factor will determine the final
award decision.
City of La Quinta
Banking Services RFP
RFP AND PROPOSAL SCHEDULE
The City intends to follow the schedule described below during the procurement
process for Banking Services, but reserves the right to alter the schedule at any time.
ACTIVITY
Date of RFP
Release of RFP
Questions Due from Bank
Proposal Due Date
Bank Interviews
Finalist Notified
Commencement of Contract
The City maintains the following bank accounts:
General Account
La Quinta Housing Account
SilverRock ZBA Account
Petty Cash Account
PROPOSAL PROCEDURES
DATE
October 2, 2007
October 3, 2007
October 24, 2007
October 31, 2007
November 14, 2007
November 27, 2007
January 2, 2008
Proposal Format - A proposing bank must follow the instructions for preparing the
proposal in the prescribed format. Section tabs (A through W) must be utilized in the
proposal following the same order of the RFP. Each question should be repeated with
the bank's response following. Any extraneous information or marketing materials
should not be included.
No Proposal - If a service requirement cannot be met by a proposer, then "No
Proposal" should be indicated on the Bid Form and in the relevant section of the
proposal. An alternative equivalent service may be offered.
Right to Reject Proposals - The City reserves the right to reject any and all proposals,
to waive any non -material irregularities or informalities in any proposal, and to accept
or reject any item or combination of items.
Execution of Agreement - If a banking institution is not able to execute an agreement
within thirty (30) days after being notified of selection, the City reserves the right to
select the next most qualified proposing bank or call for new proposals, whichever the
C!
City of La Quinta
Banking Services RFP
City deems most appropriate.
Incorporation of RFP / Proposal - The RFP and the bank's response, including all
promises, warranties, commitments, and representations made in the successful
proposal, will become binding contractual obligations and will be incorporated by
reference in any agreement between the City and the bank.
Authorized Signatories - Bank personnel signing the cover letter of the proposal or any
other related forms submitted must be authorized signers with the requisite authority
to represent their firm and to enter into binding contracts with clients.
Validity of Proposals - Proposed services and related pricing and warranties contained
in the proposal must be valid for a period of 120 days after the submission of the
proposal.
P�M *& trel `[•i:ll10 4;1L
The City will utilize the selection criteria listed below to evaluate proposals and to
recommend the best -suited provider of banking services to City Staff and the City
Council:
• Location and convenience of bank offices.
• Adherence to RFP instructions and content requirements.
e Ability to meet required service levels.
Ability to offer product and service enhancements.
• Credentials and strength of relationship management team.
• Overall lowest cost to the City and ability to guarantee pricing for contract
period.
e Financial strength of Bank and ability to collateralize deposits.
• Quality of references and experience with public agency clients.
• Other factors in the City's best interest that are not delineated above.
BANKING SERVICES PROPOSAL CONTENT AND FORMAT
In order for the City to be able to adequately compare and evaluate proposals, all
proposals must be submitted in accordance with the format detailed below.
Cover Letter. (One page maximum) The letter should designate the proposing Bank, the
business address of where the relationship will be housed, and be signed by authorized
Bank officers. The letter should address the bank's willingness and commitment to
provide the proposed services to the City and why the bank believes it should be
5
City of La Quinta
Banking Services RFP
selected. No pricing information should be included in this section.
Tab A - Table of Contents: (One page maximum.) Table of Contents should follow the
RFP format.
Tab B - Bank Profile: (Two page maximum.) Please respond to the following sections:
Bank Overview - General overview of bank, identification of local branches or
offices, and customer service philosophy.
Experience - Bank's direct experience in servicing public sector clients. Please
include: the number of public agency clients, the dollar amount of public funds
on deposit, the types of services offered, and bank's knowledge of and
adherence to the California Government Code.
Relationship Management - Identify bank officers responsible for the City's
accounts, what each person's role and responsibilities will be, and the relevant
credentials and experience of each person on the relationship management
team.
Tab C - References: (Two pages maximum.) Please provide five (5) references that are
of similar size and cope of service utilization as the City. Select both long-standing
and recent customers, preferable public agencies.
Contact Name:
Title:
Name of Customer:
Address:
Telephone Number:
Fax Number:
# of Yrs. As Customer:
Services Utilized:
Tab D - Demand Deposit Accounts: (One page maximum.) The City currently uses one
demand deposit account, the General Account, for all deposit, check writing, and other
activity. An ancillary account has been established for credit card activity to facilitate
the payment of the related bills for the City Manager.
11
City of La Quinta
Banking Services RFP
Tab E - Coiiateraiization of Deposits: (Three pages maximum including contract.)
Please detail the Bank's procedures for collateralizing public funds deposits.
Tab F - Bank Compensation: (Two pages maximum.) The City may want to utilize an
overnight Treasury Sweep. A peg balance of $50,000 would be maintained. The City
is billed for any negative net difference between the Sweep earnings and the account
service activity.
1. What is the bank's Earnings Credit Rate (ECR) based on, and how is it
calculated each month?
2. List the bank's actual ECR for each of the past six months, from January
through June 2007.
3. What account analysis settlement period will the bank offer the City? Please
state monthly, quarterly, semi-annually, or annually.
4. For what period of time will the bank's pricing as indicated in this proposal and
the Banking Services Bid Form be fixed?
5. Does the bank charge for FDIC or FICO premiums, and if so, how is the charge
calculated?
6. Please detail which types of items and services can be applied against the City's
account analysis in addition to standard bank services. Is there a mark-up?
Tab G - Deposit Activity: (Two pages maximum.) The City currently may wish to use
an armored carrier service with daily (Monday through Friday) pick-ups at City Hall at
10:00 - 1 1:00 A.M. The deposits are delivered to the bank's Operations Center for
same -day credit. Total monthly deposits consist of approximately 510 checks
(unencoded) and $7,500 in currency. Deposited items should be automatically
recleared once. Checks that are ultimately returned need to be forwarded to the City
within three working days. The City requires the ability to make occasional branch
deposits for emergencies.
1. Please provide a quote for armored carrier service. Can the cost of armored
carrier be paid through account analysis?
2. Is a mark-up applied to the cost of the service if it is paid for through account
analysis? If so, how much?
7
City of La Quinta
Banking Services RFP
3. Please describe the bank's procedures for handling deposit adjustments.
4. Please describe the bank's returned item handling and notification procedures
in detail.
5. What is the cut-off time for deposits at the bank's local branch and at the
bank's Operations Center to ensure same day credit?
6. Does the bank allow Check 21 scanning of deposits which is currently being
used by the City?
Tab H - Wire Transfers: (One page maximum.) The City currently transacts wire
transfers via the internet with backup or telephone, initiating approximately 10 wires
and receiving 10 incoming wires a month.
1. Please describe the bank's wire transfer service capabilities and what
specifically is recommended for the City's use and consideration.
2. What safeguards and security measures does the bank have in place to protect
the City?
Tab I - Account Reconcilement: (Two pages maximum.) The City currently issues
approximately 500 Accounts Payable and Payroll checks from the General Account and
has implemented an Account reconcilement service and uses Positive Pay. Checks are
written and released weekly, with Accounts Payable and Payroll alternating every other
week. The City would like to consider Full Account Reconcilement, Positive Pay,
check truncation, on-line stop payments, and any other enhancements the bank
recommends.
1. Please describe the bank's account reconcilement services and what is
recommended for the City's consideration.
2. Does the bank offer Positive Pay for this size account? If so, please describe
the service as it relates to the City's check volume and reconcilement needs.
3. Does the bank provide on-line check imaging so that the City could review its
paid or exception items electronically?
City of La Quinta
Banking Services RFP
4. Describe the bank's on-line stop payment service and how the City would
access information about whether an item has been paid and how it would
execute a stop payment.
5. Does the bank's check truncation service and how to receive copies of paid
items.
Tab J - State Activity: (One page maximum.) The City transacts State of California
Local Agency Investment Fund (LAIF) transfers on a regular basis (approx. 5 total per
month) and receives State warrants for deposit.
1. Is the bank an approved State of California depository?
2. What is the charge per transfer to LAIF? From LAIF?
3. What is the charge for the deposit of State Warrants in Sacramento?
4. Please describe the LAIF transfer process. Are the transfers done by telephone,
terminal, fax, wire transfer, etc?
5. Does the bank have an office in Sacramento that maintains a direct DDA
banking relationship with the State Treasurer's Office and the State Controller's
Office?
Tab K - Overnight Sweep: (Two pages maximum.) The City may want to consider
using an automatic, overnight DDA Sweep with all collected funds in excess of a peg
balance swept into an investment fund if interest rates increases.
1. Please describe the bank's DDA Sweep service.
2. Is the bank's Sweep an End -of -Day or Intra-Day Sweep?
3. What Sweep investments or funds are available for public funds clients?
4. Does the fund(s) meet the California Government Code for allowable
investments?
5. What are the costs associated with Sweep (monthly maintenance, set-up
charges, # of basis points spread, transaction fees)?
N
City of La Quinta
Banking Services RFP
6. Is a peg balance required? If so, how much? What are the procedures for
changing the peg?
7. How many of the bank's public agency clients use Sweep? Please cite three
such clients.
8. Provide indicative rates on your Sweep product's fund(s) for the past six
months.
Tab L - Payroll Tax Processing: (One page maximum.) Please describe the bank's
payroll tax withholding services and its related costs. The City requires the ability to
report and pay state and federal tax withholdings automatically either by telephone or
preferably by PC.
Tab M - Direct Deposit of Payroll: (Two pages maximum.) Direct Deposit of Payroll is
currently in place, with approximately 60 employees participating. The payroll files are
sent to the bank by data transmission.
1. Please describe the bank's ACH and Direct Deposit service as it relates to this
specific application.
2. What are the different ACH file transmission options available to the City?
What are the transmission deadlines for Direct Deposit ACH files?
3. Please detail the bank's back-up plans for data transmissions. The City requires
immediate notification of any changes or problems and the ability to re -send a
file.
4. Can payroll credits be sent to employees' savings accounts?
5. What special banking programs are available to employees who use Direct
Deposit?
Tab N - Credit Cards: (One page maximum.) The City currently has a credit card for
the City Manager with a total credit limit of $15,000.00.
1. What fees are associated with credit cards?
2. How are any transactional and billing problems resolved, and what is the
turnaround for problem resolution?
T
City of La Quinta
Banking Services RFP
3. How can the billing process and the application of payments be facilitated to
ensure that the card users do not encounter problems while traveling on City
business?
Tab O - Balance Reporting: (Four pages maximum including sample reports.) The City
does currently accesses daily balance 'reporting information daily by PC through the
internet. The City will require, at a minimum, prior day information for the General
Account, to include summary fields of information as well as detail fields for checks
paid and for each debit and credit transaction.
1. Please describe the bank's on-line information reporting system.
2. How can reports be custom-tailored for the end -user?
3. Can the City obtain current day (intra day) information? If so, please describe
the service.
4. What are the computer hardware and software specifications for the bank's on-
line system?
5. Please provide a sample of prior day and intra day reports that would be the
best example of the system's capabilities. Include the reports in this section.
Tab P - Implementation Plan and Costs: (Two pages maximum.) The City requires a
smooth and low-cost transition to a new bank or to enhanced services with the
existing bank.
1. Please describe the bank's plan to implement the proposed services and to
ensure a smooth, error -free conversion.
2. Please detail all costs associated with the conversion of all of the new services.
3. What size conversion allowance will the bank provide the City? Please state a
specific dollar amount.
4. Will the bank provide on -site training for City personnel for all of the services
selected?
5. Describe in detail how the bank handles problems resolution, customer service,
11
City of La Quinta
Banking Services RFP
day-to-day contact, and ongoing maintenance for governmental clients. Please
be specific about exactly whom the City will be calling and working with for the
above described situations.
Tab Q - Service Enhancements: (Two pages maximum.) Based on the information
provided in the RFP and the bank's knowledge of the public sector, please describe any
services or technological enhancements, not previously mentioned, that should be
considered for further improving the effectiveness of the City's treasury management
operations.
12
City of La Quinta
Banking Services RFP
Exhibits for Banking Services Proposal
Tab R - Banking Services Bid Form
Tab S - Standard Bank Fee Schedule for Government/Corporate Clients
Tab T - Sample Account Analysis Statement and User's Guide
Tab U - Relevant Cash Management Agreements
Tab V - Bank Credit Ratings
Most current Annual Report
Most recently available Call Report
Most recently available Annual Call Report
13
INVESTMENT ADVISORY BOARD Business Session: C
Meeting Date: September 12, 2007
ITEM TITLE:
October Meeting
BACKGROUND:
At the last meeting, Staff was asked to revisit the issue as to whether or not to hold a
meeting in the month of October due to the dates of the LAW Conference and several
members' inability to meet, due to prior commitments.
RECOMMENDATION:
Provide Staff with direction.
John M. Falconer, Finance Director
INVESTMENT ADVISORY BOARD Correspondence & Written
Material Item A
Meeting Date: September 12, 2007
TITLE:
Investment of City Moneys and Deposit of Securities
BACKGROUND:
The City Council has directed the City Attorney to draft language to expand Section
3.08.010 of the Municipal Code to allow for the retention of a Professional Portfolio
Management firm.
The City Attorney, Kathy Jenson and the City Manager, Thomas Genovese plan to be
at the meeting to review the draft which will be presented as a business item on the
September 18, 2007 Council meeting.
RECOMMENDATION:
Information item only.
1�-4 XZA-�
John M. Falconer, Finance Director
3.08.010 Investment of city moneys and deposit of securities. _
Pursuant to, and in accordance with, and to the extent allowed by, Sections 53607 and
53608 of the Government Code, the authority to invest and reinvest moneys of the city, to sell or
exchange securities, and to deposit them and provide for their safekeeping, is delegated to the
city treasurer. Notwithstanding this delq} alion, the City Council bas the discrrotion to retain on
behalf of the On, a professional portfolio management firm ("Ponfolio Manager') to manage a
Portion of the cit_ds moneys consistent with the adopted Investment Policy. As to those moneys
the ON Council chooses to have managed by a Pordoho Manao-er, the authority to invest mid
reinvest. to sell or ecehange securities, and to deposit them and provide for their safekeeping.
shall be retained by the City Council, and the City Council shall be responsible for the
investment decisions made by (he Portfolio Mana_et. 1 ho Cite Council shall exercise prudence;
in tho selection of the Pontblio Manage/, and shill impose rcasonnhle safei,uxrds to prevent
abuse in the exercise o('dkcretion by the Portfolio Manager.
❑M156r0-0
.393230 eW/05M7
FOJ
88 ATTORNEY GENERAL'S OPINIONS Volume 79
Opinion No. 95-807—June 19, 1996
Requested by: ACTING COUNTY COUNSEL, COUNTY OF
ORANGE
Opinion by: DANIEL E. LUNGREN, Attorney General
Gregory L. Gonot, Deputy
LAURENCE M. WATSON, ACTING COUNTY COUNSEL, COUNTY
OF ORANGE, has requested an opinion on the following question:
May the treasurer of a general law county grant to a contract investment
manager, who is not a deputy of the treasurer, Iscrehonary au ortty to
un s on deposit with the treasurer?
CONCLUSION
The treasurer of a general law county may grant to a contract investment
manager, who is not a deputy of the treasurer, discretionary authority to
invest funds on deposit with the treasurer, provided that the treasurer
exercises prudence in the selection of the manager and imposes suitable
safeguards to prevent abuse in the exercise of discretion by the manager.
The treasurer would remain responsible for any investment decisions made
by the manager.
ANALYSIS
The question presented for resolution concerns the ability of a county
treasurer to contract with an investment manager for the purpose of
investing funds which are in the custody of the treasurer. The manager
would select, purchase, and sell individual securities. We conclude that such
an arrangement would not violate state law if the treasurer exercises
prudence in the selection of the manager and imposes safeguards to prevent
abuse in the exercise of discretion by the manager. The treasurer would
remain responsible for any investment decisions made by the manager.
Government Code section 270001 provides that "[the] county treasurer
shall receive and keep safe all money belonging to the county and all other
money directed by law to be paid to him and apply and pay it out, rendering
the account as required by law." Section 27000.1 states:
"The board of supervisors may, by ordinance, delegate to the
county treasurer the authority to invest or reinvest the funds of
the county and funds of other depositors in the county trea-
sury .... The county treasurer shall thereafter assume full
I All section references are to the Govemment Cale unless otherwise indicated.
(MAhm a r A Co. 1w)
[C]
0
0
Jme 1996 ATTORNEY GENERAL'S OPINIONS 89
responsibility for those transactions until the board of supervisors,
by ordinance, revokes its delegation of authority ...:'
Section 27000.3 provides:
"The county treasurer is a trustee and therefore a fiduciary
subject to the prudent investor standard. When investing, reinvest-
ing, purchasing, acquiring, exchanging, selling, and managing
public funds, the county treasurer shall act with care, skill,
prudence, and diligence under the circumstances then prevailing,
that a prudent person acting in a like capacity and familiarity with
those matter; would use in the conduct of funds of a like character
and with like aims, to safeguard the principal and maintain the
liquidity needs of the county and the other depositors. Within the
limitations of this section and considering individual investments
as part of an overall investment strategy, a trustee is authorized
to acquire investments as authorized by law. Nothing in this
chapter is intended to grant investment authority to any person
or governing body except as provided in Sections 53601, 53607,
and 53635."2
Section 27000.5 states:
"When investing, reinvesting, purchasing, acquiring, exchang-
ing, selling, and managing public funds, the primary objective of
the county treasurer shall be to safeguard the principal of the funds
under his or her control. The secondary objective shall be to meet
the liquidity needs of the depositor. The third objective shall be
to achieve a return on the funds under his or her control."
When a county invests surplus funds, the board of supervisors must
establish a county treasury oversight committee. (§ 25131.) The treasurer
must annually prepare for the committee an investment policy which
includes:
"(a) A list of securities or other instruments in which the
county treasurer may invest, according to law, including the
maximum allowable percentage by type of security.
"(b) The maximum term of any security purchased by the
county treasury.
"(c) The criteria for selecting security brokers and dealers
from, to, or through whom the county treasury may purchase or
sell securities or other instruments. The criteria shall prohibit the
R The mquimmwts of sec[ions 53607 and 53635 am discussed belay.
(Mwa 0.N k C . arJ
H
0
0
90 ATTORNEY GENERAL'S OPINIONS Volume 79
selection of any broker, brokerage, dealer, or securities firm that
has, within any consecutive 48-month period following January
1, 1996, made a political contribution in an amount exceeding
the limitations contained in Rule-G37 of the Municipal Securities
Rulemaking Board, to the local treasurer, any member of the
governing board of the local agency, or any candidate for those
offices,
.. ........................ " (§ 27133.)
While the committee has oversight responsibility, it may not "direct
individual investment decisions, select individual investment advisors
brokers, or dealers, or impinge on the day-to-day operations of the county
treasury." (§ 27137.)
Historically the Legislature placed numerous restrictions upon the. invest-
ment of local public funds. (See Slats. 1967, ch. 1026, § l; Slats. 1949,
ch. 81, § 1.) Differing requirements were made applicable to the investment
of local funds needed for immediate use, surplus funds needed for future
use, and specialized funds such as those contributed under an employee
deferred compensation plan. (See 57 Ops.Cal.Atty.Gen. 534' 539-542
(1974).) Recently investment opportunities have been broadened by the
Legislature and given substantially similar treatment. (See, e.g., §§ 53601,
53609, 53635.)
We may assume for our purposes that the county treasurer has been given
the necessary authority by the board of supervisors to invest the county's
funds, that a county treasury oversight committee has been established in
the county, and that the treasurer will comply with all statutory requirements
relating to the investment of the funds.
Except insofar as the treasurer's powers may be exercised by a deputy,'
the governing statutes do not expressly provide for any further grant of
discretion with respect to the investment of county funds. Here we are given
that the manager would not be a deputy of the treasurer. Since no express
statutory authority allows a treasurer to grant discretion regarding invest-
ment decisions to such an "outside" manager, may the authority to do so
be implied? We believe the answer to this question may be determined by
examining the scope of the treasurer's authority as a trustee of the county's
funds.
8 The county treasurer "may appoint as many deputies as are necessary for the prompt and faithful
discharge of the duties of his office." (§ 24101.) "whenever the official name of any principal officer
is used in my law conferring power or imposing duties car liabilities, it includes deputies." (§ 24100,,
see also §§ 7. 1194. 70 Ops.Cal.Atty.Gen. 710, 715, 7I8-719 (1980).)
(Matthew aeMer R Co., Im.)
5
luxe 1996 ATTORNEY GENERAL'S OPINIONS 91
Section 27000.3 denominates the treasurer as a "trustee;' thereby making
him "a fiduciary subject to the prudent investor standard." The prudent
investor standard is set forth in the Restatement Third of Trusts section 227.
As applicable herein, section 227 states:
"The trustee is under a duty to the beneficiaries to invest and
manage the funds of the trust as a prudent investor would, in light
of the purposes, terms, distribution requirements, and other
circumstances of the trust.
"(c) In addition, the trustee must:
"(1) conform to fundamental fiduciary duties of loyalty (§ 170)
and impartiality (§ 183);
"(2) act with prudence in deciding whether and how to delegate
authority and in the selection and supervision of agents (§ 171);
and
"(3) incur only costs that are reasonable in amount and appro-
priate to the investment responsibilities of the trusteeship (§ 188).
"(d) The trustee's duties under this Section are subject to the
rule of § 228, dealing primarily with contrary investment provi-
sions of a trust or statute."
The Restatement rule, section 171, governing a trustee's authority in
granting discretion to others in performing his responsibilities is as follows:
"A trustee has a duty personally to perform the responsibilities
of the trusteeship except as a prudent person might delegate those
responsibilities to others. In deciding whether, to whom and in
what manner to delegate fiduciary authority in the administration
of a trust, and thereafter in supervising agents, the trustee is under
a duty to the beneficiaries to exercise fiduciary discretion and to
act as a prudent person would act in similar circumstances."
A comment to this Restatement rule explains "fiduciary duty" and "discre-
tion" as regards a delegation of responsibility:
"A trustee stands in a fiduciary relationship to the beneficiaries
of the trust and therefore is under a duty personally to perform
the responsibilities of the trusteeship except as it would be
prudent, under the circumstances, to delegate to agents the making
of decisions or the performance of acts of administration." (§ 171,
com. a; emphasis added.)
Iwow ea4a a ca. Jaa
0
92 ATTORNEY GENERAL'S OPINIONS Volume 79
The prudent investor standard is also set forth in the Uniform Prudent
Investor Act (Prob. Code, §§ 16045-16054). Probate Code section 16052,
subdivision (a), states:
"A trustee may delegate investment and management functions
as prudent under the circumstances. The trustee shall exercise
prudence in the following:
"(1) Selecting an agent.
"(2) Establishing the scope and terms of the delegation, consis-
tent with the purposes and terms of the trust.
"(3) Periodically reviewing the agent's overall performance
and compliance with the terms of the delegation:'*
The use of agents by a trustee may be necessary because "[m]any duties
of the trustee require special skills and knowledge which the trustee does
not possess so that he could not be expected to perform such work without
advice and aid." (Bogert, Trusts (6th ed. 1987) § 92, p. 331.) In a comment
regarding the prudent investor standard, the Restatement Third of 'Itfusts
states: 1 k
"The trustee is not required personally to perform all aspects
of the investment function. The trustee must not, however, abdi-
cate the responsibilities of the office and must not delegate
unreasonably. Prudent behavior in this matter, as in other aspects
of prudent investment management, cannot be reduced to a
simple, objective formula.
"With professional advice as needed, the trustee personally
must define the trust's investment objectives. The trustee must
also make the decisions that establish the trust's investment
strategies and programs, at least to the extent of approving plans
developed by agents or advisers. Beyond these generalizations,
expressed in terms that are necessarily imprecise, there is no
invariant formula concerning functions that are to be performed
by the trustee personally.
"Many factors affect the nature and extent of prudent and
therefore permissible delegation. These factors include the almost
infinite variety that exists in trustees and trusteeships, as well as
in investment objectives and techniques and in the types, circum-
stances, and goals of trusts. For example, it would be impractical
• A county treasumes conduct may be measumd under the principles applicable to trustees expmssed
in the Probate Code. (See Prob. Code, § 15003, subd. (c).)
(N uh 911da @ Ca, Irc.)
7
tune 1996 ATTORNEY GENERAL'S OPINIONS 99
for delegation decisions not to take account of the scale of a trust's
operations and the nature of the trustee's operating structure.
Corporate trustees necessarily act through their employees; be-
tween that situation and the individual who acts as a trustee or
co -trustee, however, there are many variations of trusteeship,
encompassing, for example, institutional governing bodies, law
firms, and panels of individuals operating with the support of full-
time staff.
"The trustee's authority to delegate is not confined to acts that
might reasonably be described as 'ministerial.' Nor is delegation
precluded because the act in question calls for the exercise of
considerable judgment or discretion. The trustee's decisions with
regard to delegation are themselves matters of fiduciary judgment
and responsibility falling within the sound discretion of the
trustee.
"As in other matters of fiduciary discretion. , the trustee
must not abuse the discretion to delegate. Accordingly, a court
may substitute its judgment for that of the trustee in a matter of
delegation if and only if the trustee has acted unreasonably, or
has unreasonably failed to act. Similarly, a trustee's liability in
a matter of delegation depends on a failure to exercise the required
degree of care, skill, or caution.
"In deciding what as well as whether to delegate and in
selecting, instructing, and supervising agents, the trustee has a
duty to the beneficiaries to act as a prudent investor would act
under the circumstances. The trustee must exercise care, skill, and
caution in establishing the scope and specific terms of any
delegation, and must keep reasonably informed in order to
monitor the execution of investment decisions or plans.
"In all of these matters the trustee has a duty to the beneficiaries
to take account of all relevant circumstances. These include the
knowledge, skill, facilities, and compensation of both the trustee
and the prospective agents. Also of importance are such consider-
ations as the size of the trust estate and the burdens and complex-
ity of both the assets to be managed and the strategies to be
implemented. Active investment strategies, for example, espe-
cially in low efficiency markets such as real estate and venture
capital, are likely to require the hiring of agents with special skills
not possessed by many trustees, often not even by professional
(a+u.. each a co., IM)
3
2�.;
94 ATfORNEY GENERAL'S OPINIONS Volume 79
or corporate fiduciaries." (§ 227, com. j, pp. 39-40, emphasis
added.)
The prudent investor standard requires a trustee to act in accordance with
applicable statutes. Section 228 of the Restatement Third of Trusts provides:
"In investing the funds of the trust, the trustee
"(a) has a duty to the beneficiaries to conform to any applicable
statutory provisions governing investment by trustees ... .
As previously indicated, upon receiving authority from the board of
supervisors to invest county funds, the treasurer assumes full responsibility
for that function. (§ 27000.1.) However, it is contemplated by the Legisla-
ture that the treasurer, in making investments for the county (§ 53607), will
employ necessary financial advisors, consultants, and managers in carrying
out his responsibilities. Section 53635, for example, provides in part:
A local agency purchasing or obtaining any securities
described in this section, in a negotiable, bearer, registered I, or
nonregistered format, shall require delivery of all the securities
to the local agency, including those purchased for the agenboy
financial advisors, consultants, or managers using the agency's
funds, by book entry, physical delivery, or by third -party custodial
agreement...." (Emphasis added.)§
We believe that given (1) the relatively large amount of funds which may
be administered by a county treasurer, (2) the degree of skill required for
investing in the complex forms of securities described in section 53635,
(3) the section 27133 requirement for annual preparation by the treasurer
of an investment policy to control investment decisions (including the
maximum allowable percentage by type of security), and (4) the section
27134 requirement for an annual audit which "may include issues relating
to the structure of the investment portfolio and risk," a county treasurer
may grant the authority in question under the prudent investor standard,
§ Wholly aside from W0 issue of granting discretion to a manager to invest county Ponds, we note
that a county board of supervisor may comma for investmeot advice under the terms of section 53060:
"no legislative body of any public m municipal corporation or district may
contract with and employ my persous for the furnishing to the corporation or district
special services and advise in financial, economic, accounting, engineering, legal,
or administrative matter if such persons am specialty trained and experienced and
compensation to perform the special services required.
............................................
"Ir1e legislative body of the corporation or district may pay from any available
funds such corapeasatiou to such persons ea it deems proper for the services
rendwM."
(aLaaer Baby G Cm. 1m)
0
lone 1996 ATTORNEY GENERAL'S OPINIONS 95
assuming he has exercised prudence in the selection of the manager and
has imposed suitable safeguards to prevent abuse in the exercise of
discretion by the manager. Of course, in contracting with an investment
manager, the treasurer may not abdicate his responsibility for the investment
of county funds.
We conclude that the treasurer of a general law county may grant to a
contract investment manager, who is not a deputy of the treasurer, discre-
tionary authority to invest funds on deposit with the treasurer provided that
the treasurer exercises prudence in the selection of the manager and imposes
suitable safeguards to prevent abuse in the exercise of discretion by the
manager. The trustee would remain responsible for any investment decisions
made by the manager.
Opinion No. 95-909—June 19, 1996
Requested by: MEMBER OF THE CALIFORNIA ASSEMBLY
Opinion by: DANIEL E. LUNGREN, Attorney General
Gregory L. Gonot, Deputy
THE HONORABLE RICHARD K. RAINEY, MEMBER OF THE
CALIFORNIA STATE ASSEMBLY, has requested an opinion on the
following question:
May a retirement system that operates under article 5 of the County
Employees Retirement Law of 1937 (Gov. Code, §§ 31580-316(Y7) transfer
"excess earnings" to county advance reserves for the purpose of offsetting
employer or employee contributions to the system?
CONCLUSION
A retirement system that operates under article 5 of County Employees
Retirement Law of 1937 (Gov. Code, §§ 31580-31607) may transfer
"excess earnings" to county advance reserves solely for the purpose of
paying retirement benefits and not for the purpose of offsetting amounts
owed in employer or employee contributions. However, based upon an
actuarial evaluation of the assets and liabilities of the system due to the
transfer of excess earnings to county advance reserves for payment of
retirement benefits, the future rates of employer and employee contributions
to the system may be adjusted.
(M. e"d,. • co. h..)
iP]
INVESTMENT ADVISORY BOARD
Meeting Date: September 12, 2007
TITLE:
Month End Cash Report — August 2007
BACKGROUND:
Correspondence & Written
Material Item B
This cash report is not a complete Treasury Report (exclude petty cash, deferred
compensation and fiscal agent balances) but would report in a timely fashion selected
cash balances.
RECOMMENDATION:
Information item only.
John M. Falconer, Finance Director
Y
� O tN+l
N d
C N
Y p
OJ m O N
O
1�
m
'm
wmt�
f000� O t°
� �O�
1VO1pY
p
rCm'f OOOOOOOm d p
�
T
O mEi
{Y
O
O
O
O
C
O
O N 00
p
w
O
O
O
O
O m O
O m CI m m p
M
m
m m j0
n
N
m
m
m
m
Y
m
N
m
m
m po 00
op
¢guyi
Rm
pm
iyri
N N
0
oyf
(O
m
m
N
m
CmJ
m
N
N
vN
LLm
mN
N
N
00
N p
N
O
c6
p
U g
o
0
CJ
0 v
N
e
iy
m
M
m
M
emi
IL
N
N
O
ymj
Ln
N
O
m
O�
NN
N
N
NR
C
LL
m
aN
f0
O
f0
2Ow
wsm
3
M
n
M
o
m °
m
M
M
LL p�
m d
O
p m
N
N
N
16
LL�w
a`o mono'-
a
o
a
ma
NN NC'J °i ml7M
y�
O
r
O
N
3U�o�meVdm
cl!
ro
m
Y N
is
P r
52�
W
L+ cc
Q
Y M m
n
y
a+
8
N
0
o
m m N m
A c
N
m
m
0-8m
U°gym
'�£�
u n a.� r
m
',04
4
cg.R��`o Yw
w
w NEB E E wL
e °> c a 'c t-
S
m 0 F F� N
w U Z1 i � Q E
-
¢
8
s
2
rtcts: t ommerciat raper tcaws anu vutstattutttgs
. ass.. v.
Federal Reserve Release
Commercial Pa
Release I About I Announcements I Outstandings I Volume statistics I Year-end I Mat
uri� Distribution
Data Download Proeram (DDPI
Data as of August 31, 2007
Commercial Paper Rates and Outstanding
Derived from data supplied by The Depository Trust Company
Posted September 4, 2007
7lianaam♦ ra4ae
FTerm]=nonr
nonfinancial
financial
asset -backed
1-day
5.21
5.95
5.18
5.98
7-day
5.23
6.12
5.24
6.29
15-day
5.22
6.11
5.22
6.23
30-day
5.22
5.95
5.28
6.18
60-day
n.a.
6.10
5.33
6.14
90-day
n.a.
n.a.
of the 60-day
5.43
AA nonfinancial,
6.15
90-day AA nonfinancia
Trans a.tn innuf
iciant to su000rt calculation
31, 2007.
Yield curve
Money market basis
— — — AAnanfirtancial
........... ANN nonfinancial
---- AA Financial
.............
.
1 7 15 30
Days to Maturity
M
I, and 90-day A2/P2 nonfinancial rates for August
M
6.5
6.3
6.1
5.9
5.7
5.5
5.3
5.1
http://www.federaireserve.gov/Releases/CP/ 9/4/2007 3
FRB: Commercial raper Fates ana vutstanamgs
Discount rate spread
Thirty -day A2/P2 less AA nonfinancial commercial paper (daily) Basis
RIM 2002►► t►4 2005 2006 2007
Discount rate history
7
6
5
4
3
2
1
0
2001 2002 2003 2004 2005 2t106 tar/
Outstandings
Weekly (Wednesday), seasonally adjusted
.ar,�<v.✓
http://www.federaireserve-gov/Releases/CP/ 9/4/2007 4
FRB: Commercial Paper Kates ana vutstanamgs
Billions of dollars
4
l+5"Rjy t
1� Y
1
55
f1'fl y
5
yA� `
1"N
f.:
Nonfinancial (right scale)
Financial (left xcale)
A"01-I ..rL"d :I.1t ,<AO
2001 2002 2003
Billions of dollars
250
210
170
130
90
The daily commercial paper release will usually be available before 11:OOam EST. However, the Federal
Reserve Board makes no guarantee regarding the timing of the daily commercial paper release. When
the Federal Reserve Board is closed on a business day, rates for the previous business day will be
available through the Federal Reserve Board's Data Download Program (DDP). This policy is subject to
change at any time without notice.
Release I About I Announcements I Outstandings I Volume statistics I Year-end I Maturity Distribution
Data Download Program (DDP)
Home I Statistical releases
Accessibility I Contact Us
Last update: September 4, 2007
http://www.federalreserve.gov/Releases/CP/ 9/4/2007 5
FRB: H.15--Selected interest Kates, weo-unry uany upuate--tsugubL J 1, <Vv
Federal Reserve Statistical Release
H.15
Selected Interest Rates pailyi
Skip to Content
Release Date: August 31, 2007
Weekly release dates 113istorical data I Data Download Program (DDP) I About I Announcements
Daily update Other formats: Screen reader I ASCII
- --- -- --- ---- -- U�rotaed
'' ProgMfao
The weekly release is posted on Monday. Daily updates of the weekly release are p
through Friday on this site. If Monday is a holiday, the weekly release will be p
after the holiday and the daily update will not be posted on that Tuesday.
FEDERAL RESERVE STATISTICAL RELEASE
H.15 DAILY UPDATE: WEB RELEASE ONLY
SELECTED INTEREST RATES
For use at 4:15 p.m. Eastern Time
Yields in percent per annum
August
31, 2007
2007
2007
2007
2007
Instruments
Aug
Aug
Aug
Aug
27
28
29
30
Federal funds (effective) 1 2 3
5.27
5.30
5.00
5.00
Commercial Paper 3 4 5
Nonfinancial
1-month
5.25
5.21
5.20
5.24
2-month
5.24
5.22
5.26
5.23
3-month
5.24
5.23
n.a.
n.a.
Financial
1-month
5.26
5.29
5.29
5.24
2-month
5.27
5.26
5.31
5.33
3-month
5.29
5.30
5.34
5.32
CDs (secondary market) 3 6
1-month
5.53
5.53
5.62
5.68
3-month
5.52
5.53
5.58
5.63
6-month
5.46
5.48
5.48
5.52
Eurodollar deposits (London) 3 7
1-month
5.57
5.57
5.68
5.80
3-month
5.57
5.57
5.65
5.68
6-month
5.53
5.52
5.52
5.54
Bank prime loan 2 3 8
8.25
8.25
8.25
8.25
Discount window primary credit 2 9
5.75
5.75
5.75
5.75
U.S. government securities
Treasury bills (secondary market) 3 4
4-week
4.67
4.51
3.94
3.62
3-month
4.50
4.28
3.88
3.74
6-month
4.51
4.31
4.14
4.06
Treasury constant maturities
Nominal 1.0
1-month
4.74
4.60
4.02
3.69
3-month
4.63
4.40
3.98
3.84
6-month
4.69
4.48
4.30
4.21
1-Year
4.55
4.36
4.24
4.17
2-year
4.28
4.13
4.14
4.08
http://www.federalreserve.gov/Releases/H15/update/
9/4/2007 6
FRB: H.15--Selected Interest Kates, wen-vniy uairy upuaie--tiugusi j i, zvv
r ar,c c yr -
3-year
5-year
7-year
10-year
20-year
30-year'
Inflation indexed 11
5-year
7-year
10-year
20-year
Inflation -indexed long-term average
Interest rate swaps 13
1-year
2-year
3-year
4-year
5-year
7-year
10-year
30-year
Corporate bonds
Moody's seasoned
Aaa 14
Baa
State & local bonds 15
Conventional mortgages 16
n.a. Not available.
Footnotes
4.28
4.14
4.19
4.14
4.39
4.25
4.31
4.21
4.47
4.36
4.41
4.33
4.60
4.53
4.57
4.51
4.92
4.90
4.93
4.87
4.87
4.86
4.88
4.83
2.36
2.29
2.32
2.26
2.39
2.35
2.39
2.34
2.38
2.33
2.38
2.32
2.43
2.42
2.45
2.40
12 2.41
2.41
2.44
2.39
5.07
5.02
5.01
5.05
4.93
4.88
4.85
4.86
4.95
4.89
4.85
4.86
4.96
4.93
4.90
4.90
5.04
4.99
4.96
4.96
5.14
5.10
5.09
5.08
5.25
5.23
5.23
5.22
5.47
5.47
5.48
5.46
5.76 5.76 5.80 5.76
6.60 6.60 6.62 6.58
4.70
6.45
1. The daily effective federal funds rate is a weighted average of rates on broke
2. Weekly figures are averages of 7 calendar days ending on Wednesday of the curr
figures include each calendar day in the month.
3. Annualized using a 360-day year or bank interest.
4. On a discount basis.
5. Interest rates interpolated from data on certain commercial paper trades settl
Depository Trust Company. The trades represent sales of commercial paper by deale
issuers to investors (that is, the offer. side). The 1-, 2-, and 3-month rates are
30-, 60-, and 90-day dates reported on the Board's Commercial Paper Web page
(www.federalreserve.gov/releases/cp/).
6. An average of dealer bid rates on nationally traded certificates of deposit.
7. Bid rates for Eurodollar deposits collected around 9:30 a.m. Eastern time.
8. Rate posted by a majority of top 25 (by assets in domestic offices) insured U.
commercial banks. Prime is one of several base rates used by banks to price short
loans.
9. The rate charged for discounts made and advances extended under the Federal Re
credit discount window program, which became effective January 9, 2003. This rate
adjustment credit, which was discontinued after January 8, 2003. For further info
www.federalreserve.gov/boarddocs/press/bcreg/2002/200210312/default.htm. The rate
for the Federal Reserve Bank of New York. Historical series for the rate on adjus
http://www.federalreserve.gov/Releases/Hl5/update/ 9/4/2007 9
NK13: H.1)--Jeleetea Interest Kates, weD-vnry uany L)puanc--tiugubt J 1, cvv I • erg. �_
well as the rate on primary credit are available at www.federalreserve.gov/releas
10. Yields on actively traded non -inflation -indexed issues adjusted to constant m
30-year Treasury constant maturity series was discontinued on February 18, 2002,
on February 9, 2006. From February 18, 2002, to February 9, 2006, the U.S. Treasu
factor for adjusting the daily nominal 20-year constant maturity in order to esti
nominal rate. The historical adjustment factor can be found at
www.treas.gov/offices/domestic-finance/debt-management/interest-rate/ltcompositei
Source: U.S. Treasury.
11. Yields on Treasury inflation protected securities (TIPS) adjusted to constant
Source: U.S. Treasury. Additional information on both nominal and inflation -index
found at www.trE!as.gov/offices/domestic-finance/debt-management/interest-rate/ind
12. Based on the unweighted average bid yields for all TIPS with remaining terms
more than 10 years.
13. International Swaps and Derivatives Association (ISDA(R)) mid -market par swap
for a Fixed Rate Payer in return for receiving three month LIBOR, and are based o
at 11:00 a.m. Eastern time by Garban Intercapital plc and published on Reuters Pa
ISDAFIX is a registered service mark of ISDA. Source: Reuters Limited.
14. Moody's Aaa rates through December 6, 2001, are averages of Aaa utility and A
rates. As of December 7, 2001, these rates are averages of Aaa industrial bonds o
15. Bond Buyer ]Index, general obligation, 20 years to maturity, mixed quality; Th
16. Contract interest rates on commitments for fixed-rate first mortgages. Source
--------------- ------------------------------------------------------------------
Note: Weekly and monthly figures on this release, as well as annual figures avail
Board's historical H]15 web site (see below), are averages of business days unles
----------------------------------------------------------------------------------
Current and historical H.15 data are available on the Federal Reserve Board's web
(www.federalreserve.gov/). For information about individual copies or subscriptio
Publications Services at the Federal Reserve Board (phone 202-452-3244, fax 202-7
electronic access to current and historical data, call STAT-USA at 1-800-782-8872
Description of the Treasury Nominal and Inflation -Indexed Constant Maturi
Yields on Treasury nominal securities at "constant maturity" are interpolated by
from the daily yield curve for non -inflation -indexed Treasury securities. This cu
the yield on a security to its time to maturity, is based on the closing market b
actively traded Treasury securities in the over-the-counter market. These market
calculated from composites of quotations obtained by the Federal Reserve Bank of
constant maturity yield values are read from the yield curve at fixed maturities,
and 6 months and 1, 2, 3, 5, 7, 10, 20, and 30 years. This method provides a yiel
maturity, for example, even if no outstanding security has exactly 10 years remai
Similarly, yields on inflation -indexed securities at "constant maturity" are inte
daily yield curve for Treasury inflation protected securities in the over-the-cou
inflation -indexed constant maturity yields are read from this yield curve at fixe
currently 5, 7, 10, and 20 years.
---------------------------------------------------------------------------------
Weekly release. dates I Historical_ data I Data Download Program (DDP) I About I Announcements
http://www.federalreserve.gov/Releases/H15/update/ 9/4/2007 10
r":1i.i:)--.�etecteu interest Rates,Wet,vruy „cuy VYuaw--ALLguu.. ..., ....... --a- --
Daily update Other formats: Screen reader I ASCII
Statistical releases
Home I Economic research and data
Accessibility I Contact Us
Last update: August 31, 2007
http://www.federalreserve.gov/Releases/H 15/update/
9/4/2007 11
Bill Lockyer, State Treasurer
Inside the State Treasurer's Office
Local Agency Investment Fund (LAIF)
PMIA Performance Report
QUWW to,
AVOW
MqturfW
8/14/2007
5.25
5.25
183
8/15/2007
5.26
5.25
183
8/16/2007
5.26
5.25
185
8/17/ 0007
5.26
5.25
185
8/18/2007
5.26
5.25
185
8/19/2007
5.26
5.25
185
8/20/2007
5.25
5.25
183
8/21/2007
5.25
5.25
181
8/22/2007
5.25
5.25
180
8/23/2007
5.25
5.25
179
8/24/2007
5.25
5.25
175
8/25/2007
1 5.251
5.25
175
8/26/2007
5.25
5.25
175
8/27/2007
5.25
5.25
173
LAW Performance Report
Quarter ending 6/30/2007
Apportionment Rate: 5.23%
Earnings Ratio: .00014325574266716
Fair Value Factor: .999545022
PMIA Average Monthly Effective Yields
July 2007 5.255%
May 2007 5.248%
Apr 2007 5.222%
Pooled Money Investment Account
Portfolio Composition
$61.2 Billion
07/31/07
Loans Reverse Treasuries
13.89% 0.73 5.11%Mortgages
1.39%
Corporate Bonds
0.61 %
Commercial Paper
18.46%
Time Deposits
14.20%
Agencies
23.75%
CDs/BNs
23.32%
VA
Recent Bill Auction Results r aKc; ' vi
Treasu17
rt/Dirett
Recent Bill Auction Results
Security
Issue
Maturity
Discount
Investment
Price
CUSIP
Term
Date
Date
Rate %
Rate %
Per $100
91-DAY
09-06-2007
12-06-2007
4.350
4,472
98.900417
912795859
182-DAY
09-06-2007
03-06-2008
4.380
4,554
97.785667
912795D24
17-DAY
08-31-2007
09-17-2007
4.500
4.585
99.787500
912795UB5
28-DAY
08-30-2007
09-27-2007
4.600
4,693
99,642222
912795A35
91-DAY
08-30-2007
11-29-2007
4.600
4.732
98.837222
912795842
182-DAY
08-30-2007
02-28-2008
4.590
4.777
97,679500
912795C90
28-DAY
08-23-2007
09-20-2007
4.750
4.847
99,630556
912795A27
92-DAY
08-23-2007
11-23-2007
2.850
2.919
99.271667
912795B34
182-DAY
08-23-2007
02-21-2008
3.950
4.098
98.003056
912795C82
28-DAY
08-16-2007
09-13-2007
4.560
4.653
99.645333
912795ZZ7
91-DAY
08-16-2007
11-15-2007
4,630
4.763
98.829639
912795B26
182-DAY
08-16-2007
02-14-2008
4.710
4,905
97,618833
912795C74
1-DAY
08-15-2007
08-16-2007
5.030
5.114
99,986028
912795ZV6
8-DAY
08-15-2007
08-23-2007
4,100
4.172
99.908889
912795ZW4
28-DAY
08-09-2007
09-06-2007
4.980
5.083
99.612667
912795ZYO
91-DAY
08-09-2007
11-08-2007
4.770
4.909
98,794250
912795A92
182-DAY
08-09-2007
02-07-2008
4.730
4.927
97.608722
912795C66
28-DAY
08-02-2007
08-30-2007
5.055
5.160
99.606833
912795Z%2
91-DAY
08-02-2007
11-01-2007
4.825
4.966
98,780347
912795A84
182-DAY
08-02-2007
01-31-2008
4.800
5.001
97.573333
912795C58
28-DAY
07-26-2007
08-23-2007
4,940
5.042
99,615778
912795ZW4
91-DAY
07-26-2007
10-25-2007
4.885
5.029
98.765181
912795A76
182-DAY
07-26-2007
01-24-2008
4.890
5,098
97.527833
912795C41
28-DAY
07-19-2007
08-16-2007
4.660
4.755
99.637556
912795ZV6
91-DAY
07-19-2007
10-18-2007
4.840
4.982
98.776556
912795A68
182-DAY
07-19-2007
01-17-2008
4.865
5.072
97.540472
912795C33
28-DAY
07-12-2007
08-09-2007
4.650
4.745
99.638333
912795ZUS
91-DAY
07-12-2007
10-11-2007
4,815
4.956
98,782875
912795A50
182-DAY
07-12-2007
01-10-2008
4.850
5.055
97.548056
912795C25
28-DAY
07-05-2007
08-02-2007
4.660
4.755
99.637556
912795ZT1
91-DAY
07-05-2007
10-04-2007
4,790
4,930
98,789194
912795A43
182-DAY
07-05-2007
01-03-2006
4.810
5,012
97.568278
912795891
28-DAY
06-28-2007
07-26-2007
4.490
4,581
99.650778
912795ZS3
91-DAY
06-28-2007
09-27-2007
4.685
4.820
98.815736
912795A35
182-DAY
06-28-2007
12-27-2007
4.810
5.012
97.568278
912795B83
28-DAY
06-21-2007
07-19-2007
4.335
4.422
99.662833
912795ZR5
91-DAY
06-21-2007
09-20-2007
4.490
4,617
98.865028
912795A27
182-DAY
06-21-2007
12-20-2007
4.715
4.911
97.616306
912795B75
28-DAY
06-14-2007
07-12-2007
4.545
4.637
99.646500
912795ZQ7
91-DAY
06-14-2007
09-13-2007
4.640
4.773
98.827111
912795ZZ7
Effective with the 11/2/98 auction, all bills are auctioned using the single -priced method.
http://www.treasurydirect.gov/RI/OFBills
9/4/2007 8
0 2
2
o
z
-
rc
' F o
mM of
v
n
W m m
o orP-
W
n IU m m
m
E
W
' MOO
t"1
KM � m mN
W
m
H
h 0 N
[mO
� 17 �[ yW
y
N
ro
H o
U
Q
a
o �
E
`O or
m�i
0°
y
voi
m M
rvmi
v!
'Mn vMivo
M N V m r
fk
1`l
_
m N
N
M
N
m
j\
m
W
VI O O M
M
N
y
U
d
N
o >
Z
w o
m- o m
m
d r
W
m rm
m [D r
N
m n O m M
Ol�m N N�
m
N
W
d <<'lm
- -W
m a1 NO M r r N r N m
Mm N h Mmm m W NNv
M � N"�s"
N
m.
m O
� r
o
N O mID
ri
v
n r �
ri
N
v
M
N
d d
a
.�
m
C
>
j0
L
2
E
r
�.J
a d
W a
>
d
m
d
W
d
C
i
«�
F J
W W
W W JF-
u
yy
Z U
=
m
F Q> Q a 0
dfw
oUc~i
m w c
x
a m
wm
FzZaZ
N`
WO
`Wa�Zm/
QzU
ZYF Qz
wU¢m
0
z oa°
wwwzw
2r
aWUZ
ZU Z
Fm...
m
i
d
d
O
wo
ww
❑(__
Ono ?Jw0
Uau1 ¢f/JLL
WOdwwdo
OF
z
z
E
INVESTMENT ADVISORY BOARD
Meeting Date: September 12, 2007
TITLE:
Pooled Money Investment Board Report
for June 2007.
BACKGROUND:
Correspondence & Written Material
Item C
The Pooled Money Investment Board Report for June 2007 is included in the agenda
packet.
RECOMMENDATION:
Receive & File
John M. Falconer, Finance Director
POOLED MONEY INVESTMENT ACCOUNT
SUMMARY OF INVESTMENT DATA
A COMPARISON OF JUNE 2007 WITH JUNE 2006
(DOLLARS IN THOUSANDS)
JUNE 200711 JUNE 2006 CHANGE
Average Daily Portfolio
$ 62,380,261
$
63,221,434
$
-841,173
Accrued Earnings
$ 269,193
$
244,211
$
+24,982
Effective Yield
5.250
4.700
+0.55
Average Life -Month End (In Days)
176
152
+24
Total Security Transactions
Amount
$ 35,623,083
$
34,216,623
$
+1,406,560
Number
755
712
+43
Total Time Deposit Transactions
Amount
$ 2,746,500
$
3,603,500
$
-867,000
Number
143
173
40
Average Workday Investment Activity
$ 1,827,123
$
1,719,092
$
+108,031
Prescribed Demand Account Balances
For Services
$ 293,701
$
269,143
$
+24,558
For Uncollected Funds
$ 208,569
$
198,973
$
+9,596
1
BILL LOCKYER
TREASURER
STATE OF CALIFORNIA
INVESTMENT DIVISION SELECTED INVESTMENT DATA
ANALYSIS OF THE POOLED MONEY INVESTMENT ACCOUNT PORTFOLIO
(000 OMITTED)
JUNE 30, 2007
DIFFERENCE IN
PERCENTOF
PERCENT OF
PORTFOLIO FROM
TYPE OF SECURITY
AMOUNT
PORTFOLIO
PRIOR MONTH
Government
Bills
$
3,326,633
5.07
+0.85
Bonds
0
0.00
0
Notes
0
0.00
0
Strips
0
0.00
0
Total Government
$
3,326,633
5.07
+0.85
Federal Agency Coupons
$
8,132,351
12.39
-0.52
Certificates of Deposit
15,594,464
23.76
-1.17
Bank Notes
1,300,000
1.98
-0.49
Bankers' Acceptances
0
0.00
0
Repurchases
0
0.00
0
Federal Agency Discount Notes
5,718,180
8.71
+2.37
Time Deposits
8,740,495
13.31
-0.60
GNMAs
209
0.00
0
Commercial Paper
14,375,798
21.90
-0.06
FHLMC/Remics
865,556
1.32
-0.08
Corporate Bonds
385,050
0.59
-0.12
AB 55 Loans
7,204,764
10.97
-1.39
GF Loans
0
0.00
0
Reversed Repurchases
0
0.00
-1.11
Total (All Types)
$
65,643,489
100.00
INVESTMENT ACTIVITY
JUNE
2007
MAY 2007
NUMBER
AMOUNT
NUMBER
AMOUNT
Pooled Money
755 $
35,623,083
713
$ 34,467,716
Other
19
317,588
21
125,928
Time Deposits
143
2,746,500
154
3,294,300
Totals
917 $
38,687,171
888
$ 37,887,944
PMIA Monthly Average Effective Yield
5.250
5.248
Year to Date Yield Last Day of Month
5.121
5.108
8
Pooled Money Investment Account
Portfolio Composition
$65.6 Billion
Corporate E
0.59%
Commercial Paper
21.90%
Time
13.31 %
06/30/07
Treasuries
Loans 5.07% Mortgages
�n n�ni 1 'i90/
3
25.74%
iencies
1.10%
BOARD MEMBER ITEMS
BOARD MEMBER ITEM
To: Treasurer and Members of the IAB
From: Don Moulin
Date: August 15, 2007
The July 2007 meeting of the IAB included a discussion of the return on the City's investment
portfolio compared to returns on certain debt instruments and portfolios. Section XV
BENCHMARK of the IP specifies that the City "will use the six-month U.S. Treasury Bill as a
benchmark when measuring performance of the investment portfolio." In practice, the Treasurer
and the IAB do not use the referenced T-Bill as a "benchmark" in the usual meaning of the word.
The T-Bill yield is only one of the bases for comparing the City's rate of return. The monthly
Treasurer's Report includes the LAIF return as another base for comparison. The discussion led
to the recognition that the BENCHMARK section of the IP should be visited during the 2008
review of the IP and revised if appropriate.
A comparison of section XV and the YIELD paragraph of section IV OBJECTIVES reveals
redundant content. See a copy of the YIELD and BENCHMARK paragraphs on the following
page.
If the Treasurer and the members of the IAB agree to propose a change to the benchmark section
of the IP, a suggested discussion draft of an alternative paragraph follows:
XV COMPARATIVE RETURNS
The City Of La Quinta does not specify a single benchmark as a goal or target for a rate of return
on its investment portfolio. Rates of return are influenced by several factors including actions by
the Federal Reserve Board, the marketplace and overall economic perceptions and conditions.
These factors do not affect the yield during holding period of the City's investments because the
City's buy and hold policy fixes the yield at the time of purchase. As bases for comparison only,
the Treasurer's monthly report shows the rate of return on the U.S. Six-month Treasury Bill and
the State Treasurer's Local Agency Investment Fund (LAIF). The Treasurer may use these or
other published rates of return that the Treasurer deems appropriate for comparison to the return
on the City's investment portfolio.
(Consider adding the rates of return of 1, 2, 3 and 5-year maturities of U.S. Treasury Notes to the
Treasurer's monthly report as additional comparative data)
Proposed action: Add to agenda at a future meeting. If discussion at that meeting indicates that a
change to section XV should be considered, continue the matter to a meeting that begins the
review of IP for 2008-9.
to ensure the preservation of capital in the overall portfolio in accordance with the
permitted investments. The objective will be to mitigate credit risk and interest
rate risk.
A. Credit Risk
Credit Risk - 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, and broker/dealers, which the
City of La Quinta will do business with; and,
► Diversifying the investment portfolio so that potential losses on
individual securities will be minimized.
B. Interest Rate Risk
Interest Rate risk 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; and
► By investing operating funds primarily in shorter -term securities.
2. 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 sufficient liquid funds are available to meet
anticipated demands. Furthermore since all possible cash demands cannot be
anticipated the portfolio should be diversified and consist of securities with active
secondary or resale markets. Securities shall not be sold prior to maturity with the
following exceptions:
► A declining credit quality security could be sold early to minimize loss of
principal;
► Liquidity needs of the portfolio require that the security be sold.
3. 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
cores of investments are limited to relatively low risk securities in anticipation of
earning a fair return relative to the risk being assumed.
5
transactions, all telephone transactions shall 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. Fax correspondence must be supported by evidence of
verbal or written follow-up.
g. Development of a wire transfer agreement with the City's bank and third party
custodian. This agreement should outline the various controls, security
provisions, and delineate responsibilities of each party making and receiving wire
transfers.
The System of Internal Controls developed by the City, shall be reviewed annually by
the independent auditor in connection with the annual audit of the City of La Quinta's
Financial Statements.
The independent auditor's management letter comments pertaining to cash and
investments, if any, shall be directed to the City Manager who will direct the City
Treasurer to provide a written response to the independent auditor's letter. The
I management letter comments pertaining to cash and investment activities and the City
Treasurer's response shall be provided to the City's Investment Advisory Board for their
consideration. Following the completion of each annual audit, the independent auditor
shall meet with the Investment Advisory Board and discuss the auditing procedures
performed and the review of internal controls for cash and investment activities.
XV BENCHMARK
The investment portfolio shall be designed with the objective of obtaining a rate of return
throughout budgetary and economic cycles commensurate with the investment risk
constraints and the cash flow needs of the City. Return on investment is of least
importance compared to safety and liquidity objectives.
The City of La Quinta Investment Policy will use the six-month U.S. Treasury Bill as a
benchmark when measuring the performance of the investment portfolio.
XVI REPORTING STANDARDS
SB564 section 3 requires a quarterly report to the Legislative Body of Investment
activities. The City of La Quinta Investment Advisory Board has elected to report the
investment activities to the City Council on a monthly basis through the Treasurers
Report. AB 943 requires that the December 3151 and June 301' Treasurers Reports be
sent to the California Debt and Advisory Commission within sixty days of the end of the
quarter.
The City Treasurer shall submit a monthly Treasurers Report to the City Council and the
Investment Advisory Board that includes all cash and investments under the authority of
the Treasurer.
1 15