2010 07 14 IABIZwl I W-O M,
i
P.O. Box 1504
LA QUIVIA, i IFORNIA 92247-1504
78-495 Cm.1.r: TA.4rrl(;o 760) 777-7000
LA Quls['A, CAI.IPORyIA 92253 FAX (760) 777-7101
AGENDA
INVESTMENT ADVISORY BOARD
Caucus Room
78-495 Calle Tampico- La Quinta, CA 92253
July 14, 2010 - 4:00 P.M.
CALL TO ORDER
a. Pledge of Allegiance
b. Roll Call
II APPOINTMENT OF OFFICERS
A. Appointment of Investment Advisory Board Chairperson
B. Appointment of Investment Advisory Board Vice -Chairperson
III PUBLIC COMMENT - (This is the time set aside for public comment on any matter not
scheduled on the agenda.)
IV CONFIRMATION OF AGENDA
V CONSENT CALENDAR
A. Approval of Minutes of Meeting on June 9, 2010 for the Investment Advisory Board,
VI BUSINESS SESSION
A, Transmittal of Treasury Report for May 2010
B. Consideration of Approval of Investment Advisory Board 2010-2011 Work Plan
C- FY 2010/2011 Meeting Schedule
D. LAIF Conference
VII CORRESPONDENCE AND WRITTEN MATERIAL
A. Month End Cash Report - June 2010
B. Pooled Money Investment Board Reports - April 2010
C. Distribution of Investment Policies for Fiscal Year 2010-2011
VIII BOARD MEMBER ITEMS
IX ADJOURNMENT
PUBLIC NOTICES
The La Quints Caucus Room is handicapped accessible. If special equipment's needed for the hearing impaired, please call the Finance Department at 777-7150, twenty-
four (24) hours In advance of the meeting and accommodations will be made.
Any writings or documents provided in a majority of the Investment Advisory Board regarding anv -tam on this agenda will be made available for public Inspection at the
City Clerk counter at City Hall located at 78 495 Cade Tenfold , La Quints, CA 92253, during normal business hours.
INVESTMENT ADVISORY BOARD
Meeting
June 9, 2010
CALL TO ORDER
Regular meeting of the La Quinta Investment Advisory Board was called to order at the
hour of 4:00 P.M. by Chairman Ross followed by the Pledge of Allegiance.
PRESENT: Board Members Park, Moulin, Ross and Rassi (1 vacancy)
ABSENT: None
OTHERS PRESENT: John Falconer, Finance Director, Tom Genovese, City
Manager, Kathy Jenson (via conference call) and Vianka
Orrantia, Senior Secretary
II PUBLIC COMMENT — Frank Blum, Kurt Mortenson and Andrea Spirtos - None
III CONFIRMATION OF AGENDA —
Chairman Ross requested that general comments from Board Member Moulin
and himself be added to Item VII, Board Member Items.
MOTION: It was moved by Board Members Park/Moulin to confirm the agenda
for June 9, 2010. Motion carried unanimously.
IV CONSENT CALENDAR
A. Approval of Minutes of Meeting on May 12, 2010 for the Investment Advisory
Board.
Board Member Ross requested that the following correction be made to page 2,
Section V, Item A, second paragraph, third sentence should read:
He further advised that the portfolio had decreased €rem 14 days [... I
MOTION - It was moved by Board Members Park/Moulin to approve the Minutes
of May 12, 2010 as amended. Motion carried unanimously.
Investment Advisory Board June 9, 2010
Minutes
V BUSINESS SESSION
A. Transmittal of Treasury Report for April 2010
Mr. Falconer presented and reviewed the staff report for the month of
April, advising the Board that the portfolio's balance ended at
$183, 441,991 million, with a decrease of $1 .45 million for the month.
The decrease was due to the City's construction projects, the city yard
and the La Quinta Fire Station projects at $566,000 and Phase 3
improvements to Highway 1 1 1 at $200,000. Mr. Falconer also advised
that the portfolio average maturity decreased by 10 days with the
average maturity ending at 162 days, with the yields still remaining low
with a slight increase by 1 basis point ending the month at .48% and the
overall pooled investments at .52%; with the previous year's yields at
.85%. Mr. Falconer further advised that the pooled investments remain
short-term as well as the LAIF balances with the state. During the month
of April there were several maturing investments which were rolled over
for a three month term, with a maturity in the month of August to
coincide with the upcoming pass-thru payments. In addition, Mr.
Falconer reviewed for the Board page 5 of the Treasurer's report; the
comparison between the LAIF yields to the current market yields.
In response to Chairman Ross, Mr. Falconer replied that the construction
phase in question in the first paragraph of the commentary was Phase
"3" of the Highway 111 street improvements.
Mr. Falconer commented that the City currently does not invest in Fannie
Mae and Freddie Mac at this time.
General conversation ensued amongst the Board and staff regarding
Fannie Mae and Freddie Mac.
MOTION - It was moved by Board Members Moulin/Park to review,
receive and file the Treasurers Report for April 2010. Motion carried
unanimously.
B. Consideration of the Fiscal Year 2010/11 Investment Policy
Mr. Falconer gave a brief overview of the Investment Advisory Board's role and
their responsibility annually of reviewing the Investment Policy.
Mr. Falconer presented the final redlined version of the investment policy with
Investment Advisory Board
Minutes
June 9, 2010
minor changes, in addition to the Executive Summary with staff's
recommendations which included the following:
PAGE EXECUTIVE SUMMARY
2, 4, 12 Scope — Added Housing Authority
8, 17 Certificate of Deposit increased to $250,000 for
new FDIC limit
9, 10, 17 LAIF increased account size from $40 million to
$50 million (no change in percentage maximum
of 30% of portfolio)
In response to Mrs. Jenson, Mr. Falconer clarified that the maximum
permissible investment and limitation is $50 million per account with a limit
of 30% of the portfolio. The City's portfolio size is currently at $180 million
with $47.6 million in LAIF, which is made up $38 million in the City's
account and a portion less than $10 million in the City's RDA account.
Chairman Ross asked for the Board's comments to the proposed change
from $40 million LAIF to $50 million.
Board Member Rassi stated that he felt that the LAIF was a safe investment
and was in agreement with the proposed increase. Board Member Park
concurred.
Mr. Falconer clarified for the Board that the raise in the LAIF limitation was
from a state statute.
General discussion ensued amongst the Board and staff regarding the
investment increase in LAIF from $40 million to $50 million.
In response to Mrs. Jenson, Mr. Falconer clarified that the Housing Authority
will not have a separate account but will be included as part of the City's
"pooled account."
Board Member Moulin stated that he was in favor of keeping the current
limitation at $40 million.
In response to Mrs. Jenson, Mr. Falconer clarified that the spreadsheet used
to compare the actual and surplus funds is no longer used, therefore deleting
the bullet point on page 14 referencing the spreadsheet.
Investment Advisory Board
Minutes
June 9, 2010
In response to Mrs. Jenson, Mr. Falconer clarified that staff did a comparison
of the current California Debt and Investment Advisory Commission and
updated the current language on page 35 of the policy.
Mr. Genovese stated that he had no comments in regards to the proposed
Investment Policy and also stated he had no concerns regarding the increase
of LAIF from $40 million to $50 million.
At this time a vote was taken in favor of the increase of the LAIF from $40
million to $50 million.
Ayes: Board Members Rassi and Ross
Noes: Board Member Ross and Moulin.
Mrs. Jenson suggested that a transmittal to the City Council accompany the
proposed Investment Policy outlining the outcome of the Board's vote.
General discussion again ensued with the Board and Staff regarding the LAIF
increase.
Mr. Falconer suggested the following language be inserted on page 10,
section 6 after the first paragraph, as follows:
The City Treasurer may not invest more than $40 million per account in
LAIF.
In addition, changing pages 9 and 17 reflecting the $40 million restriction.
The Board concurred with staff's suggested changes.
MOTION — It was moved by Board Members Rassi/Moulin to approve the
Investment Policy for Fiscal Year 2010/11 as amended. Motion carried
unanimously.
VI CORRESPONDENCE AND WRITTEN MATERIAL
A. Month End Cash Report — May 2010
Mr. Falconer presented and reviewed the staff report advising that page 3
reflects the current PMIA age performance ending at .53%, the 4 week T-
Bills down at .15% and the two-year T-Notes at .75%.
Investment Advisory Board June 9, 2010
Minutes
Noted and Filed
B. Pooled Money Investment Board Reports — March 2010
Mr. Falconer advised that this report is for informational purposes only and he
had no comments at this time.
In response to Board Member Rassi, Mr. Falconer clarified that the LAIF portfolio
currently stands at $69 billion of which $20 billion is city, county and special
district funds. These funds are not subject to State loans.
Noted and Filed
VII BOARD MEMBER ITEMS —
Both Chairman Ross and Board Member Moulin gave their sentiments regarding
their years of service on the Board as well as thanking staff, City Manager and
the City Council for allowing citizens to participate in the City's government.
Along with Mr. Genovese, Board Members Park and Rassi and staff extended
their thanks to the outgoing member's for their years of service.
Vill ADJOURNMENT
MOTION - It was moved by Board Members Moulin/Park to adjourn the meeting at
5:02 p.m. Motion carried unanimously.
S�ybmitted y,
?OVianka Orrantia
Senior Secretary
INVESTMENT ADVISORY BOARD Business Session: A
Meeting Date: July 14, 2010
Transmittal of Treasury Report
for May 31, 2010
BACKGROUND:
Attached please find the Treasury Report for May 31, 2010.
RECOMMENDATION:
Review, Receive and File the Treasury Report for May 31, 2010.
4 / l
John M. Falconer, Finance Director
MEMORANDUM
TO: La Quinta City Council
FROM: John M. Falconer, Finance Directoo-Freasurer
SUBJECT: Treasurer's Report for May 31, 2010
DATE. June 30, 2010
Attached is the Treasurers Report for the month ending May 31, 2010. 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:
Investment
Beginning
Purchased
Notes
Sold/Matured
Other
Ending
Change
LAW
Certificates of Deposit
US Treasuries
US Gov't Sponsored Enterprises
Commercial Paper
Corporate Notes
Mutual Funds
$ 47.651,232
T209,000
98,895,685
18,993.734
-
15,203,480
411,652
$ 33,800,000
(2)
(2)
(2)
1
$ (29.800.000)
20.158
1.874
0
(12,178)
0
$ 51,651,232
1,209,000
98,915,843
18,995,608
0
15.191,302
411,652
4,000,000
0
20,158
1,874
0
(12,178)
0
Subtotal
S 182,364,783
1 $ 33,800.000
$ 29,800,000
$ 9,854
$ 186.374,637
$ 4,009.854
Cash $ 1.077,216 7 & 3 $ 861,298 $ 215,918 861,298
Total $ 183,441,999 $ 33,800,000 1 $ 30,661,298 $ 9,854 1 $ 186,590,555 $ 3.148,556
I certify that this report accurately reflects all pooled investments and is in compliance with the California
Government Cade; and is in conformity with the City Investment Policy.
As Treasurer of the City of La Quinta, 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.
N4A 30 Zb10
John M. Falconer Date
Finance Director/Treasurer
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.
OA
Treasurer's Commentary
For the Month of May 2010
Cash Balances — The portfolio size increased by $3.15 million to end the month at $186.59
million. The major reason for the increase was the receipt of the 2nd County of Riverside May
property tax installment of $26.9 million less a payment of the $23.5 million SERAF payment
to the State of California.
Investment Activity — The investment activity resulted in an average maturity decreased by
25 days to 127 days at the end of May. The Treasurer follows a buy and hold investment
policy and no investment purchases were made in the month. The sweep account earned $22
in interest income for the month of April and the bank fees for the month were $ 2,012
which resulted in a net decrease of $1,990 in real savings.
Portfolio Performance — The overall portfolio performance remained unchanged from last
month and ended at .48% for the month, with the pooled cash investments yielding .52%.
The portfolio yield should continue to stay at these levels for the near future. At this time last
year, the portfolio was yielding .84% which reflects the current interest rate environment.
Looking Ahead
The Treasurer is still concentrating on safety first and foremost. In the short term, the
Treasurer will be maintaining LAIF balances at the maximum allowable percentage because its
rate declines slower in a declining rate environment.
The Treasurer will not be investing in non-TLGP corporate notes, non-TLGP commercial paper
or Fannie Mae or Freddie Mac Government Sponsored Enterprises (GSE) due to the current
economic conditions affecting the financial markets.
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City of La Dwnta
Comparative Rates of Interest
May 31, 2010
City of LIO I
Month
Annualiie6
P001e0 Cash
Eam1n
Fiscal A ern
s
Overall
Average
MaWrit ea s
Three Month
nth
Bills/Note
One Year
Two Year
Three Month
Non
LAW Ra
ly 2006
493%
5.00%
4,96%
95
-Financial
hM2006
4.94%
501%
4.9]%
48
4a85%
pt2006
4,98%
501%
tt
53
495%
02006
5.00%
502%
501%
67
502%
v 2006
504%
5.03%
5.03%
62
7461%7
512%
c 2006
508%
SOa%
5.06%
60
510%
n 200]
5.18%
5,12%
5,16%
64
513%
b 200]
5.19%
5.13%
5.1]%
45
5.13%
ar200]
5.21%
503%
5.15%
6]
518%
10ut
pr200]
5.20%
5.14%
5.15%
42
521%
ay 200]
520%
5. 55%
5. 16%
32
5.21%
ne 200]
5.19%
488%
5.10%
85
4.81%
525%
ly 200>
521%
490%
5.12%
129
480%
5.25%
ust 200]
5,17%
4.85%
508%
109
4.59%
5.26%
p1200]
5.16%
4.86%
506%
129
4.00%
5.25%
ct 200]
511%
485%
502%
116
3,95%514%
523%
v200]
503%
483%
496%
99
334%
c 2007
495%
343%
445%
123
339%4B0%
414%
n 2008
458%
333%
422%
96
231%
b 2008
412%
324%
385%
86
207%
480%
r2008
40➢%
283%
36]%
l4
150%
4.16%
r2008
3.45%
3.27%
341%
82
1.70%
3]8%
May 2008
3.14%
3.27%
3.17%
63
1,92%
340%
June 2008
3.09%
1 94%
286%
80
214%
3.0]%
FV 08109
July 2008
2.99%
L93%
2.77%
62
1.70%
188%
229%
2.75%
2.18%
2.89%
279%
Augvst20(b
3.16%
1.92%
2.88%
51
1.69%
1.89%
2. 14%
236%
2,08%
278%
Sept 2W8
2.81%
192%
264%
37
1.42%
179%
1.96%
2.00%
2.13%
2.]]%
Oct2008
2.66%
2.61%
261%
29
090%
140%
172%
150%
2.07%
271%
Nov 2008
238%
2.36%
2.36%
64
0.15%
049%
104%
125%
145%
2.57%
Dec 2008
160%
0.18%
142n
116
0.05%
0.25%
0.59%
0.88%
097%
2.35%
Jan 2009
1.36%
0.18%
1.23 %
82
0.15%
0.35 %
043%
0.88 %
0.31%
205%
Feb 2009
123%
0.18%
1.11%
75
0.30%
050%
061%
0.88%
048%
167%
Mar2009
1,26%
0.18%
113%
fig
0.20%
042%
070%
088%
037%
1.82%
Apr2009
0.94%
0.18%
085%
54
031%
0.33%
0.59%
0.88%
028%
1.61%
May 2009
092%
0. 18%
0.84%
80
0.18 %
0.30%
053%
0.88%
023%
1.53%
June 2009
085%
0.29%
0.80%
111
020%
0.35%
0.55%
1.13%
0.26%
138%
FY 09110
July 2009
0.69%
0.30%
065%
ill
0.19%
0.28%
0.47%
100%
0.28%
104%
August 200E
0.64%
0.30%
0.61%
92
0.16%
0.26%
045/
100%
024%
093%
Sept2009
0.56%
0.31%
0.53%
112
0,12%
0.19%
041%
100%
0.19%
075%
Celt 2009
0.52%
0.31%
0.50%
90
008%
0.19%
038%
100%
0.19%
0.65%
Nov 2009
0.56%
0.31%
0.53%
152
004%
0.14%
0.32%
075%
0.15%
0.61%
Dec2009
0.56%
0.15%
0.51%
239
0. 11%
020%
0.16%
1.00%
0.16%
0.57%
Jan 2010
04696
0.15%
043%
179
006%
0.14%
0.34%
0.88%
a 13 %
0,56 %
Feb2010
051%
0.16%
048%
162
0.13%
a19%
0.32%
0.88%
0.15%
058%
Mar2010
0.50%
0.16%
047%
172
0,15%
0.24%
0.38%
1.00%
0.20%
0.55%
Apr201,0
0.52%
0,16%
048%
162
0.15 %
024%
049%
100%
023%
059%
10
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11
INVESTMENT ADVISORY BOARD Business Session: B
Meeting Date: July 14, 2010
ITEM TITLE:
Fiscal Year 2010-2011 Work Plan
BACKGROUND:
Each year the Investment Advisory Board adopts a work plan, which is subsequently
forwarded to the City Council for approval.
Municipal Code Section 2.70.030 sets forth the work plan items for the Investment
Advisory Board for each year as follows:
The principal functions of the board are: (1) review at least annually the city's
investment policy and recommend appropriate changes; (2) review monthly treasury
report and note compliance with the investment policy and adequacy of cash and
investments for anticipated obligations; (3) receive and consider other reports provided
by the city treasurer; (4) meet with the independent auditor after completion of the
annual audit of the city's financial statements, and receive and consider the auditor's
comments on auditing procedures, internal controls, and findings for cash and
investment activities, and (5) serve as a resource for the city treasurer on matters such
as proposed investments, internal controls, use of change of financial institutions,
custodians, brokers and dealers.
In addition to the above items last years FY 2009/2010 Work Plan included the
following areas of discussion:
1) Responsibilities listed in the ordinance;
2) Review of LAIF and GSE's;
3) Review of Bank CD's and
4) Consideration of CDAR's and Money Market Fund.
Due to the past efforts of the Board, staff has no Work Plan items other than those
mandated by the Municipal Code for consideration in FY 2010/201 1 .
RECOMMENDATION:
Review and approval of work plan items as deemed appropriate, for consideration by
the City Council at their August 3, 2010 meeting.
John M. Falconer, Finance Director
INVESTMENT ADVISORY BOARD MEETING BUSINESS SESSION: C
Meeting Date: July 14, 2010
ITEM TITLE
Meeting Schedule for Fiscal Year
2010-201 1
BACKGROUND:
Attached find a list of meeting dates for Fiscal Year 2010-201 1.
RECOMMENDATION:
Approve the meeting schedule of the Investment Advisory Board for Fiscal Year
2010-20%1` 1.
AJn M. Falcon r, Finance Director
TO: Investment Advisory Board Members
FROM: John M. Falconer, Finance Director
DATE: July 14, 2010
RE: Schedule of Investment Advisory Board Meeting Schedule
The City Ordinance specifies that the Investment Advisory Board usually will meet
monthly unless the Board with Council concurrence believes less frequent meetings
are considered necessary. For the last several years the Board has met monthly
however, in the past the Board has elected to not meet in August. Listed below are
meeting dates for the Boards review.
Monthly
July 14, 2010
August 11, 2010
September 8, 2010
October 13, 2010
November 10. 2010
December 8, 2010
January 12, 2011
February 9, 2011
March 9, 2011
April 13, 2011
May 11, 2011
June 8, 2011
Quarterly
September 8, 2010
December 8, 2010
March 9, 2011
June 8, 2011
Please consider the schedules for Fiscal Year 2010-2011 and give Staff direction.
INVESTMENT ADVISORY BOARD Business Session: D
Meeting Date: July 14, 2010
TITLE:
LAIF Conference — Sacramento, CA
October 21 -22, 2010
BACKGROUND:
The LAIF Conference Agenda has not been printed yet but will be held in Sacramento,
California on October 21 — 22, 2010, which is a Thursday and Friday.
Staff will provide the agenda to the Board as soon as it is available. We wanted to
bring this item to the Board to check your calendars.
RECOMMENDATION:
Select up to two Board members to attend the LAIF Conference.
JoM. FalcoI—
hn nance Director
SAVE THE DATE
Local Agency Investment Fund (LAIF)
Annual Conference
October 21 — 22, 2010
The LAIF Annual Conference will be held on Thursday, October 21 at
the Sacramento Convention Center in downtown Sacramento. A
post -conference tour of Investments/LAIF is scheduled the following
day Friday, October 22 at the California State Treasurer's Office.
It is anticipated the conference registration form will be posted on the
LAIF website(www.treasurer.ca.gov/pmia-laif) two months prior to
the event. LAIF will no longer send registration brochures by mail.
For questions regarding the conference please contact Janice Hayashi at
jhayashi@treasurer.ca.gov or call (916) 653-3001.
INVESTMENT ADVISORY BOARD Correspondence & Written
Material Item A
Meeting Date: July 14, 2010
TITLE:
Month End Cash Report - June 2010
BACKGROUND:
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
Bill Lockyer, State Treasurer
Inside the State Treasurer's Office
PMIA Performance Report
aily
d6/9/2010 0.54
M
turitate
196
6/10/2010
0.54
196
6/11/2010
0.52
198
6/12/2010
0.52
198
6/13/2010
0.52
0.57
198
6/14/2010
0.51
0.57
193
6/15/2010
0.51
0.57
192
6/16/2010
0.51
0.57
196
6/17/2010
0.52
0.56
204
6/18/2010
0.52
0.56
204
6/19/2010
0.52
0.56
204
6/20/2010
0.52
0.56
204
6/21/2010
0.52
0.56
209
6/22/2010
0.52
0.56
209
*Daily yield does not reflect capital gains or losses
LAIF Performance Report
Quarter ending 03/31/2010
Apportionment Rate:
Earnings Ratio:
Fair Value Factor:
Daily:
Quarter To Date:
Average Life:
0.56%
.00001526772794093
1.001183091
0.55%
0.56%
213
PMIA Average Monthly Effective Yields
MAY 2010 0.560%
APR 2010 0.588%
MAR 2010 0.547%
Pooled Money Investment Account
Portfolio Composition
$72.0 Billion
05/31 /10
Corporate Bor
0.17%
Commercial Paper
10.87%
Time Deposits
5.63%
CDs/BN
9.48%
Loans
14.01 %
Agencies Mortgages
10.14% 0.96%
Treasuries
48.74%
3
Recent Bill Auction Results
TreasuryDirect
IIA l 4 I tilt Il, I , A ll, ,'I'l L . Lata i 1-111, .a 1 a-t. u...9' E '! ReCa t,, I:cS UIIS
Recent Bill Auction Results
Security
1-ue
Malnnty
D,wY..e
mvesm,en<
Prim
CUSIP
T._
Dale
R.I.
Rate 11.
R.I. I
Par Yt.
4-WEEK
02-01-2010
09-79 2010
0.ISO
0.152
99,988333
9121950
56 DAY
01'01 2010
0846-2010
0.180
0.383
99 17MOD
911]951182
13-WEEK
0]-Ub1010
09-30 2010
0. 160
0.162
99,959556
912295VC1
16-WEEK
O]-0b2010
12-3090ta
0.215
0.218
49.89ll06
911]95%55
52 WEEK
01 01 2010
06-30 2011
0.320
U. 325
99.616444
912191.22
4 WEEK
06 24 1010
U]32 2010
9085
0 086
99 993389
912295UZ2
S6 DAY
06 24-2010
08-19-2910
0.110
O.122
9998D33
91D95V65
13 WEEK
06-24QOI0
09211010
0.115
0.117
9
91120931
912I95U90
W 26EEK
06 24 L0 0
12 23-2010
0.120
0.1]3
99914M
913195x40
4-WEEK
U6-12401U
0]-152010
0.930
0O3n
999916E,
91U95VY5
56 OAY
U6-17 203E
08-12-2010
E.090
0.091
99.98600E
912195V9
IJ-WEEK
06- 7 2010
09-16-2010
0.065
0.06b
99.983569
912795V84
26-WECK
0E-17'2010
12-16 2010
0. 150
0.152
I'924167
912195UKY
5-DAY
Ob10-10I0
0615-2010
0.16E
0,162
99.991]]0
912795Z53
4-WEEK
06-10-201a
01-06-2010
0.090
0.091
99.993000
912195UW9
56 DAY
06-10-2010
08 05 2010
0.095
0.096
99 985M
91.']9SV24
13-WEEK
0610201E
09-09-20ID
0.130
0. 132
99967139
912195VA6
26-WEEK
06-10-201a
12-01-MO
0.210
0.213
99.893831
912J95Y10
4-WEEK
06-" 2010
07-01-2010
0. 130
0132
99989889
9W111,I66
56 DAY
06 03-M.
01-29-2010
0.14E
0. 142
99928222
9122951174
l3-WEEK
06 03-2010
09-O2 2010
0,160
0.162
99.95955E
912795V23
26-WEEK
0603-20ID
12-02-2010
0.2n
0.211
99.6A81]8
9177111198
52-WEEK
96-03-2010
E6-072011
0.365
0.371
99.690944
912715W64
4 WEEK
05Q2-2010
06-24-2010
0. 155
0. 151
99.987944
91119SVVt
56 -DAY
OS-21-2030
07 22201U
0. 150
0. 152
99.916667
91219SUZZ
13-WEEK
05-21-2U30
06-26-2010
0. 165
0_Ill
99.958292
91279EV82
26-WEEK
05-27 2010
1126 2010
0.120
0.223
99.688117
912295W80
4 WEEK
05 20 2010
06 17-2010
0. 170
0.172
99.98611E
912795UU3
56 DAY
05-20 2010
0]-15-2010
0,160
9. 1ti2
99 915331
912795115
13-WEEK
05-20-2010
0849-2830
0,160
0. 162
99.959556
912995V6Y
26-WEEK
05-20-2010
It 18-2010
0 230
0233
99.863,22
912795u"
4-WEEK
05-13-2010
06-10-2010
U. 150
0.152
99.968333
91279SLIT6
56 DAY
05-13-2030
02-08 2010
0. 15U
0.t 52
99 416661
912195VV19
13-WEEK
05 13-2010
08-12-2010
0.155
0.15]
99.96081,
912195V51
26-WEEK
0513403E
1t-12 Q010
0230
0.233
99.8830.3
9t2MW/}
4-MEEK
05-062010
06-03-2010
0.150
0. 152
99.988331
9127951158
56-DAY
05-06-2010
01-01-2010
0.150
0.152
99.976667
4llJ95V66
13 WEEK
OS-06-2010
0A-05-2010
0.165
O.lfil
99.958292
91,95124
26-WEEK
0506-2010
"-044010
0.245
�249
99.8]6139
912195W56
52WEEK
0506 ILIA
0545-ItI1
OAH
O427
99175131
91TJ95VE8
Effective with Me 11/2198 auction, all bills are auctlened using the single-Dticed rnethod
i rtw0 11E1nmeSon ALL I U11A ,,K111, I H,t.Y'ALga l 1,t-11 WxLt lf,rl,KC,,Illll I Ill,libtry 1 llata Qua111
- -- U. S. II I t'✓ir r.Yt 1 13 rl-1 t-1U 111(Ih'I
http://www.treasurydirect.gov/RI/OFBills
4
7/1/2010
Recent Note, Bond, and TIPS Auction Results
rage i or i
TreasuryDired
1,..-._ 1 li a1599 1 A ' , t n15. bola 6 he;III I I Lale-st "A O'Ll Ffs V - L,n,l. mi , TPS 'I't It, RV 01
Recent Note, Bond, and TIPS Auction Results
PA..
MoturltI
Hilary.[
Yielvl
Prlce
coal,
Security
Teun
Type
Oar.
DAN,
Ra le I4h
P.1 SI00
2 YEAR
NOTE
06-30-WCIO
06 30-2012
0.125
0738
99. P6070
N, 0S"NS5
5-YEAR
NOTE
06-302010
06-30-2015
1.825
199E
994316.16
912828NA0
ZYEAR
NOTE
06-30 2010
06-30-2017
2.500
2.575
99.522306
912826NR2
3-YEAR
NOTE
06-15-2010
06 15 20 t3
1.125
1.220
99720987
9 2828NN9
,-YEAR
11 MONTH
NOTE
.645-20I0
05-15-2020
1 500
3.242
102.169092
912026ND0
29-YEAR
11-MOUTH
BOND
06-15-2010
05 15 2040
4325
4.182
103.270808
912%0Q114
2-YEAR
NOTE
06 0'-20 E0
05-31-2.12
0750
0769
99 962406
112828NE6
5-YEAR
NOTE
06-01-2010
05 31-2015
2.12E
2130
99.926355
912828Nf3
1 YEAR
NOTE
06-01-2010
05-31-2017
2.750
2.615
99.589671
912828NG1
YEAR
NOTE
05-V-2010
05-15-2013
1.32E
1.414
99.885991
912826NC0
ID -YEAR
NOTE
O5-11-2010
OY 45-2020
9.500
3.S48
99.598,21
9I2828Be111
30-YEAR
BOND
05 11-2010
05-15-2040
4.b%
4.49O
96. 114362
91 DI OQH4
2 YEAR
NOTO
04-30-2010
04-30-2012
L000
1024
99.952608
912826NB2
5'YEAR
THE
O4-30-2010
04-tS 2015
0,500
0.560
99.>67648
912620MY3
5-YEAR
NOTE
04-30-2010
04-30-2015
2.500
2.540
99.813289
9128281420
)-YEAR
NOTE
04-30-2010
04 30-2017
3.125
3210
99.470881
9t2628NA4
3-YEAR
NOTE
04-15-2010
'Yr15-2013
1.]50
l.]]6
99 024368
91282811.1
YEAR
9-MONTH
TIPS
O4-15-2 0
01-15-2020
1.325
1.909
912[9505
912828MF4
9-YFAR
10-MONTH
NOTE
04 15-2010
02-15 2020
3.625
3 900
92.763102
912828MP2
29YFAR
10-MONTH
BOND
04 15-2010
02-15-2040
4 625
4J20
92.692939
912810QF1
2-YEAR
NOTE
03 31-2010
03-31-2012
1.000
1,000
to. 000000
912928MU1
5-YEAR
NOTE
03-31-2010
03 11-2015
2.500
2 605
99.510230
91d828MYJ➢
2-YFAR
NOTE
03 31 2010
03-31-201]
3.25.
3,374
99.232610
912828MV9
3 YCAR
NOTE
03-15-20t0
03 15-28t3
1.325
1437
99.818589
912828MT4
9 YEAR
11NONTl1
NOTE
03 15 20W
02�15-2020
6
325
J
335
99.090493
912020MP2
Z9 YEAR
11-110NT11
BOND
03 15 2010
02-15-2040
4.625
4.62P
99. 120 19
912810001
2-YEAR
NOTE
03-91-2010
02. 29-2012
0,825
0.89E
99.969480
911820MQ0
5 YEAR
NOTE
03 01 2010
02-20-2015
2.375
2 39`i
99.906254
912828MR8
2-YEAR
NOTE
03-01 2010
02-28-2012
3.000
3.020
99.5122lb
912028M56
-30-YEAR
TIPS
02-26-2030
02-15-2040
2.125
2,229
91662212
912830Q10
3-YEAR
NOTE
02-16-2010
02-15-2013
1.375
'1.322
99 994122
912828MN2
10-YEAR
NOTE
02-16 2010
02-15 2020
3625
3 692
99 443944
91282811112
30-YEAR
BOND
O2-16-2010
02-15-2040
4 625
4,720
96 483611
912810QC1
2 YEAR
NOTE
02-01-2010
O1 31 2012
0.82E
0.880
99 990112
912628M16
SPEAR
NOTE
02-01-2010
01-31-2015
2.250
2310
19,131540
9t2828MH0
1 1-YEAR
NOTE
02-01-2010
01 31-2017
3.125
1,121
99A82385
912826MN3
3-YEAR
NOTE
D1-15Q830
01-15-2013
1.32E
1490
99,663820
912828MG2
9-YEAR
10-MONTH
NOTE
01-15-2010
11-15-2019
3.325
3J54
e6.900805
912828CY4
10-YFAR
TIPS
01-15-2010
01-U-2020
1.315
1,430
99 e89212
9128281114
29-YEAR
10-MONTH
BOND
01-t5-2010
11-15 2039
4.325
4 640
95731167
912810QD3
Denotes TIPS b..d; all other TIPS without asterisks are notes
F11Ot1,F tlPortnarP, Ait I LI. 1, n M[I.I;'eLt 'e.. h(pn lton. IA 1,11u11 I D.IA QuIstl
it thI, rV hi, 't, It U I, ""I, C'Cb!
5
http://www.treasurydirect.gov/RI/OFNtebnd 7/1/2010
rren: t-ouuucrciai raper rcalcs auu vutstattuutgs
rage r ur .3
Federal Reserve Release
•
Release I About I Announcements I Outstatrdngs I Vohmie statistics I Year-end I Maturity Distribution I Data
Download Program (DDP)
Data as of June 30, 2010
Commercial Paper Rates and Outstanding
Derived from data supplied by The Depository Trust & Clearing Corporation
Posted July 1, 2010
Discount rates
Term
AA
nonfinancial
A2/P2
nonfinancial
AA
financial
AA
asset -backed
1-day
0.08
0.41
0.04
0.22
7-day
0.07
0.35
0.13
0.47
15-day
0.09
0.42
0.07
0.42
30-day
0.14
0.40
0.19
0.38
60-day
0.17
0.54
0.31
0.41
90-day
n.a.
n.a.
0.42
0.51
Trade data insufficient to support calculation of the 90-day AA nonfinancial and 90-day A21P2 nonfinancial rates for June 30, 2010.
Yield curve
Money market basis
---- AA nanliu:mciwi
A2JP2 nortfinancinl
--- AA Imarmial
1 7 15 30
Days to Maturity
.o
Percent
7 1.00
0.75
0.50
0.25
0.00
6
http://www.federalreserve.gov/Releases/CP/ 7/1/2010
rnn: %-ommerciai raper rcates ana vutstanatngs
Page 2 of 3
Discount rate spread
Thirty -day A2/P2 less AA nonfinancial
commercial paper (daily)
Basis points
800
fitbTad. 5-day moving avg
700
6000
500
l
+
400
l
300
200
100
2001 2002 2003 2004
2005 2006 2007 2008
2009 2010
fl
Discount rate history
Thirty -day commercial paper (daily) Percent
-- AA nonfinancial i
-- A'!P? nonfinancial !�
AA finaRciall
Y
i,
7
6
5
4
3
2
1
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 0
Outstandings
Weekly (Wednesday), seasonally adjusted
7
http://www.federalreserve.gov/Releases/CP/ 7/1/2010
FRB: Commercial Paper Rates and Outstandings
Page 3 of 3
1190
1090
990
890
790
690
590
490
390
Billions of dollars
Billions of dollars
--- IVo�rfinaarti.d (�94�ht ricsiep
y ""'•— Fi�runeial €1<cit s+.:dcl
(
t ,
t ,
�I^t n+$ V
�
It 1 �1
}
2001 2003 2005 2007 2009
280
240
200
160
120
80
The daily commercial paper release will usually be available before 11:00am 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 I Data
Download Program (DDP)
Home I Statistical releases
Accessibility I Contact Us
Last update: July 1, 2010
8
http://www.federalreserve.gov/Releases/CP/ 7/1/2010
N'K13: H.IS--Selected Interest Kates, Web-Unly lla11y Update --June SU, 2U1U
Yage 1 of S
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
June
30,
2010
2010
2010
Instruments
Jun
Jun
28
29
Federal funds (effective) 1 2 3
0.17
0.15
Commercial Paper 3 4 5 6
Nonfinancial
1-month
0.17
0.17
2-month
0.25
0.20
3-month
0.35
0.33
Financial
1-month
0.21
0.18
2-month
0.31
0.33
3-month
0.41
0.43
CDs (secondary market) 3 7
1-month
0.31
0.31
3-month
0.47
0.48
6-month
0.69
0.72
Eurodollar deposits (London) 3 8
1-month
0.45
0.45
3-month
0.62
0.62
6-month
0.78
0.75
Bank prime loan 2 3 9
3.25
3.25
Discount window primary credit 2 10
0.75
0.75
U.S. government securities
Treasury bills (secondary market) 3 4
4-week
0.06
0.09
3-month
0.17
0.15
6-month
0.22
0.22
1-year
0.28
0.31
Treasury constant maturities
Nominal 11
1-month
0.07
0.09
3-month
0.17
0.15
6-month
0.22
0.22
1-year
0.30
0.31
2-year
0.62
0.61
3-year
1.03
0.99
5-year
1.83
1.78
7-year
2.49
2.43
10-year
3.05
2.97
20-year
3.82
3.76
30-year
4.01
3.94
Inflation indexed 12
5-year
0.26
0.24
7-year
0.67
0.65
10-year
1.17
1.14
http://www.federalreserve.gov/Releases/H 15/update/
Federal Reserve Statistical Release
H.15
Selected Interest Rates (Daily) k'
Sk, ro Conrcn1
Release Date: June 30, 2010
Weekly release dates I 1-listoncal data I Data Download Program (DDP) I About I Announcements
Daily update Otherformats: Screen reader I ASCII
/1�1' Prog Downlwd
The weekly release is posted on Monday. Daily updates of the weekly release are posted Tuesday
through Friday on this site. If Monday is a holiday, the weekly release will be posted on Tuesday
after the holiday and the daily update will not be posted on that Tuesday.
7/1/2010
0
1,R13: H.15--Selected Interest Kates, Web -Only Daily Update --June 30, 2010 Page 2 of 3
20-year 1.65 1.64
30-year 1.72 1.70
Inflation -indexed long-term average 13 1.67 1.64
Interest rate swaps 19
1-year 0.73 0.73
2-year 0.99 0.98
3-year 1.37 1.33
9-year 1.77 1.70
5-year 2.13 2.06
7-year 2.67 2.58
10-year 3.13 3.04
30-year 3.86 3.78
Corporate bonds
Moody's seasoned
Aaa 15 9.78 4.71
Baa 6.15 6.09
State 6 local bonds 16
Conventional mortgages 17
Footnotes
1. The daily effective federal funds rate is a weighted average of rates on brokered trades.
2. Weekly figures are averages of 7 calendar days ending on Wednesday of the current week; monthly
figures include each calendar day in the month.
3. Annualized using a 360-day year or bank interest.
9. On a discount basis.
5. Interest rates interpolated from data on certain commercial paper trades settled by The
Depository Trust Company. The trades represent sales of commercial paper by dealers or direct
issuers to investors (that is, the offer side). The 1-, 2-, and 3-month rates are equivalent to the
30-, 60-, and 90-day dates reported on the Board's Commercial Paper Web page
(www.federalreserve.gov/releases/cp/).
6. Financial paper that is insured by the FDIC's Temporary Liquidity Guarantee Program is not
excluded from relevant indexes, nor is any financial or nonfinancial commercial paper that may be
directly or indirectly affected by one or more of the Federal Reserve's liquidity facilities. Thus
the rates published after September 19, 2008, likely reflect the direct or indirect effects of the
new temporary programs and, accordingly, likely are not comparable for some purposes to rates
published prior to that period.
7. An average of dealer bid rates on nationally traded certificates of deposit.
8. Bid rates for Eurodollar deposits collected around 9:30 a.m. Eastern time.
9. Rate posted by a majority of top 25 (by assets in domestic offices) insured U.S.-chartered
commercial banks. Prime is one of several base rates used by banks to price short-term business
loans.
10. The rate charged for discounts made and advances extended under the Federal Reserve's primary
credit discount window program, which became effective January 9, 2003. This rate replaces that for
adjustment credit, which was discontinued after January 8, 2003. For further information, see
www.federalreserve.gov/boarddocs/press/bcreg/2002/200210312/default.htm. The rate reported is that
for the Federal Reserve Bank of New York. Historical series for the rate on adjustment credit as
well as the rate on primary credit are available at www.federalre5erve.gov/releases/hl5/data.htm.
11. Yields on actively traded non -inflation -indexed issues adjusted to constant maturities. The
30-year Treasury constant maturity series was discontinued on February 18, 2002, and reintroduced
on February 9, 2006. From February 18, 2002, to February 9, 2006, the U.S. Treasury published a
factor for adjusting the daily nominal 20-year constant maturity in order to estimate a 30-year
nominal rate. The historical adjustment factor can be found at
www.treas.gov/offices/domestic-finance/debt-management/interest-rate/ltcompositeindex historical.shtml.
Source: U.S. Treasury.
12. Yields on Treasury inflation protected securities (TIPS) adjusted to constant maturities.
Source: U.S. Treasury. Additional information on both nominal and inflation -indexed yields may be
found at www.treas.gov/offices/domestic-finance/debt-management/interest-rate/.
10
http://www.federalreserve.gov/Releases/H15/update/ 7/1/2010
VKti: H.15--Selected interest Kates, Web -Only Ually Update --June 3U, 2UlU Fage 3 of 3
13. Based on the unweighted average bid yields for all TIPS with remaining terms to maturity of
more than 10 years.
14. International Swaps and Derivatives Association (ISDA?) mid -market par swap rates. Rates are
for a Fixed Rate Payer in return for receiving three month LIBOR, and are based on rates collected
at 11:00 a.m. Eastern time by Garban Intercapital plc and published on Reuters Page ISDAFIX?1.
ISDAFIX is a registered service mark of ISDA. Source: Reuters Limited.
15. Moody's Aaa rates through December 6, 2001, are averages of Aaa utility and Aaa industrial bond
rates. As of December 7, 2001, these rates are averages of Aaa industrial bonds only.
16. Bond Buyer Index, general obligation, 20 years to maturity, mixed quality; Thursday quotations.
17. Contract interest rates on commitments for fixed-rate first mortgages. Source: Primary Mortgage
Market Survey? data provided by Freddie Mac.
---------------------------------------------------------------------------------------------------
Note: weekly and monthly figures on this release, as well as annual figures available on the
Board's historical H.15 web site (see below), are averages of business days unless otherwise noted.
---------------------------------------------------------------------------------------------------
Current and historical H.15 data are available on the Federal Reserve Board's web site
(www.federalreserve.gov/). For information about individual copies or subscriptions, contact
Publications Services at the Federal Reserve Board (phone 202-452-3244, fax 202-728-5886). For paid
electronic access to current and historical data, call STAT-USA at 1-800-782-8872 or 202-482-1986.
Description of the Treasury Nominal and Inflation -Indexed Constant Maturity Series
Yields on Treasury nominal securities at "constant maturity" are interpolated by the U.S. Treasury
from the daily yield curve for non -inflation -indexed Treasury securities. This curve, which relates
the yield on a security to its time to maturity, is based on the closing market bid yields on
actively traded Treasury securities in the over-the-counter market. These market yields are
calculated from composites of quotations obtained by the Federal Reserve Bank of New York. The
constant maturity yield values are read from the yield curve at fixed maturities, currently 1, 3,
and 6 months and 1, 2, 3, 5, 7, 10, 20, and 30 years. This method provides a yield for a 10-year
maturity, for example, even if no outstanding security has exactly 10 years remaining to maturity.
Similarly, yields on inflation -indexed securities at "constant maturity" are interpolated from the
daily yield curve for Treasury inflation protected securities in the over-the-counter market. The
inflation -indexed constant maturity yields are read from this yield curve at fixed maturities,
currently 5, 7, 10, and 20 years.
Weekly release dates I Historical data I Data Download Program (I)DP) I Ahout I Announcements
Daily update Otherformats: Screen reader I ASCII
Statistical releases
Home I Eamomfc eescarch and data
Acces',sibilihI Comact Os
Last update: June 30, 2010
11
http://www.federalreserve.gov/Releases/H 15/update/ 7/ 1 /2010
City of La Quints
Cash Flow
Budget to Actual
May 31, 2010
Cash Basis
Account
Budget
5110
Actual
5/10
Accrual /
Adjustment
Adjusted Total
5/10
Variance
Over Under
Notes
Property Tax/ Tax Increment
Transient Occupancy Tax
Sales Tax
SllverRock Golf
Library
Riverside Cc Transportation Commission
41,959,035
504,756
552.385
295,793
238
38,580,233
1,167.439
538,800
318,158
(535,440)
38,580,233
631,999
538.800
318,15E
_
(3,378.802)
127, 243
(13, 585)
22,365
(238)
Did not receive Supplemental Property Tax
Other revenues
2,931069
2,122.942
2,122.942
808,127
Did not receive Surface Trans,O.t,.n fund,
budgeted at$952k
Revenues
46,243,276
42,727,572
(535,440)1
42,192,132
4,051,144)
Expenditures
Salaries & Fringe Benefits
1,488,749
783,791
783,791
704,958
( )
saga for two vacant
ry positions
Other expenditures
22,009,461
1,310,17E
1.310,178
23,319,639
Public Works expense S322k uncer budget
Police $6051, under budget
Subtotal
20,520,712
2,093,969
2,093,969
22614681
Do not have expenses In 20(14 Housing
Redevelopment Agency
24,275, 197
116,435
116,435
(24.158,762)
Program and close out of Attorney tees in CIP
PA
Debt Service (Principal/Interest/Pass Through)
36,586,474
36,587,628
36,587,628
1,15,1
Subtotal
60,861,671
36,704,063
36,704,063
24,157,608
1,488,749
1,488.749
1,488,749
Capital Projects
Total Expenditures
41,829,708
40,286,781
40,286,781
(1,542,92]
Net Revenues/Expenditures
4,413,568
2,440,791
(535,440)1
1,905,351
(5,594,071)
NOTE 1:
Expenditures are budgeted at 8,34 % per month
Difference between actual and budget
(Underspent)
DEPARTMENT
Overspent
Notes
GENERAL GOVERNMENT
(183,568)
CITY CLERK
(16,203)
COMMUNITY SERVICES
(125,192)
FINANCE
(16,270)
BUILDING & SAFETY
(124,802)
PUBLIC SAFETY
(607,435)
PLANNING
(107,129)
PUBLIC WORKS:
322,137
Street Maintenance lower than budget
1,502,736
SUBTOTAL - GENERAL FUND
Library
Gas Tax
Federal Assistance
JAG Grant
Slesf(Cops) Revenue
Indian Gaming
Lighting & Landscaping
RCTC
Development Agreement
CV Violent Crime Task Force
-
AB 939
7,169
Quimby
Infrastructure
Proposition 1B
South Coast Air Quality
(2,219)
Transportation
Parks & Recreation
Civic Center
Library Development
Community Center
Street Facility
Park Facility
Fire Protection
Arts In Public Places
(51.712)
Interest Allocation
Equipment Replacement
(66,339)
Information Technology
(22,642)
Park Maintenance Facility
(2,127)
SllverRock Golf
(24,388)
SllverRock Reserve
LO Public Safety Officer
(167)
Finance Authority
(1,316)
Capital Improvement
-
Total
1.666477
12
INVESTMENT ADVISORY BOARD
Meeting Date
TITLE:
July 14, 2010
Pooled Money Investment Board Report
for April 2010
BACKGROUND:
Correspondence & Written
Material Item B
The Pooled Money Investment Board Report for April, 2010, summary pages have
been attached for the Board's review. A complete copy is available for review upon
request.
RECOMMENDATION:
Receive & File
John M. Falconer, Finance Director
POOLED MONEY INVESTMENT ACCOUNT
SUMMARY OF INVESTMENT DATA
A COMPARISON OF APRIL 2010 WITH APRIL 2009
(DOLLARS IN THOUSANDS)
APML 2010 APRIL 2069 GHANGE
Average Daily Portfolio
$
70,946,295
$
59,011,679
$
+11,934,616
Accrued Earnings
$
34,290
$
77,957
$
-43,667
Effective Yield
0.588
%
1.607
%
-1.019 %
Average Life -Month End (In Days)
190
172
+18
Total Security Transactions
Amount
$
20,916,243
$
14,953,827
$
+5,962,416
Number
426
299
+127
Total Time Deposit Transactions
Amount
$
4,568,280
$
5,779,200
$
-1,220,920
Number
207
236
-29
Average Workday Investment Activity
$
1,157,933
$
942,410
$
+215,523
Prescribed Demand Account Balances
For Services
$
1,487,072
$
1,030,114
$
+466,958
For Uncollected Funds
$
204,971
$
304,137
$
-99,166
NOW Account Average Balance
$
0
$
0
$
0
1
BILL LOCKYER
TREASURER
STATE OF CALIFORNIA
INVESTMENT DIVISION SELECTED INVESTMENT DATA
ANALYSIS OF THE POOLED MONEY INVESTMENT ACCOUNT PORTFOLIO
(000 OMITTED)
April 30, 2010
DIFFERENCE IN
PERCENT OF
PERCENT OF
PORTFOLIO FROM
TYPE OF SECURITY
AMOUNT
PORTFOLIO
PRIOR MONTH
Government
Bills
$
25,752,705
34.98
+2.98
Bonds
0
0.00
0
Notes
7,851,744
10.67
-1.56
Strips
0
0.00
0
Total Government
$
33,604,449
45.65
+1.42
Federal Agency Debentures
$
2,174,128
2.95
-0.18
Certificates of Deposit
8,626,036
11.71
+0.78
Bank Notes
300,000
0.41
+0.41
Bankers' Acceptances
0
0.00
0
Repurchases
0
0.00
0
Federal Agency Discount Notes
6,439,728
8.75
-1.98
Time Deposits
4,062,640
5.52
-0.34
GNMAs
77
0.00
0
Commercial Paper
8,294,933
11.27
+4.29
FHLMC/Remics
779,875
1.06
-0.13
Corporate Bonds
126,120
0.17
-0.01
AB 55 Loans
286,197
0.39
-0.05
GF Loans
8,617,100
11.71
-4.19
NOW Accounts
0
0.00
0
Other
300,000
0.41
-0.02
Reversed Repurchases
0
0.00
0
Total (All Types)
$
73,609,283
100.00
INVESTMENT ACTIVITY
APRIL 2010
MARCH 2O10
NUMBER
AMOUNT
NUMBER
AMOUNT
Pooled Money
426
$ 20,916,243
492
$ 24,322,331
Other
7
15,031
41
2,117,807
Time Deposits
207
4,558,280
143
2,685,000
Totals
640
$ 25,489,554
676
$ 29,126,138
PMIA Monthly Average Effective Yield
0.588
0.547
Year to Date Yield Last Day of Month
0.675
0.685
2
Pooled Money Investment Account
Portfolio Composition
$73.6 Billion
04/30/10
Corporate
0.17
Commercial Paper
11.27%
Time Deposits
5.52%
CDs/BI
12.12'.
Loans
12.10%
Agencies Mortgages
12.11% 1.06%
Treasuries
45.65%
INVESTMENT ADVISORY BOARD MEETING Correspondence and
Written Material: C
Meeting Date: July 14, 2010
ITEM TITLE
Distribution of Investment Policies
for Fiscal Year 2010-201 1
BACKGROUND:
On June 15, 2010 the City Council approved the Investment Policies for Fiscal Year
2010-2011 which is attached.
I;1XK�uu ►�_ •►
Receive and File.
John M. Falconer, Finance Director
City of La Quinta
GEM of the DESERT
I Investment Policy
Fiscal Year 2010-2011
CITY OF LA QUINTA
Investment Policy
'
Fiscal Year 2010/2011
tTable
of Contents
Section
Topic
Page
Executive Summary
2
1
General Purpose
4
II
Investment Policy
4
'
III
Scope
4
IV
Objectives
4
► Safety of Principal
'
► Provide Liquidity
► Yield A Risk -Based Market Rate Of Return
V
Maximum Maturities
6
'
VI
Prudence
6
VII
Authority
7
Vill
Ethics and Conflicts of Interest
7
IX
Authorized Financial Dealers and Institutions
7
► Broker/Dealers
► Financial Institutions
'
X
Permissible Deposits and Investments
8
XI
Investment Pools
12
XII
Payment and Custody
12
'
XIII
Interest Earning Distribution Policy
12
XIV
Internal Controls and Independent Auditors
13
XV
Reporting Standards
14
'
XVI
Financial Assets and Investment Activity Not Subject to this Policy
15
XVII
Investment of Bond Proceeds
15
XIII
Investment Advisory Board - City of La Quinta
15
'
XIX
Investment Policy Adoption
16
Appendices To is Page
A
Summary of Permissible Deposits and Investments
17
B
City of La Quinta Municipal Code Ordinance 2.70 - Investment Advisory Board
19
C
City of La Quinta Municipal Code Ordinance 3.08 - Investment of Moneys and Funds20
'
D
Segregation of Major Investment Responsibilities
22
E
Listing of Approved Financial Institutions
23
F
Broker/Dealer Questionnaire and Certification
24
G
Request for Proposal for Professional Portfolio Management Firm
28
H
Permissible Investment Chart — Professional Portfolio Management Firm
34
1
Investment Management Process and Risk
35
'
J
Glossary
36
11
CITY OF LA QUINTA
Investment Policy
Fiscal Year 2010/2011
' Executive Summary
The general purpose of this Investment Policy is to provide the rules and standards that must be
followed in administering the City of La Quinta's deposits and investments.
The City's Investment Policy conforms to all state and local statutes and applies to all deposits
' and investments of the City of La Quinta, City of La Quinta Redevelopment Agency, and the
City of La Quinta Financing and Housing Authorities (the"City" ).
' It is the City's policy to deposit and invest public funds in a manner that shall provide:
► Safety of principal;
► Liquidity to meet all of the City's obligations and requirements that may be reasonably
anticipated;
► A risk -based market rate of return.
' It is the City's policy to hold securities and other investments until maturity. This buy -and -hold
policy shall not prevent the sale of a security to minimize loss of principal when an issuer or
' backer suffers declining credit worthiness or when the liquidity needs of the portfolio require
that a security be sold.
' Authority to manage the City's investment portfolio is derived from the City Ordinance.
Management responsibility for the investment program is delegated to the City Treasurer, who
shall establish and implement written procedures for the operation of the City's investment
' program consistent with the Investment Policy. The Treasurer shall establish and implement a
system of internal controls to accomplish the following objectives:
► Safeguard assets;
► The orderly and efficient conduct of its business, including adherence to all City
management policies;
► Prevention or detection of errors and fraud;
' ► The accuracy and completeness of accounting records;
► Timely preparation of reliable financial information.
' The System of Internal Controls developed by the City Treasurer shall be reviewed annually by the
independent auditors in connection with the annual audit of the City's Financial Statements.
The City Manager, Assistant City Managers, City Treasurer and city employees involved in the
City's banking and investment process shall conduct the City's business in an ethical manner and
refrain from any activity or relationship that may be, or have the appearance of, a conflict of
' interest.
The City Treasurer maintains a listing of financial institutions which are approved for investment
purposes. All Broker/Dealers and financial institutions that provide investment services will be
subject to City Council approval.
' The Treasurer will be permitted to invest only in the permissible deposits and investments
described in Section X and Appendix A up to the specified maximum allowable percentages
1
2
and/or dollar limitations and, where applicable, through the bid process requirements. Permissible
deposits and investments include, in general:
► FDIC -Insured Checking, Savings, and Sweep Accounts;
► Certificates of Deposit;
► U.S. Government Agency Securities and Federal Government Securities;
► Prime Commercial Paper;
► Local Agency Investment Fund (LAIF);
► Money Market Mutual Funds;
► Corporate Notes;
► Professionally Managed Accounts.
The City's deposits and investments are generally limited to three years' maximum maturity.
However, the projected amount of funds not expected to be disbursed within five years may be
invested in U.S. Treasury bills, notes and bonds maturing between three and five years.
The City's Investment Policy does not specify a single benchmark as a goal or target yield for a
rate of return on its investment portfolio. As a basis for comparison only, the Treasurer's
monthly report will display the rates of return on the three-month Bill, six-month Bill, and the one
and two-year U.S. Treasury Note, comparable -period rates for commercial paper, and the yield
for the State Treasurer's Local Agency Investment Fund (LAIF).
The Investment Policy shall be adopted by resolution of the La Quinta City Council on an annual
basis. The Investment Policy will be adopted before the end of June of each year.
This Executive Summary is only an overview of the City's Investment Policy. Reading this
' summary does not constitute a complete review, which can only be accomplished by reviewing all
of the pages herein.
1
1
1
IO 17,14
i
P.O. Box 1504
Ln Qoin'FA, CALIFORMA 92247-1504
78-495 Cm.i_i; TAMPIGO
LA QuinrA, CAI,IFURN1A 92253
City of La Quinta
Statement of Investment Policy
July 1, 2010 through June 30, 2011
Adopted by the City Council on June 15, 2010
GENERAL PURPOSE
(760) 7 7 7 - 7 0 0 0
FAX (760) 777-7101
The general purpose of this document is to provide the rules and standards that must be followed
in administering the City of La Quinta's deposits and investments.
11 INVESTMENT POLICY
It is the policy of the City of La Quinta to deposit and invest public funds in a manner that shall
provide:
➢ Safety of principal;
➢ Liquidity to meet all of the City's obligations and requirements that may be reasonably
anticipated;
➢ A risk -based market rate of return.
The Investment Policy conforms to all State and local statutes governing the investment of public
funds and sets forth the permissible deposits and investments of the City's funds and the
limitations thereon.
III SCOPE
Except as further detailed in Section XVII, this Investment Policy applies to all deposits and
investments of the City of La Quinta, City of La Quinta Redevelopment Agency and the City of La
Quinta Financing and Housing Authorities (hereafter referred to in this document as the "City").
These funds are reported in the City's Comprehensive Annual Financial Report (CAFR) and include
all funds within the following fund types:
► General
► .Special Revenue
. ► Capital Projects
► Debt Service
► Enterprise
► Internal Service
► Trust and Agency
► Any new fund types and fund(s) that may be created.
IV OBJECTIVES
The objectives of the City's investment activity, in order of priority and importance, are:
1. Safety of Principal
Safety of principal is the foremost objective of the City's investment program.
4 UUU
' Investments shall be undertaken in a manner that seeks to ensure the preservation of
' principal of the overall portfolio in accordance with the permissible deposits and
investments.
' The City shall endeavor to preserve its investment principal by making only permissible
deposits and investments, undertaken in a controlled manner to minimize the possibility of
loss or misappropriation through malfeasance or otherwise. Investments not backed by
the full faith and credit of the United States Government shall be diversified by allocating
' assets between different types of permissible investments, maturities, and issuers as a
means to mitigate credit risk and interest rate risk.
IA. Credit Risk is the risk of loss from the failure of the security issuer or backer.
Credit risk may be mitigated by:
' ► Limiting investments to investment grade securities as permitted in Section X;
► Diversifying the issuers of the securities in the investment portfolio so that
potential losses due to issuer failure or individual securities downgrades may be
' minimized.
B. Interest Rate Risk is the risk that market values of securities in the portfolio will
decline 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
' ► • Investing operating funds primarily in shorter -term securities.
C. Liquidity Risk is the risk that a security cannot be liquidated because of its unique
' features or structure or because it is thinly traded. Liquidity risk is not a material
issue for the City's portfolio because of the permissible deposits and investments
(see Section X) and because the City maintains a buy -and -hold policy and holds
securities and other investments to maturity. A discussion of the City's investment
process and risk is presented in Appendix I.
' 2. Provide Liquidity
The investment portfolio shall remain sufficiently liquid to meet all of the City's cash needs
' 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 needs cannot be anticipated the portfolio should be diversified and
' consist of securities with active secondary or resale markets.
The City's policy is to hold securities and other investments to maturity. Accordingly,
securities shall not be sold prior to maturity with the following exceptions:
► A security with declining credit quality can be sold early to minimize loss of
principal;
► Unanticipated liquidity needs of the portfolio require that one or more securities be
sold.
t
1 5
' 3. Yield A Risk -Based Market Rate Of Return
' The City's investment portfolio shall be structured with the objective of yielding a risk -
based market rate of return throughout budgetary and economic cycles. Return on
investment is less important than the safety and liquidity objectives described above.
' The City's Investment Policy does not specify a single benchmark as a goal or target yield
for a rate of return on its investment portfolio. The portfolio's rates of return will be
' influenced by several factors, including actions by the Federal Reserve Board, the
marketplace, and overall economic perceptions and conditions. These factors will not
affect yield during the securities' holding period because the City's buy -and -hold policy
fixes the securities' yield at the time of purchase.
As a basis for comparison only, the Treasurer's monthly reports will display the rates of
' return on the three-month Bill, six-month Bill, and one and two-year U.S. Treasury Note,
comparable -period rates for commercial paper, and the yield for the State Treasurer's
Local Agency Investment Fund (LAIF). The Treasurer may use these or any other
' published rates of return that the Treasurer deems appropriate for comparison to the return
on the City's investment portfolio.
V MAXIMUM MATURITIES
It is the City's policy to hold securities and other investments until maturity, thus avoiding the risk
of market value fluctuations with overall market interest rates. This buy -and -hold policy shall not
prevent the sale of a security to minimize loss of principal when an issuer or backer suffers
declining credit worthiness or when the liquidity needs of the City require that a security be sold.
The buy -and -hold policy requires that the City's investment portfolio be structured so that
' sufficient liquid funds are available from maturing investments and other sources to meet all
reasonably -anticipated cash needs. To meet anticipated cash needs, it is essential that the
Treasurer have reliable, diligently prepared cash flow projections.
' Annually, the Treasurer shall project the amount of funds not expected to be disbursed within five
years. For FY 2010/201 1, the amount of such funds is projected to be $4 million. Funds up to
' that amount may be invested in U.S. Treasury bills, notes and bonds maturing between 3 and 5
years. For all other funds, investments are limited to three years maximum maturity, with no
more than 25% of surplus funds invested in maturities exceeding two years and less than three
' years.
VI PRUDENCE
The City shall follow the Uniform Prudent Investor Act as adopted by the State of California in
Probate Code Sections 16045 through 16054.
Section 16053 sets forth the terms of a prudent person which are as follows: "Investments shall
be made with judgment and care - under circumstances then prevailing - which persons of
prudence, discretion, and intelligence exercise in the professional 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."
1 6
VII AUTHORITY
■ Authority to manage the City's investment portfolio is derived from sections 35607 and 35608 of
City Ordinance 3.08.010. Management responsibility for the investment program is delegated to
' the City Treasurer for a period of one year pursuant to the City Council's annual adoption of the
Investment Policy.
t The City Treasurer shall establish written procedures for the operation of the investment program
consistent with the Investment Policy. Procedures should include reference to safekeeping, wire
transfer agreements, banking service contracts, and collateral/depository agreements. Such
' procedures shall include explicit delegation of authority to persons responsible for investment
transactions. No person may engage in an investment transaction except as provided under the
terms of this Investment Policy and the procedures established by the City Treasurer. The City
' Treasurer shall be responsible for all transactions undertaken and shall establish a system of
controls to regulate the activities of subordinate officials. The City Manager or an Assistant City
Manager shall acknowledge in writing all purchases and sales of investments prior to their
execution by the City Treasurer.
' Vlll ETHICS AND CONFLICTS OF INTEREST
The City Manager, Assistant City Managers, City Treasurer and city employees involved in the
' City's banking and investment process shall conduct the City's business in an ethical manner and
refrain from any activity or relationship that may be, or have the appearance of, a conflict of
interest. Any questionable activity or relationship shall be reported immediately and in compliance
' with the procedures set forth in Section 1.40 - Conflicts of Interest and Acceptance of Gifts and
other Gratuities of the City of La Quinta Personnel Manual. Reporting must be made in
accordance with the personnel policies of the City and, until resolved, the officer or employee
' shall refrain from participating in the City's business related to the matter.
The City Manager, Assistant City Managers, City Treasurer and city employees may conduct
personal business with banks, brokers, and other financial institutions that are authorized to
conduct business with the City provided that the terms of the activity to the accountholder with
the City are the same as those that are available to the public in general.
IX AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS
' The City Treasurer maintains a listing of financial institutions which are approved for direct
investment purposes. In addition a list will also be maintained of approved broker/dealers selected
' by credit worthiness, who maintain an office in the State of California.
1. Broker/Dealers who desire to become bidders for direct investment transactions must
' supply the City with the following:
► Current audited financial statements;
► Proof of Financial Industry Regulatory Authority (FINRA) Certification;
' ► Trading resolution;
► Proof of California registration;
► Resume of Financial broker; and
' ► Completion of the City of La Quinta Broker/Dealer questionnaire (see Appendix F)
which contains a certification of having read the City's Investment Policy.
7
The City Treasurer shall evaluate the documentation submitted by the broker/dealer and
' independently verify existing reports on file for any firm and individual conducting
investment related business.
' The City Treasurer will also contact the following agencies during the verification process:
► Financial Industry Regulatory Authority (FINRA) Public Disclosure Report File (1-
' 800-289-9999).
► State of California Department of Corporations (1-916-445-3062).
' The City Treasurer maintains a listing of financial institutions which are approved for
investment purposes. All Broker/Dealers and financial institutions that provide investment
services will be subject to City Council approval.
' Each securities dealer shall provide monthly and quarterly reports filed pursuant to U.S. Treasury
Department regulations. Each mutual fund shall provide a prospectus and statement of additional
information.
2. Financial Institutions will be required to meet the following criteria in order to receive City
' funds for deposit or investment (see Appendix E, "Listing of Approved Financial
Institutions"1:
' A. Insurance - Public Funds shall be deposited only in financial institutions having
accounts insured by the Federal Deposit Insurance Corporation (FDIC).
' B. Collateral - The amount of the City's deposits or investments not insured by the
FDIC —shall be collateralized by securities with market values of 110%, or by
mortgages with market values 150%, of the amount of invested funds plus unpaid
' interest earnings.
C. Disclosure - Each financial institution maintaining invested funds in excess of the
' FDIC insured amount shall furnish the City a copy of the most recent Call Report.
The City shall not invest in excess of the FDIC insured amount in banking
' institutions which do not disclose to the city a current listing of securities pledged
for collateral ization in public monies.
' X PERMISSIBLE DEPOSITS AND INVESTMENTS
Permissible deposits and investments are summarized below. A more comprehensive list is
included in Appendix A.
Permissible Investments and Limitations
(See Appendix A for Additional Information)
Maximum
Allocation
Maximum
Maturity
Restrictions
Current /
Sweep Account:
Checking & Savings Accounts FDIC Insured & Sweep Accounts
85% Portfolio
On Demand
U.S. Treasuries
and/or GSE's
<= $250,000,
Certificates of Deposit
60% Portfolio
3 Years
including interest
per institution
E-1
[1
Permissible Investments and Limitations
Maximum
Maximum
Restrictions
(See Appendix A for Additional Information)
Allocation
Maturity
U.S. Treasury Bills, Notes and Bonds, and Government National
100 % Portfolio
3 Years
`=$4,0000,000
Mortgage Association (GNMA) Securities
maturing 3-5 Yrs
U.S. Government Agency Securities and Federal Government Securities
(except collateralized mortgage obligations (CMO's) or structured notes
which contain embedded rate options):
- Federal National Mortgage Association (FNMA)
$20,000,000
3 Years
- Federal Home Loan Bank Notes & Bonds (FHLB)
$25,000,000
3 Years
- Federal Farm Credit Bank (FFCB)
$30,000,000
3 Years
- Federal Home Loan Mortgage Corporation (FHLMC)
$20,000,000
3 years
Prime Commercial Paper including Temporary Liquidity Guarantee
15% Portfolio
90 Days
$5,000.000 per
Program (TLGP)
issuer maximum.
Local Agency Investment Fund (LAIF)
30% Portfolio
Current /
On Demand
$40 million
per account.
Money market mutual funds regulated by the SEC that consist only of US
20% Portfolio
Current /
Maintain $1 per
Treasury Securities or GSE's and maintain a par value of $1 per share
On Demand
share par value
$5,000,000 max
Corporate Notes
10%
3 Years
per issuer AA
rated or better
$10,000,000 max
Corporate Notes - Temporary Liquidity Guarantee Program (TLGP)
20%
3 Years
per issuer, AA
rated or better.
Requires
Professionally Managed Account
10%
3 Years
City Council -
Approved RFP
1 . Checking, Savings, and Sweep Accounts - The City will only maintain checking, savings,
and sweep accounts with FDIC insured financial institutions. As authorized by the City
Council, a U.S. Treasury and/or U.S. Agency Securities Money Market Sweep Account
with a $50,000 target balance may be maintained in conjunction with the checking
account.
2. Certificates of Deposit - As authorized in Government Code Section 53649, Certificates of
Deposit are fixed term investments which are required to be collateralized from 1 10% to
150% depending on the specific security pledged as collateral in accordance with
Government Code Section 53652. There are no portfolio limits on the amount or maturity
for this investment vehicle.
Collateralization will be required for Certificates of Deposits in excess of the FDIC insured
amount. The type of collateral is limited to City authorized investments. Collateral will
always be held by an independent third party from the institution that sells the Certificates
of Deposit to the City. Evidence of compliance with State Collateralization policies must
be supplied to the City and retained by the City Treasurer as follows:
A. Certificates of Deposits Insured by the FDIC: The City Treasurer may waive
collateral ization of a deposit that is federally insured.
B. Certificates of Deposit in excess of FDIC Limits: The amount not federally insured
shall be 110% collateralized securities or 1 50% mortgages market value of that
amount of invested funds plus unpaid interest earnings.
E
' The City's Investment Policy limits the percentage of Certificates of Deposit to 60% of the
portfolio.
' ➢ The City does not allow investments in CDAR's or negotiable (secondary market)
certificates of deposit.
' 3. U.S. Treasury Bills Notes and Bonds and Government National Mortgage Associations
(GNMA) securities - The City may invest in U.S. Treasury bills, notes, and bonds, and
' GNMA securities directly issued and backed by the full faith and credit of the U.S.
Government. The City's Investment Policy limits investments in U.S. Treasury issues and
GNMA's to 100% of the portfolio.
t➢ The City's Investment Policy does not allow investments in local and state
indebtedness.
' 4. U.S. Government Agency Securities and Federal Government Securities - The City may
invest in securities issued by U.S. Government instrumentalities and agencies (commonly
referred to as government sponsored enterprises or GSE's). These securities are not
backed by the full faith and credit of the U.S. Government. Publicly owned LSE's include
Federal National Mortgage Association (FNMA), Federal Home Loan Mortgage Corporation
(FHLMC) and Student Loan Marketing Association (SLMA). Non -publicly owned GSE's
include the Federal Home Loan Bank (FHLB), Federal Farm Credit Bank (FFCB), Federal
Land Bank (FLB) and Federal Intermediate Credit Bank (FICB).
' The City's Investment Policy allows investment only in securities of FNMA, FHLMC, FHLB
and FFCB. For Fiscal Year 2010/2011, the maximum face amount per issuer is $20
' million for FNMA and FHLMC, $25 million for FHLB and $30 million for FFCB. In addition,
no more than 30% of the portfolio surplus may be invested in all GSE's combined with a
maximum $10 million face amount per purchase.
5. Prime Commercial Paper - As authorized in Government Code Section 53601(g), a portion
of the City's portfolio may be invested in commercial paper of the highest rating (A-1 or P-
' 1 ) as rated by Moody's or Standard and Poor's. 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. The City's Investment Policy permits
' investments in commercial paper with the following limitations:
A. Maximum 15% of the portfolio.
' B. Maximum maturity of 90 days.
C. Maximum of $5 million per issuer.
' These limitations are more restrictive than the State code allowed amounts of 25% of the
total portfolio with maturities up to 270 days with no per -issuer limitations.
' The City is also permitted to invest in commercial paper issued under the FDIC Temporary
Liquidity Guarantee Program subject to the aforementioned commercial paper limitations.
6. State Treasurer's Local Agency Investment Fund (LAIF) - As authorized in Government
Code Section 16429.1 and by LAIF procedures, local government agencies are each
authorized to invest a maximum of $50 million per account in this investment program
administered by the California State Treasurer.
The City Treasurer may not invest more than $40 million per account in LAIF
10
' The City's investment in LAIF is allowable as long as the average maturity of its
' investment portfolio does not exceed two years, unless specific approval is authorized by
the City Council. The City has two accounts with LAIF and limits investment to 30% of
the portfolio.
' 7. Money Market Mutual Funds - As authorized in Government Code Section 53601(k), local
agencies are authorized to invest in shares of beneficial interest issued by diversified
management companies (mutual funds) in an amount not to exceed 20% of the agency's
portfolio. There are a number of other qualifications and restrictions regarding allowable
investments in corporate notes and shares of beneficial interest issued by mutual funds
which include (1) attaining the highest ranking or the highest letter and numerical rating
' provided by not less than two of the three largest nationally recognized rating services, or
(2) having an investment advisor registered with the Securities and Exchange Commission
with not less than five years' experience investing in the securities and obligations and
' with assets under management in excess of five hundred million dollars ($500,000,000).
The City's Investment Policy only allows investments in mutual funds that are money
' market funds maintaining a par value of $1 per share that invest in direct issues of the
U.S. Treasury and/or US Agency Securities with an average maturity of their portfolio not
exceeding 90 days and the City limits such investments to 20% of the portfolio.
' 8. Corporate Notes - As authorized in Government Code Section 53601 (j), local agencies
may invest in corporate notes. The notes must be issued by corporations organized and
operating in the United States or by depository institutions licensed by the United States
or any other state and operating in the United States. The City's Investment Policy allows
investment in corporate notes authorized by the Government Code with the following
limitations:
► Maturities shall not exceed three years from date of purchase.
' ► Eligible notes shall be regularly quoted and traded in the marketplace.
► Eligible notes shall be rated "AA"or better.
► Total investment shall not exceed 10% of the portfolio for non- Temporary
' Liquidity Guarantee Program (TLGP) Corporate Notes and 20% of the portfolio for
TLGP Corporate Notes, and
► The maximum aggregate investment shall not exceed $5 million face amount for
each issuer.
This is more restrictive than the State code allowed amounts of 30% of the total portfolio
with maturities up to five years with no per -issuer limitations.
The City is also permitted to invest in corporate notes issued under the FDIC
t Temporary Liquidity Guarantee Program subject to the aforementioned corporate note
limitations, except that corporate notes issued under the Temporary Liquidity Guarantee
Program or otherwise backed by the United States government shall be limited to 20% of
' the portfolio and the maximum aggregate investment for such notes shall not exceed $10
million face amount for each issuer.
' 9. Professionally Managed Account(s) - The City Treasurer may place up to 10% of the
portfolio with a professional portfolio management firm ("PPMF"). The PPMF will be
approved by the City Council based upon the City Treasurer's recommendation pursuant to
completion of a request for proposal (RFP) as outlined in Appendix G. The PPMF shall
have:
(a) An established professional reputation for asset or investment management;
' 11
' (b) Knowledge and working familiarity with State and Federal laws governing and
' restricting the investment of public funds;
(c) Substantial experience providing investment management services to local public
agencies whose investment policies and portfolio size are similar to those of the
City;
' (d) Professional liability (errors and omissions) insurance and fidelity bonding in such
amounts as are required by the City;
(e) Registration with the Securities and Exchange Commission under the Investment
' Advisers Act of 1940.
Before engagement by the City and except as may be specifically waived or revised, the
PPMF shall commit to adhere to the provisions of the City's Investment Policy with the
following exceptions:
(f) The PPMF may be granted the discretion to purchase and sell investment securities
in accordance with Appendix I of this Investment Policy;
(g) The PPMF is not required to adhere to the buy -and -hold policy of the City's
' Investment Policy, and;
(h) The PPMF does not need City Manager or City Treasurer approval to make
permissible investments as detailed in column 8 of Appendix H of this Investment
' Policy.
' XI INVESTMENT POOLS
There are three (3) types of investment pools:
' ► State -run pools (e.g., LAIF);
► Pools that are operated by a political subdivision where allowed by law and the political
' subdivision is the trustee (e.g., County Pools);
► Pools that are operated for profit by third parties.
The City's Investment Policy permits investment only in pools authorized in Section X.
' XII PAYMENT AND CUSTODY
The City shall engage qualified third party custodians to act in a fiduciary capacity to maintain
' appropriate evidence of the City's ownership of securities and other eligible investments. Such
custodians shall disburse funds, received from the City for a purchase, to the broker, dealer or
seller only after receiving evidence that the City has legal, record ownership of the securities.
' Even though ownership is evidenced in book -entry form rather than by actual certificates, this
procedure is commonly accepted as the delivery versus payment (DVP) method for the transfer of
securities.
XIII INTEREST EARNING DISTRIBUTION POLICY
Interest earnings are generated from pooled investments and specific investments.
' 1. Pooled Investments - It is the general policy of the City to pool all available operating cash
of the City of La Quinta, La Quinta Redevelopment Agency and La Quinta Financing and
Housing Authorities and allocate interest earnings, in the following order, as follows:
' 12
' A. Payment to the General Fund of an amount equal to the total annual bank service
charges as incurred by the general fund for all operating funds as included in the
annual operating budget.
' B. Payment to the General Fund of a management fee equal to 5% of the annual
pooled cash fund investment earnings.
1 C. Payment to each fund of an amount based on the average computerized
daily cash balance included in the common portfolio for the earning period.
' 2. Specific Investments - Specific investments purchased by a fund shall incur all earnings
and expenses to that particular fund.
XIV INTERNAL CONTROLS AND INDEPENDENT AUDITOR
The City Treasurer shall establish a system of internal controls to accomplish the following
objectives:
► Safeguard assets;
► The orderly and efficient conduct of its business, including adherence to management
policies;
► Prevention or detection of errors and fraud;
► The accuracy and completeness of accounting records; and
► Timely preparation of reliable financial information.
While no internal control system, however elaborate, can guarantee absolute assurance that the
' City's assets are safeguarded, it is the intent of the City's internal control to provide a reasonable
assurance that management of the investment function meets the City's objectives.
The internal controls shall address the following
1 . Control of collusion. Collusion is a situation where two or more employees are working in
' conjunction to defraud their employer.
2. 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.
3. 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.
4. 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.
5. 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
1
13
contingent on the various staff positions and their respective responsibilities as outlined in
the Segregation of Major Investment Responsibilities appendices.
6. Written confirmation or telephone transactions for investments and wire transfers. Due to
the potential for error and improprieties arising from telephone transactions, all telephone
transactions shall be supported by written communications or electronic confirmations 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.
7. 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's Financial Statements.
The independent auditor's letter on internal control over financial reporting and compliance as it
pertains 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 auditor's
' letter, as it pertains, 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.
' See Appendix D, "Segregation of Major Investment Responsibilities."
' XV REPORTING STANDARDS
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.
' The Treasurer's Report shall summarize cash and investment activity and changes in balances and
include the following:
' ► A certification by the City Treasurer.
► A listing of purchases and sales/maturities of investments.
► Cash and Investments categorized by authorized investments, except for LAIF
' which will be provided quarterly and show yield and maturity.
► Comparison of month end actual holdings to Investment Policy limitations.
► Current year and prior year monthly history of cash and investments for trend
' analysis.
► Balance Sheet.
► Distribution of cash and investment balances by fund.
► A year to date historical cash flow analysis and projection for the next six months.
► A two-year list of historical interest rates.
14
' XVI FINANCIAL ASSETS AND INVESTMENT ACTIVITY NOT SUBJECT TO THIS POLICY
' The City's Investment Policy does not apply to the following:
► Cash and Investments raised from Conduit Debt Financing;
' ► Funds held in trust in the City's name in pension or other post -retirement benefit
programs;
► Cash and Investments held in lieu of retention by banks or other financial
' institutions for construction projects;
► Short or long term loans made to other entities by the City or Agency; and
Short term (Due to/from) or long term (Advances from/to) obligations made
' either between the City and its funds or between the City and Agency.
XVII INVESTMENT OF BOND PROCEEDS
The City's Investment Policy shall govern bond proceeds and bond reserve fund investments.
California Code Section 5922 (d) governs the investment of bond proceeds and reserve funds in
' accordance with bond indenture provisions which shall be structured in accordance with the
City's Investment Policy.
Arbitrage Requirement - The US Tax Reform Act of 1986 requires the City to perform arbitrage
calculations as required and return excess earnings to the US Treasury from investments of
proceeds of bond issues sold after the effective date of this law. These arbitrage calculations
' may be contracted with an outside source to provide the necessary technical assistance to
comply with this regulation. Investable funds subject to the 1986 Tax Reform Act will be kept
segregated from other funds and records will be kept in a fashion to facilitate the calculations.
' The City's investment position relative to the new arbitrage restrictions is to continue pursuing
the maximum yield on applicable investments while ensuring the safety of capital and liquidity. It
' is the City's position to continue maximization of yield and to rebate excess earnings, if
necessary.
1 XVIII INVESTMENT ADVISORY BOARD - CITY OF LA QUINTA
' The Investment Advisory Board (IAB) is a standing board composed of five members from the
public that are appointed by the City Council. Background information will be requested and
potential candidates must agree to a background check and verification. On an annual basis, in
' conjunction with the Political Reform Act disclosure statutes, or at any time if a change in
circumstances warrants, each board member will provide the City Council with a disclosure
statement which identifies any matters that have a bearing on the appropriateness of that
member's service on the board. All board members shall report annually to the City Clerk on
Form 700, Statement of Economic Interests, any activities, interests, or relationships that may be,
or have the appearance of, a conflict of interest.
' The IAB must meet at least quarterly, but usually meets monthly, to:
1. Review at least annually the City's Investment Policy and recommend appropriate
changes;
2. Review monthly treasury report and note compliance with the Investment Policy and
' adequacy of cash and investments for anticipated obligations;
3. Receive and consider other reports provided by the City Treasurer;
1 15
4. Meet with the independent auditor after completion of the annual audit of the City's
financial statements, and receive and consider the auditor's comments on auditing
' procedures, internal controls and findings for cash and investment activities, and;
5. Serve as a resource for the City Treasurer on matters such as proposed investments,
internal controls, use or change of financial institutions, custodians, brokers and dealers.
The IAB will report to the City Council after each meeting either in person or through
correspondence at a regular City Council meeting. See Appendix B: "Investment Advisory Board
' Provisions".
XIX INVESTMENT POLICY ADOPTION
The City's Investment Policy will be reviewed annually by the City's Investment Advisory Board
' and the City Treasurer. The Investment Advisory Board will forward the Investment Policy with
any revisions to the City Manager and City Attorney for their review and comment. A joint
meeting will be held with the Investment Advisory Board, City Manager, City Attorney, and City
' Treasurer to review the Investment Policy and any comments prior to submission to the City
Council for their consideration.
The Investment Policy shall be adopted by resolution of the City Council annually before the end
of June of each year.
16
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17
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' Appendix B
City of La Quinta Municipal Code
Chapter 2.70
' INVESTMENT ADVISORY BOARD PROVISIONS
Sections:
2.70.010 General Rules Regarding Appointment.
2.70.020 Board meetings.
2.70.030 Board functions.
' 2.70.010 General rules regarding appointment
A. Except as set out below, see Chapter 2.06 for General Provisions.
B. The Investment Advisory Board (the "board") is a standing board composed of five (5)
members from the public that are appointed by city council.
C. Applicants for the board should have a background in finance, preferably with knowledge
and/or experience in markets, controls and accounting for securities. Background information will
be requested and potential candidates must agree to a background check and verification.
' D. On an annual basis, in conjunction with the Political Reform Act disclosure statutes, or at
any time if a change in circumstances warrants, each board member will provide the City Council
with a disclosure statement which identifies any matters that have a bearing on the
' appropriateness of that member's service on the board. Such matters may include, but are not
limited to, changes in employment, changes in residence, or changes in clients.
E. To promote continuity, the expiration of the terms of the members of the board shall be
' staggered. The term of service is three years, with one or two terms expiring each year.
2.70.020 Board meetings.
' The Board usually will meet monthly, but this schedule may be extended to quarterly
meetings upon the concurrence of the Board and the City Council. The specific meeting dates will
be determined by the Board Members and meetings may be called for on an as needed basis.
' 2.70.030 Board functions.
' A. The principal functions of the Board are: (1) review at least annually the City's Investment
Policy and recommend appropriate changes; (2) review monthly Treasury Report and note
compliance with the Investment Policy and adequacy of cash and investments for anticipated
obligations; (3) receive and consider other reports provided by the City Treasurer; (4) meet with
the independent auditor after completion of the annual audit of the City's financial statements, and
receive and consider the auditor's comments on auditing procedures, internal controls, and findings
' for cash and investment activities, and; (5) serve as a resource for the City Treasurer on matters
such as proposed investments, internal controls, use or change of financial institutions, custodians,
brokers and dealers.
' B. The Board will report to the City Council after each meeting either in person or through
correspondence at a regular City Council meeting.
19
Appendix C
City of La Quinta Municipal Code
Chapter 3.08
INVESTMENT OF MONEYS AND FUNDS
1 Sections:
' 3.08.010 Investment of city moneys and deposit of securities.
3.08.020 Authorized investments.
' 3.08.030 Sales of securities.
3.08.040 City bonds.
3.08.050 Reports.
' 3.08.060 Deposits of securities.
3.08.070 Trust fund administration.
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. (Ord. 2 § 1 (part), 1982)
' 3.08.020 Authorized investments.
Pursuant to the delegation of authority in Section 3.08.010, the city treasurer is
authorized to purchase, at their original sale or after they have been issued, securities
which are permissible investments under any provision of state law relating to the
investing of general city funds, including but not limited to Sections 53601 and 53635 of
' the Government Code, as said sections now read or may hereafter be amended, from
moneys in his custody which are not required for the immediate necessities of the city
and as he may deem wise and expedient, and to sell or exchange for other eligible
securities and reinvest the proceeds of the securities so purchased. (Ord. 2 § 1 (part),
1982)
3.08.030 Sales of Securities.
From time to time the city treasurer shall sell the securities in which city moneys have
been invested pursuant to this chapter, so that the proceeds may, as appropriate, be
applied to the purchase for which the original purchase money may have been designated
or placed in the city treasury. (Ord.2 § I (part),
' 3.08.040 City bonds.
Bonds issued by the city and purchased pursuant to this chapter may be cancelled
' either in satisfaction of sinking fund obligations or otherwise if proper and appropriate;
provided, however, that the bonds may be held uncancelled and while so held may be
resold. (Ord. 2 § 1 (part), 1982)
20
F
' 3.08.050 Reports.
The city treasurer shall make a monthly report to the city council of all investments
' made pursuant to the authority delegated in this chapter. (Ord. 2 § 1 (part), 1982)
3.08.060 Deposits of securities.
' Pursuant to the delegation of authority in Section 3.08.010, the city treasurer is
authorized to deposit for safekeeping, the securities in which city moneys have been
invested pursuant to this chapter, in any institution or depository authorized by the terms
' of any state law, including but not limited to Section 53608 of the Government Code as
it now reads or may hereafter be amended. In accordance with said section, the city
treasurer shall take from the institution or depository a receipt for the securities so
' deposited and shall not be responsible for the securities delivered to and receipted for by
the institution or depository until they are withdrawn therefrom by the city treasurer.
' (Ord. 2 § 1 (part), 1982
3.08.070 Trust fund administration.
Any departmental trust fund established by the city council pursuant to Section
36523 of the Government Code shall be administered by the city treasurer in accordance
with Section 36523 and 26524 of the Government code and any other applicable
' provisions of law. (Ord. 2 § 1 (part), 1982)
F
21
Appendix D
SEGREGATION OF MAJOR INVESTMENT RESPONSIBILITIES
Function
Responsible Parties
Develop and Recommend Modifications
Investment Advisory Board
to City's Formal Investment Policy
and City Treasurer
Review City's Investment Policy
City Manager
and Recommend City Council Action
and City Attorney
Adopt Formal Investment Policy
City Council
Implement Formal Investment Policy
City Treasurer
Review Financial Institutions & Select Investments
City Treasurer
Acknowledge Investment Selections
City Manager or an
Assistant City Manager
Execute Investment transactions
City Treasurer or City Manager
Confirm Wires (if applicable)
Accounting Manager or
Financial Services Assistant
Record Investment Transactions in City's
Accounting Manager or
Accounting Records
Financial Services Assistant
Investment Verification (match broker confirmation
City Treasurer and Financial
to City investment records)
Services Assistant
Reconcile Investment Records
to Accounting Records and Bank Statements
Financial Services Assistant
Reconcile Investment Records
to Treasurers Report of Investments
Accounting Manager
Security of Investments at City
Accounting Manager or Senior
Secretary
Security of Investments outside City
Third Party Custodian
Review Internal Control Procedures
External Auditor
22
Appendix E
LISTING OF APPROVED FINANCIAL INSTITUTIONS
1. Banking Services Wells Fargo Bank, Government Services,
Los Angeles, CA
2. Custodian Services Bank of New York/Mellon, Los Angeles,
CA
3. Deferred Compensation International City/County Management
Association Retirement Corporation
4. Broker/Dealer Services Banc of America Securities, San
Francisco, CA
Morgan Stanley, San Rafael, CA
CitiGroup, Costa Mesa, CA
5. Government Pool State of California Local Agency
Investment Fund
City of La Quinta Account
La Quinta Redevelopment Agency Account
6. Bond Trustees 1991 City Hall Revenue Bonds - US Bank
1991 RDA Project Area 1 - US Bank
1992 RDA Project Area 2 - US Bank
1994 RDA Project Area 1 -US Bank
1998 RDA Project Area 1 &2 — US Bank
2001 RDA Project Area 1 — US Bank
2002 RDA Project Area 1 — US Bank
2003 RDA Project Area 1 —US Bank
Assessment Districts — US Bank
No Changes to this listing may be made without City Council approval
Pis]
Appendix F
BROKER/DEALER QUESTIONNAIRE AND CERTIFICATION
1. Name of Firm:
2. Address:
3. Telephone: I—) ( )
4. Broker's Representative to the City (attach resume):
Name:
Title:
Telephone: I—)
5. Manager/Partner-in-charge (attach resume):
Name:
Title:
Telephone:
6. List all personnel who will be trading with or quoting securities to City employees (attach
resume)
Name:
Title: —
Telephone: I—) ( )
7. Which of the above personnel have read the City's Investment Policy?
8. Which instruments are offered regularly by your local office? (Must equal 100%)
% U.S. Treasuries % Repos
% BA's % Reverse Repos
% Commercial Paper % CMO's
% CD's % Derivatives
% Mutual Funds % Stocks/Equities
Agencies (specify): % Other (specify):
9. References -- Please identify your most directly comparable public sector clients in our
geographical area.
Entity Entity
Contact Contact
24
Telephone () Telephone ()
Client Since Client Since
' 10. Have any of your clients ever sustained a loss on a securities transaction arising from a
misunderstanding or misrepresentation of the risk characteristics of the instrument? If so,
explain.
1 1 . Has your firm or your local office ever been subject to a regulatory or state/ federal
' agency investigation for alleged improper, fraudulent, disreputable or unfair activities
related to the sale of securities? Have any of your employees been so investigated? If
so, explain.
12. Has a client ever claimed in writing that you were responsible for an investment loss?
' Yes No If yes, please provide action taken
' Has a client ever claimed in writing that your firm was responsible for an investment
loss? Yes No If yes, please provide action taken
' Do Lou have any current or pending complaints that are unreported to FINRA?
' Yes No If yes, please provide action taken
' Does your firm have any current, or pending complaints that are unreported to FINRA?
Yes No If yes, please provide action taken
13. Explain your clearing and safekeeping procedures, custody and delivery process.
Who audits these fiduciary responsibilities?
Latest Audit Report Date
' 25
14. How many and what percentage of your transactions failed?
Last month? % $
Last year? % $
15. Describe the method your firm would use to establish capital trading limits for the City of
La Quinta.
16. Is your firm a member in the S.I.P.C. insurance program? Yes No
If yes, explain primary and excess coverage and carriers.
17, What portfolio information, if any, do you require from your clients?
18. What reports and transaction confirmations or any other research publications will the City
receive?
19. Does your firm offer investment training to your clients? Yes No
20. Does your firm have professional liability insurance? Yes No
If yes, please provide the insurance carrier, limits and expiration date.
21. Please list your FINRA/NASD Registration Number
22. Do you have any relatives who work at the City of La Quinta?
Yes No If yes, Name and Department
23. Do you maintain an office in California? Yes No
24. Do you maintain an office in La Quinta or Riverside County? Yes No
25. Please enclose the following:
► Latest audited financial statements.
► Samples of reports, transaction confirmations and any other research/publications the
City will receive.
► Samples of research reports and/or publications that your firm regularly provides to
clients.
► Complete schedule of fees and charges for various transactions.
M1
`CERTIFICATION...
I hereby certify that I have personally read the Statement of Investment Policy of the City of La
Quinta, 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 La Quinta. All sales personnel will be routinely informed of the City's investment
objectives, horizons, outlooks, strategies and risk constraints whenever we are so advised by the
City. We pledge to exercise due diligence in informing the City of La Quinta of all foreseeable
risks associated with financial transactions conducted with our firm.
By signing this document the City of La Quinta is authorized to conduct any and all background
checks.
Under penalties of perjury, the responses to this questionnaire are true and accurate to the best of
my knowledge.
Broker
Sales Manager and/or Managing Partner*_
Date Title
27
Appendix G
' Request for Proposals
Professional Portfolio Management Firm
City of La Quinta, CA
The City of La Quinta, CA is soliciting Requests for Proposals (RFP) from interested firms for the
provision of a discretionary investment management services for City of La Quinta, CA. The
portfolio to be managed of the invested assets is will be approximately 10% of the City's
investment portfolio and will be invested between 0 — 3 years.
The investment of City of La Quinta, CA's funds is guided by the applicable State statutes and
the City of La Quinta, CA's investment policy. A copy of the investment policy is attached for
your information.
Questions regarding this RFP should be directed to:
Name:
Title:
City of:
Address:
City, State, Zip Code:
Phone Number:
John M. Falconer
Finance Director/Treasurer
La Quinta, CA
P.O. Box 1504
La Quinta, CA 92247-1504
(760)777-7150
I. CRITERIA FOR EVALUATION AND SELECTION
■ Experience of the firm in providing services to public sector entities of similar size
and with similar investment objectives;
■ Professional experience and qualifications of the individuals assigned to the
account;
■ Portfolio management resources, investment philosophy and approach;
■ Responsiveness to the RFP, communicating an understanding of the overall
program and services required;
■ Reporting capabilities;
■ Fees.
Il. SELECTION TIMETABLE
A. [Month, Day and Year] Proposals due by [Time] PST.
B. [Month, Day and Year] Proposals evaluated: to be determined
C. [Month, Day and Year] [City of La Quinta, CAI [Board/Council] approves selection
and awards contract.
III. FORMAT FOR PROPOSALS
' Please format your response to this RFP in the following manner:
A. Organization
m
1
1. Describe your organization, date founded, ownership and other business
' affiliations. Provide number and location of affiliated offices. Specify the number
of years your organization has provided investment management service.
' 2. Describe your firm's revenue sources (e.g., investment management, institutional
research, etc.) and comment on your firm's financial condition.
' 3. Within the past three years, have there been any significant developments in your
organization (e.g., changes in ownership, new business ventures)? Do you expect
any changes in the near future?
' 4. Describe any U.S. Securities and Exchange Commission (SEC) censures or litigation
involving your organization, any officer, or employee at any time in the last ten
' years.
5. Describe the firm's fiduciary liability and/or errors and omissions insurance
coverage. Include dollar amount of coverage.
B. Personnel
' 1. Identify the number of professionals employed by your firm by classification.
2. Provide an organization chart showing function, positions, and titles of all the
' professionals in your organization.
3. Provide biographical information on investment professionals that will be involved
' in the decision -making process for our portfolio, including number of years at your
firm. Identify the person who will be the primary portfolio manager assigned to the
account.
4. Describe your firm's compensation policies for investment professionals and
address any incentive compensation programs.
1 C. Assets Under Management
1. Summarize your institutional investment management asset totals by category for
your latest reporting period in the following table:
' Other Restrictive
of Clients Number Operating Funds Number of Funds
Clients
' Governmental $ $
' Governmental Pension $ N/A N/A
' Non Governmental
Pension $ N/A N/A
t
' 29
9
Corporate $ N/A N/A
High Net Worth Client S N/A N/A
Endo wmental/Foun- $ N/A N/A
dation
2. Provide the number of separate accounts whose portfolios consist of operating
funds.
3. List in the following table the percentage by market value of aggregate assets
under all governmental accounts under management for your latest reporting
period:
Type of Asset Percent by Market
Value
U.S. Treasury securities
Federal Agency obligations
Corporate securities rated AAA -AA
Corporate securities rated A
Corporate securities rated BBB or
lower
Other
(specify )
4. Describe the procedures that your firm has in place to address the potential or
actual credit downgrade of an issuer and to disclose and advise a client of the
situation.
5. Provide data on account/asset growth over the past five years. Indicate the
number of government accounts gained and the number of government accounts
lost.
6. List your five governmental largest clients. Identify those that are exclusively
operating fund relationships and/or those that are other relationships (e.g., bond
fund, retirement fund).
7. Provide a copy of the firm's Form ADV, Parts I and II (including all schedules).
8. Provide proof of State of California Registration, if your firm is not eligible for SEC
registration.
9. Provide a sample contract for services.
30
' F
1
Philosophy/Approach
Describe your firm's investment philosophy for public clients, including your firm's
philosophy regarding average duration, maturity, investment types, credit quality,
and yield.
2. Describe in detail your investment process, as you would apply it to City of La
Quinta, CA's portfolio.
3. What are the primary strategies for adding value to portfolios?
4. Describe the process you would recommend for establishing the investment
objectives and constraints for this account.
5. Describe in detail your process of credit risk management, including how you
analyze credit quality, monitor credits on an ongoing basis, and report credit to
governmental accounts.
6. Describe your firm's trading methodology.
7. Describe your firm's decision -making process in terms of structure, committees,
membership, meeting frequency, responsibilities, integration of research ideas, and
portfolio management.
8. Describe your research capabilities as they would pertain to governmental
accounts. What types of analysis do you use?
9. Describe the firm's approach to managing relationships with the broker -dealer
community.
Portfolio Management
Are portfolios managed by teams or by one individual?
2. What is the average number of accounts handled per manager?
3. Which professional staff member will be the primary client contact for City of La
Quinta, CA?
4. How frequently are you willing to meet with us?
5. Describe procedures used to ensure that portfolios comply with client investment
objectives, policies, and bond resolutions.
Fees Charged
Please include a copy of your firm's fee schedule applicable to this RFP.
2. Identify any expenses that would not be covered through this fee structure and
would be required in order to implement the firm's program.
31
1
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3. Is there a minimum annual fee?
Performance Reporting
1. Please report on all accounts under $100 million.
2. Please provide performance history for governmental accounts for the last five
years.
3. Please provide risk measurements for governmental accounts for the last five
years.
4. Indicate whether your returns are calculated and compiled in accordance with
the Association for Investment Management and Research (AIMR/CFA Institute)
standards.
5. Do your reports conform to the State of California reporting standards? Are you
willing to customize your reports to meet our specifications?
6. How will you notify us of investment transactions?
7. Are confirmations of investment transactions sent directly by the broker/dealer to
the client?
8. Do your reports include rating information on investments which is required by
GASB 40?
References
Provide a list of at least five (5) client references in California. References should be
public agencies with portfolio size and investment objectives similar to City of La Quinta,
CA. Include length of time managing the assets, contact name, and phone number.
Insurance Requirements
Exhibit A defines the insurance requirements that will need to be met prior to the
[Board/Counciq's approval of any agreement for services.
Submittal of proposals
1 . Seven (7) copies of the proposal shall be submitted in a sealed envelope bearing
the caption RFP for (City of La Quinta, CAi and addressed to:
City of La Quinta, CA
P.O. Box 1504
La Quinta, CA 92247-1504
Attention: John Falconer, Finance Director/Treasurer
2. Proposal must be received no later than [Time] PST on (Month, Day, and Year].
32
3. Proposals should be verified before submission. The City of La Quinta, CA shall
' not be responsible for errors or omissions on the part of the respondent in
preparation of a proposal. The City of La Quinta, CA reserves the right to reject
any and all proposals, to wave any irregularities, or informalities in the
' proposals, and to negotiate modifications to any proposal.
Enclosures: Investment Policy
' Treasurers Report
33
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34
Appendix I
Investment Management Process and Risk
Except as provided for in Section 27000.3, Government Code Section 53600.3 declares as a trustee
each person, treasurer, or governing body authorized to make investment decisions on behalf of local
agencies. As trustees are subject to the prudent investor standard. These persons shall act with care,
skill, prudence, and diligence under the circumstances then prevailing when investing, reinvesting,
purchasing, acquiring, exchanging, selling, and managing funds. Section 53600.5 further stipulates
that the primary objective of any person investing public funds is to safeguard principal; secondly, to
meet liquidity needs of the depositor; and lastly, to achieve a return or yield on invested funds
(Government Code Section 27000.5 specifies the same objectives for county treasurers and board of
supervisors).
Risk is inherent throughout the investment process. There is investment risk associated with any
' investment activity and opportunity risk related to inactivity. Market risk is derived from exposure to
overall changes in the general level of interest rates while credit risk is the risk of loss due to the failure
of the insurer of a security. The market value of a security varies inversely with the level of interest
' rates. If an investor is required to sell an investment with a five percent yield in a comparable seven
percent rate environment, that security will be sold at a loss. The magnitude of that loss will depend on
the amount of time until maturity.
' Purchasing certain allowable securities with a maturity of greater than five years requires approval of
the governing board (see Government Code Section 53601). Part of that approval process involves
assessing and disclosing the risk and possible volatility of longer -term investments
' Another element of market risk is liquidity risk. Instruments with unique call features or special
structures, or those issued by little known companies, are examples of "story bonds" and are often
' thinly traded. Their uniqueness often makes finding prospective buyers in a secondary market more
difficult and, consequently, the securities' marketability and price are discounted. However, under
certain market conditions, gains are also possible with these types of securities.
Default risk represents the possibility that the borrower may be unable to repay the obligation as
scheduled. Generally, securities issued by the federal government and its agencies are considered the
most secure, while securities issued by private corporations or negotiable certificates of deposit issued
' by commercial banks have a greater degree of risk. Securities with additional credit enhancements,
such as bankers acceptances, collateralized repurchase agreements and collateralized bank deposits are
somewhere between the two on the risk spectrum.
The vast majority of portfolios are managed within a buy and hold policy. Investments are purchased
with the intent and capacity to hold that security until maturity. At times, market forces or operations
' may dictate swapping one security for another or selling a security before maturity. Continuous analysis
and fine tuning of the investment portfolio are considered prudent investment management. (... I
The Government Code contains specific provisions regarding the types of investments and practices
' permitted after considering the broad requirement of preserving principal and maintaining liquidity before
seeking yield. These provisions are intended to promote the use of reliable, diverse, and safe investment
instruments to better ensure a prudently managed portfolio worthy of public trust.
Chapter 11. fund Management
Local Agency Investment Guidelines 2010 Issued by California Debt and Investment Advisory Commission
1
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Appendix J
GLOSSARY
(Adopted from the Municipal Treasurers Association)
The purpose of this glossary is to provide the reader of the City of La Quinta investment
policies with a better understanding of financial terms used in municipal investing.
AGENCIES: Federal agency securities and/or
Government -sponsored enterprises.
ASKED: The price at which securities are offered
BANKERS' ACCEPTANCE (BA): A draft or bill or
exchange accepted by a bank or trust company.
The accepting institution guarantees payment of
the bill, as well as the issuer.
BID: The price offered by a buyer of securities.
(When you are selling securities, you ask for a
bid.) See Offer.
BROKER: A broker brings buyers and sellers
together for a commission.
CERTIFICATE OF DEPOSIT (CD): A time deposit
with a specific maturity evidenced by a
certificate. Large -denomination CD's are typically
negotiable.
COLLATERAL: Securities, evidence of deposit or
other property which a borrower pledges to
secure repayment of a loan. Also refers to
securities pledged by a bank to secure deposits of
public monies.
COMMERCIAL PAPER: Short-term unsecured
promissory notes issued by a corporation to raise
working capital. These negotiable instruments
are purchased at a discount to par value or at par
value with interest bearing. Commercial paper is
issued by corporations such as General Motors
Acceptance Corporation, IBM, Bank America, etc.
COMPREHENSIVE ANNUAL FINANCIAL REPORT
(CAFR): The official annual report for the City of
La Quinta. It includes five combined statements
for each individual fund and account group
prepared in conformity with GAAP. It also
includes supporting schedules necessary to
demonstrate compliance with finance -related
legal and contractual provisions, extensive
introductory material, and a detailed Statistical
Section.
CONDUIT FINANCING: A form of Financing in
which a government or a government agency
lends its name to a bond issue, although it is
acting only as a conduit between a specific project
and bond holders. The bond holders can look only
to the revenues from the project being financed
for repayment and not to the government or
agency whose name appears on the bond.
COUPON: (a) The annual rate of interest that a
bond's issuer promises to pay the bondholder on
the bond's face value. (b) A certificate attached
to a bond evidencing interest due on a payment
date.
DEALER: A dealer, as opposed to a broker, acts as
a principal in all transactions, buying and selling
for his own account.
DEBENTURE: A bond secured only by the general
credit of the issuer.
DELIVERY VERSUS PAYMENT: There are two
methods of delivery of securities: delivery versus
payment and delivery versus receipt. Delivery
versus payment is delivery of securities with an
exchange of money for the securities. Delivery
versus receipt is delivery of securities with an
exchange of a signed receipt for the securities.
DERIVATIVES: (1) Financial instruments whose
return profile is linked to, or derived from, the
movement of one or more underlying index or
security, and may include a leveraging factor, or
(2) financial contracts based upon notional
amounts whose value is derived from an
underlying index or security (interest rates, foreign
exchange rates, equities or commodities).
DISCOUNT: The difference between the cost price
of a security and its maturity when quoted at
L
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lower than face value. A security selling below
mortgage credit provided to farmers by Federal
' original offering price shortly after sale also is
Land Banks. These bonds are issued at
considered to be at a discount.
irregular times for various maturities ranging
from a few months to ten years. The
' DISCOUNT SECURITIES: Non -interest bearing
minimum denomination is $1,000. They carry
money market instruments that are issued a
semi-annual coupons. Interest is calculated on
discount and redeemed at maturity for full face
a 360-day, 30 day month basis.
value, e.g., U.S. Treasury Bills.
4. FFCBs (Federal Farm Credit Bank) - Debt
DIVERSIFICATION: Dividing investment funds
instruments used to finance the short and
among a variety of securities offering
intermediate term needs of farmers and the
independent returns.
national agricultural industry. They are issued
monthly with three- and six-month maturities.
FEDERAL CREDIT AGENCIES: Agencies of the
The FFCB issues larger issues (one to ten
'
Federal government set up to supply credit to
year) on a periodic basis. These issues are
various classes of institutions and individuals,
highly liquid.
e.g., S&L's, small business firms, students,
'
farmers, farm cooperatives, and exporters.
5. FICBs (Federal Intermediate Credit Bank
Debentures) - Loans to lending institutions
1. FNMAs (Federal National Mortgage
used to finance the short-term and
'
Association) - Like GNMA was chartered
intermediate needs of farmers, such as
under the Federal National Mortgage
seasonal production. They are usually issued
Association Act in 1938. FNMA is a federal
monthly in minimum denominations of $3,000
corporation working under the auspices of the
with a nine -month maturity. Interest is
Department of Housing and Urban
payable at maturity and is calculated on a 360-
Development (HUD). It is the largest single
day, 30-day month basis.
'
provider of residential mortgage funds in the
United States. Fannie Mae, as the corporation
6. FHLMCs (Federal Home Loan Mortgage
is called, is a private stockholder -owned
Corporation) - a government sponsored entity
corporation. The corporation's purchases
established in 1970 to provide a secondary
include a variety of adjustable mortgages and
market for conventional home mortgages.
second loans, in addition to fixed-rate
Mortgages are purchased solely from the
'
mortgages. FNMA's securities are also highly
Federal Home Loan Bank System member
liquid and are widely accepted. FNMA
lending institutions whose deposits are insured
assumes and guarantees that all security
by agencies of the United States Government.
holders will receive timely payment of
t
They are issued for various maturities and in
principal and interest,
minimum denominations of $10,000. Principal
and interest is paid monthly. Other federal
'
2. FHLBs (Federal Home Loan Bank Notes and
agency issues are Small Business
Bonds) - Issued by the Federal Home Loan
Administration notes (SBA's), Government
Bank System to help finance the housing
National Mortgage Association notes
'
industry. The notes and bonds provide
(GNMA's), Tennessee Valley Authority notes
liquidity and home mortgage credit to savings
(TVA's), and Student Loan Association notes
and loan associations, mutual savings banks,
(SALLIE-MAE's).
' cooperative banks, insurance companies, and
mortgage -lending institutions. They are
FEDERAL DEPOSIT INSURANCE CORPORATION
issued irregularly for various maturities. The
(FDIC): A federal agency that insures bank
minimum denomination is $5,000. The notes
deposits, currently up to $250,000 per deposit
are issued with maturities of less than one
through December 31, 2013.
year and interest is paid at maturity.
'
FEDERAL FUNDS RATE: The rate of interest at
3. FLBs (Federal Land Bank Bonds) - Long-term
which Fed funds are traded. This rate is currently
' 37
pegged by the Federal Reserve through open -
market operations.
FEDERAL HOME LOAN BANKS (FHLB):
Government sponsored wholesale banks
(currently 12 regional banks) which lend funds
and provide correspondent banking services to
member commercial banks, thrift institutions,
credit unions and insurance companies. The
mission of the FHLBs is to liquefy the housing
related assets of its members who must purchase
stock in their district Bank.
FEDERAL OPEN MARKET COMMITTEE (FOMC):
Consists of seven members of the Federal
Reserve Board and five of the twelve Federal
Reserve Bank Presidents. The President of the
New York Federal Reserve Bank is a permanent
member, while the other Presidents serve on a
rotating basis. The Committee periodically meets
to set Federal Reserve guidelines regarding
purchases and sales of Government Securities in
the open market as a means of influencing the
volume of bank credit and money.
FEDERAL RESERVE SYSTEM: The central bank of
the United States created by Congress and
consisting of a seven member Board of Governors
in Washington, D.C., 12 regional banks and about
5,700 commercial banks that are members of the
system.
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION (GNMA or Ginnie Mae): Securities
influencing the volume of bank credit guaranteed
by GNMA and issued by mortgage bankers,
commercial banks, savings and loan associations,
and other institutions. Security holder is
protected by full faith and credit of the U.S.
Government. Ginnie Mae securities are backed
by the FHA, VA or FMHM mortgages. The term
"pass-throughs" is often used to describe Ginnie
Maes.
LAIF (Local Agency Investment Fund) - A special
fund in the State Treasury which local agencies
may use to deposit funds for investment. There
is no minimum investment period and the
minimum transaction is $5,000, in multiples of
$1,000 above that, with a maximum balance of
$50,000,000 for any agency. The City is
restricted to a maximum of ten transactions per
month. It offers high liquidity because deposits
can be converted to cash in 24 hours and no
interest is lost. All interest is distributed to those
agencies participating on a proportionate share
basis determined by the amounts deposited and
the length of time they are deposited. Interest is
paid quarterly. The State retains an amount for
reasonable costs of making the investments, not
to exceed one-half of one percent of the earnings.
LIQUIDITY: A liquid asset is one that can be
converted easily and rapidly into cash without a
substantial loss of value. In the money market, a
security is said to be liquid if the spread between
bid and asked prices is narrow and reasonable size
can be done at those quotes.
LOCAL GOVERNMENT INVESTMENT POOL (LGIP):
The aggregate of all funds from political
subdivisions that are placed in the custody of the
State Treasurer for investment and reinvestment
MARKET VALUE: The price at which a security is
trading and could presumably be purchased or
sold.
MASTER REPURCHASE AGREEMENT: A written
contract covering all future transactions between
the parties to repurchase --reverse repurchase
agreements that establishes each party's rights in
the transactions. A master agreement will often
specify, among other things, the right of the
buyer -lender to liquidate the underlying securities
in the event of default by the seller -borrower.
MATURITY: The date upon which the principal or
stated value of an investment becomes due and
payable
MONEY MARKET: The market in which short-term
debt instruments (bills, commercial paper,
bankers' acceptances, etc.) are issued and traded.
OFFER: The price asked by a seller of securities.
(When you are buying securities, you ask for an
offer.) See Asked and Bid.
OPEN MARKET OPERATIONS: Purchases and
sales of government and certain other securities in
the open market by the New York Federal Reserve
Bank as directed by the FOMC in order to
influence the volume of money and credit in the
economy. Purchases inject reserves into the
bank system and stimulate growth of money and
credit; sales have the opposite effect. Open
market operations are the Federal Reserve's most
important and most flexible monetary policy tool.
PORTFOLIO: Collection of all cash and securities
under the direction of the City Treasurer,
including Bond Proceeds.
PRIMARY DEALER: A group of government
securities dealers who submit daily reports of
market activity and positions and monthly
financial statements to the Federal Reserve Bank
of New York and are subject to its informal
oversight. Primary dealers include Securities and
Exchange Commission (SEC) -registered securities
broker -dealers, banks and a few unregulated
firms.
QUALIFIED PUBLIC DEPOSITORIES: A financial
institution which does not claim exemption from
the payment of any sales or compensating use or
ad valorem taxes under the laws of this state,
which has segregated for the benefit of the
commission eligible collateral having a value of
not less than its maximum liability and which has
been approved by the Public Deposit Protection
Commission to hold public deposits.
RATE OF RETURN: The yield obtainable on a
security based on its purchase price or its current
market price. This may be the amortized yield to
maturity on a bond the current income return.
REPURCHASE AGREEMENT (RP OR REPO): A
holder of securities sells these securities to an
investor with an agreement to repurchase them
at a fixed price on a fixed date. The security
"buyer" in effect lends the "seller" money for the
period of the agreement, and the terms of the
agreement are structured to compensate him for
this. Dealers use RP extensively to finance their
positions. Exception: When the Fed is said to be
doing RP, it is lending money that is increasing
bank reserves.
REVERSE REPURCHASE AGREEMENTS (RRP or
RevRepo) - A holder of securities sells these
securities to an investor with an agreement to
repurchase them at a fixed price on a fixed date.
The security"buyer" in effect lends the"seller"
money for the period of the agreement, and the
terms of the agreement are structured to
compensate him for this. Dealers use RRP
extensively to finance their positions. Exception:
When the Fed is said to be doing RRP, it is lending
money that is increasing bank reserves.
SAFEKEEPING: A service to customers rendered
by banks for a fee whereby securities and
valuables of all types and descriptions are held in
the bank's vaults for protection.
SECONDARY MARKET: A market made for the
purchase and sale of outstanding issues following
the initial distribution.
SECURITIES & EXCHANGE COMMISSION: Agency
created by Congress to protect investors in
securities transactions by administering securities
legislation.
SEC RULE 15C3-1: See Uniform Net Capital Rule.
STRUCTURED NOTES: Notes issued by
Government Sponsored Enterprises (FHLB, FNMA,
SLMA, etc.) and Corporations which have
imbedded options (e.g., call features, step-up
coupons, floating rate coupons, derivative -based
returns) into their debt structure. Their market
performance is impacted by the fluctuation of
interest rates, the volatility of the imbedded
options and shifts in the shape of the yield curve.
SURPLUS FUNDS: Section 53601 of the California
Government Code defines surplus funds as any
money not required for immediate necessities of
the local agency. The City has defined immediate
necessities to be payment due within one week.
TREASURY BILLS: A non -interest bearing discount
security issued by the U.S. Treasury to finance the
national debt. Most bills are issued to mature in
three months, six months or one year.
TREASURY BONDS: Long-term coupon -bearing
U.S. Treasury securities issued as direct
obligations of the U.S. Government and having
initial maturities of more than 10 years.
TREASURY NOTES: Medium -term coupon -bearing
U.S. Treasury securities issued as direct
39
obligations of the U.S. Government and having
initial maturities from two to 10 years.
UNIFORM NET CAPITAL RULE: Securities and
' Exchange Commission requirement that member
firms as well as nonmember broker -dealers in
securities maintain a maximum ratio of
' indebtedness to liquid capital of 15 to 1; also
called net capital rule and net capital ratio.
Indebtedness covers all money owed to a firm,
' including margin loans and commitments to
purchase securities, one reason new public issues
are spread among members of underwriting
' syndicates. Liquid capital includes cash and
assets easily converted into cash.
UNIFORM PRUDENT INVESTOR ACT: The State
of California has adopted this Act. The Act
contains the following sections: duty of care,
diversification, review of assets, costs,
compliance determinations, delegation of
investments, terms of prudent investor rule, and
application.
YIELD: The rate of annual income return on an
investment, expressed as a percentage. (a)
INCOME YIELD is obtained by dividing the current
dollar income by the current market price for the
security. (b) NET YIELD or YIELD TO MATURITY
is the current income yield minus any premium
above par or plus any discount from par in
purchase price, with the adjustment spread over
the period from the date of purchase to the date
of maturity of the bond.
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