2013 03 13 IABit ' L#Mrlj
Investment Advisory Board agendas and
staff reports are now available on the
City's web page., wwwda-quinta.
INVESTMENT ADVISORY BOARD
AGENDA
CITY HALL CAUCUS ROOM
78-495 Celle Tampico, La Quinta
REGULAR MEETING on WEDNESDAY, MARCH 13, 2013 AT 4:00 P.M.
CALL TO ORDER
1 . Roll Call
2. Pledge of Allegiance
PUBLIC COMMENT
At this time members of the public may address the Board on any matter not listed
on the agenda. Please complete a "Request to Speak" form and limit your
comments to three minutes.
CONFIRMATION OF AGENDA
APPROVAL OF MINUTES
Approval of the Minutes of January 9, 2013
CONSENT CALENDAR
1 - Receive and File Treasurer's Report for December 2012 and January 2013
1 Consideration of Fiscal Year 2013/2014 Investment Policy and Work Plan
Items
INVESTMENT ADVISORY BOARD AGENDA 1 MARCH 13, 2013
CORRESPONDENCE AND WRITTEN MATERIALS
1 Month End Cash Report, January 2013 and February 2013 and the Pooled
Money Investment Board Reports — December 2012 and January 2013
BOARD MEMBER ITEMS — None
ADJOURNMENT
The next regular meeting of the Investment Advisory Board will be held on April
10, 2013, commencing at 4:00 p.m. at the La Quinta Study Session Room, 78-
495 Calle Tampico, La Quinta, CA 92253.
DECLARATION OF POSTING
1, Vianka Orrantia, Senior Secretary, of the City of La Quinta, do hereby declare
that the foregoing Agenda for the La Quinte Investment Advisory Board meeting
was posted on the outside entry to the Council Chamber at 78-495 Calle Tampico,
and the bulletin boards at 78-630 Highway 111, and the La Quinta Cove Post
Office at 51-321 Avenida Bermudas, on March 7, 2013.
DATED: March 7, 2013
VIANKA ORRANTIA, Senior Secretary
City of La Quinta, California
Public Notices
The La Quinta Study Session Room is handicapped accessible. If special equipment is needed for the hearing impaired,
please call the City Clerk's office at 777-7123, twenty-four J24) hours in advance of the meeting and accommodations
will be made.
If special electronic equipment is needed to make presentations to the City Council, arrangements should be made in
advance by contacting the City Clerk's office at 777-7123. A one (1) week notice is required.
If background material is to be presented to the Investment Advisory Board during a Investment Advisory Board
meeting, please be advised that five (5) copies of all documents, exhibits, etc., must be supplied to the Senior Secretary
for distribution. It is requested that this take place prior to the beginning of the meeting.
Any writings or documents provided to a majority of the Investment Advisory Board regarding any item(s) on this
agenda will be made available for public inspection at the City Clerk's counter at City Hall located at 78-495 Calls
Tampico, La Quinta, California, 92253, during normal business hours.
INVESTMENT ADVISORY BOARD AGENDA 2 MARCH 13, 2013
INVESTMENT ADVISORY BOARD
MINUTES
WEDNESDAY, JANUARY 9, 2013
CALL TO ORDER
A regular meeting of the La Quinta Investment Advisory Board was called to order
at 4:00 p.m. by Chairman Blum.
PRESENT: Board Members Mortenson Blum, Spirtos Park and Donais
(4:02)
ABSENT: None
STAFF PRESENT: Finance Director, Robbeyn Bird and Senior Secretary, Vianka
Orrantia
PUBLIC COMMENT — None
CONFIRMATION OF AGENDA -
Board Member Donais requested that the date on page 2 of the "Adjournment" be
corrected and should read janUaFY 9, 2013 60 11"
Due to the Finance Directors unavailability to the February 13, 2013 board
meeting, the Board at this time discussed alternatives dates for a Special Meeting
in February. It was the consensus of the Board to hold a special meeting on
February 18, 2013.
Motion — A motion was made by Board Members Spirtos/Park to approve the
agenda as amended. Motion passed unanimously.
APPROVAL OF MINUTES
Approval of the Minutes of December 12, 2012
Board Member Donais requested that a correction be made to page 1, Approval of
Minutes Motion and should read:
A motion was made by Board Members Mortenson/Donais OWN
INVESTMENT ADVISORY MINUTES January 9, 2013
Motion - A motion was made by Board Members Mortenson/Spirtos to approve the
Minutes of December 12, 2012 as amended. Motion passed unanimously.
CONSENT CALENDAR ITEMS
1. Transmittal of Treasury Report for November 2012
Ms. Bird presented and reviewed the staff report for the month November 2012.
In response to Board Member Spirtos, Ms. Bird advised the Board that the
maximum dollar investment limit in LAW is $50 million. Board Member Spirtos
asked staff what the maximum percentage limit was. Staff to follow-up and report
back to the Board at the next scheduled meeting.
In response to Board Member Mortenson, Ms. Bird clarified for the Board that the
Treasury Notes yield to maturity on page 5 and page 7 should be .750%.
In response to Board Member Donais, Ms. Bird clarified that the November "Cash &
Investment" increase on page 8 was due to a LAIF investment. Staff received the
funds late on Friday, November 30, 2012 and the investment took place on
Monday, December 3, 2012, therefore the increase was reported in the month of
November.
Motion - A motion was made by Board Members Mortenson/Spirtos to review,
receive and file the Treasurer's Report for November 2012, as amended. Motion
passed unanimously- I
BUSINESS SESSION - None.
CORRESPONDENCE AND WRITTEN MATERIAL
1. Month End Cash Report, December 2012 and Pooled Money Investment Board
Report - November 2012
Ms. Bird presented and reviewed the staff report for the month November 2012.
Noted and Filed.
INVESTMENT ADVISORY MINUTES 2 January 9, 2013
BOARD MEMBER ITEMS
Board Member Spirtos advised the Board that on Thursday, January 10, 2013 at
11:00 a.m. the City will host Pillars of the Community recognizing those individuals
that have made a difference within the City of La Quinta.
ADJOURNMENT
There being no further business, it was moved by Board members Park/Donais to
ad.journ this meeting at 4:23 p.m. Motion passed unanimously.
Vianka,Orranti-i-,--Senior Se6i
City of La Quinta, California
INVESTMENT ADVISORY MINUTES 3 January 9, 2013
INVESTMENT ADVISORY BOARD CONSENT CALENDAR
-1 Item 1
Meeting Date: March 13, 2013
ITEM TITLE:
Transmittal of Treasury Report for
December 31, 2012 and January 31, 2013
BACKGROUND:
Attached please find the Treasury Report December 31, 2012 and January 31,
2013
RECOMMENDATION:
Review, Receive and File the Treasury Report for December 31, 2012 and January
31,2013
P:±�- -
Robbeyn'Bird, Finance Director
=1 #M
MEMORANDUM
TO: La Quints City Council
FROM: Robbetm Bird, Finance Directorrfreasurer
SUBJECT Treasurer's Report for Janary 31. 2013
DATE: February 28, 2013
Attached is the Treasurer's Report for the month ending January 31. 2013. 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
inni
Purchased
Notes
Other
Interest bearing active bank deposit
37,946,825
39.898.494
g
$ 11,324,669
1 10 16
$ (2,400,000)
195
$ 46.871.689 8.924,864
7LAIF
Certificates of Deposit
1,200,000
0
39.909.510 11,016
US Treasuries
6
61,033,380
1.200,000 0
q
US Gov't Sponsored Enterprises
-
:Sold/Matu2md
2,357
61.035.737 2,357
Commercial Paper
0
0 0
orporate Notes
C C Is
0
0 0
Mutual Funds
2,462,175
33
1
0 0
Subtotal
S 142,540,874
T-11:3-35.718
1
$ (2.400.0001
0
4, 2.5,52
462,208 33
$ 1,921:479,144 1 $ 8.938270
Cash 1 $ (487,400)1 11116011 * 2,194.0991 1 $ �,706,699 �$2,194�,099
1 uW1 1 $ 142.053,474, 1 Z� J205,901il $ 2,552 $ 153,1 5,843 11.132,369
I certify that this report accurately reflects all Pooled investments and is in compliance with the California
Governm I ant Code; and is in conformity with the City Investment Policy.
As Treasurer of the City of La Quints, I hereby certify that sufficient investment liquidity and anticipated
revenues are available to meet the pools expenditure requirements for the next six months. The City of
La Quints 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.
RAAIA,lbs'
K000eyn turpr
Finance DinectWrreasurer Date
Footnote
(1) The amount reported represents the net increase (decrease) of deposits and withdrawals from
the previous month.
(2) The amount reported in the other column represents the amortization of premium/discount for the
month on US Treasury, Commercial Paper and Agency investments,
(3) The cash account may reflect a negabve balance. This negative balance will be offset with transfers from other investments
before warrants are presented for payment by the payee at the bank.
Treasurer's Commentary
For the Month of January 2013
Cash Balances - The portfolio size increased by approximately $11.1 million to end the month
at $153.19 million. The major reason for the increase was due to the receipt of property tax
revenue in the amount of $1.4 million; the County of Riverside reimbursement for the
Successor Agency ROPS in the amount of $6.9 million; receipt of $1.1 million for the Fire
Service credit from the Riverside County Fire Department; and $905 thousand from the
Department of Transportation for reimbursement of expenses for the Adams Street Bridge.
Investment Activity - The investment activity resulted in an average maturity decrease of 18
days from the prior month to end the month of January at 119 days. The Treasurer follows a
buy and hold investment policy.
During the month of January, the LAIF account increased by $8.9 million. The sweep account
earned $10 in interest income for the month of January and the bank fees for the month were
$1553 which resulted in a net decrease of $1,543 in real savings.
Portfolio Performance - The overall portfolio performance decreased from the prior month and
ended at .35% for the month, with the pooled cash investments at .44%. The portfolio yield
should continue to, stay at these levels for the near future. At this time last year, the portfolio
was yielding .52% which reflects the current interest rate environment.
Looking Ahead
In the short term, the Treasurer will be investing in negotiable certificates of deposit, short
term commercial paper or GSE paper and rolling over bond proceeds and reserves into U.S.
Treasury bills or notes.
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CornOwat," Fiates of Interest
January 31. 2013
City of La Quintst
Thnsc
A,rgust �
316%
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2,88%
51
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2,14%
238%
2 OM
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Sept 2008
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37
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271%
� 2008
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049%
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125%
145%
2,57%
Dec 20M
160%
018%
142%
116
0,05%
0,25%
059%
0,88%
0,97%
235%
Jan 2009
1.36%
0.18%
123%
82
0,16%
035%
043%
088%
031%
20S%
Feb2DO9
In%
0,18%
1.11%
75
0,30%
0.!50%
061%
ON%
046%
1,87%
Mar 2W9
1.26%
0.18%
1.13%
69
0,20%
0,42%
0,70%
088%
0.37%
1,82%
AIx 2009
OJP1%
0.18%
045%
54
0,31%
033%
0 5M
OM%
028%
161%
Wry 2M
0 0254
OA8%
0.8,4%
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0.18%
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0.0%
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1,53%
June 2MI,
0,86%
0 2M
0,80%
Ill
020%
035%
0,55%
113%
On%
1.38%
FY owl 0
0.69%
030%
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ill
019%
0,26%
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IM%
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IN%
August 2009
0."%
0,30%
0.61%
92
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IN%
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0.93%
Sept M9
056%
0,31%
OS3%
112
0,12%
019%
041%
IM%
0 19%
075%
00 2MQ
0.52%
0,31%
0.50%
90
0.08%
0,19%
038%
100%
019%
0,65%
No� 2WO
055%
0.31%
053%
152
ON%
014%
012%
0.75%
015%
061%
Dec2009
056%
0.15%
051%
239
0.11%
020%
016%
100%
016%
057%
jan 2010
0,16%
0,15%
043%
179
006%
014%
O,U%
088%
0,13%
0,56%
FW2010
051%
016%
048%
162
0,13%
019%
0,32%
088%
015%
058%
W,2010
0,60%
0,16%
0,47%
172
015%
0,24%
0.38%
1.00%
020%
055%
AM2010
0,52%
0.16%
0.48%
162
0.15%
024%
OA996
IM%
023%
0 5996
Wy2010
om%
0,16%
0,411%
lie
0.17%
0.22%
037%
0.75%
0.28%
0,66%
Jum 2010
O�"%
0,10%
0.34%
134
0.16%
022%
0,32%
063%
032%
0,53%
FY 101111
J*2010
0.50%
0.15%
047%
119
016%
0,20%
O,W%
0,63%
0.28%
O�53%
August 201(
0.49%
0,15%
0,46%
108
0,15%
0,19%
am%
038%
025%
0.51%
S.Plmlo
0.55%
0,15%
0.51%
107
0.16%
0.19%
027%
038%
024%
ON%
od 2010
D55%
0,15%
0.51%
W
0.13%
0,17%
023%
0�38%
023%
048%
NM2010
0,53%
0.15%
OA9%
84
0A8%
0,21%
0,28%
ON%
023%
0,45%
Dec2DIO
057%
014%
0,52%
265
015%
019%
0,30%
0,63%
023%
0441%
Jan 2011
051%
014%
0,43%
206
016%
0,18%
028%
063%
024%
0 54%
Fab 2011
0 55%
0 17%
046%
210
0.15%
0,17%
031%
00%
023%
051%
Ma,2DII
O,U%
0,17%
045%
218
005%
0 13%
0,26%
0,75%
023%
0,50%
AW2011
0.59,14
017%
04,15%
192
005%
0.10%
028%
00%
020%
050%
May 2011
0.,48%
0.17%
0,41%
1 W
ON%
012%
020%
O.W%
016%
0.41%
June 2011
053%
0.00%
035%
126
0.03%
0,10%
0 20%
038%
015%
045%
FY 11112
JWy2OII
D0%
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OA4%
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Augusl2OlI
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102
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0,10%
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041%
sept2oil
D,W%
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0.30%
124
002%
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009%
013%
014%
0,38%
002011
0,53%
0,03%
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117
001%
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012%
025%
015%
039%
lim 2011
052%
003%
031%
94
0,03%
007%
0.10%
025%
014%
00%
Dec 2011
048%
0.03%
0,35%
N
0.02%
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0,11%
013%
014%
039%
Jar, 2012
045%
0,03%
O.U%
74
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008%
0.11%
025%
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0 39%
Fab 2012
0.4�
0,05%
O�36%
72
0,12%
0.15%
0 17%
025%
0 17%
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Mar 2012
0'"%
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74
008%
014%
019%
025%
OAS%
038%
Ap 2012
0.�%
009%
035%
61
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0,15%
019%
0,25%
020%
037%
Wy2012
0,43%
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62
ON%
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0,19%
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0,19%
0,313%
June 2012
0,38%
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0,29%
47
0.10%
0,15%
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0.25%
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036%
FY 12113
July 2012
0,41%
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015%
018%
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August 2012
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31
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0.25%
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0,38%
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025%
020%
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C
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22
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0.16%
0.18%
025%
019%
O.U%
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OAO%
0,36%
161
010%
0,15%
OA11%
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137
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11
MEMORANDUM
TO:
La Quinta City Council
FROM
Robbeyn Bird, Finance Director/Treasurer
SUBJECT
Treasurer's Report for December 31, 2012
DATE:
January 31, 2013
Attached is the Treasurer's Report for the month ending December 31, 2012. 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
LAIF
Interest bearing active bank deposit
Certificates of Deposit
US Treasuries
US Gov't Sponsored Enterprises
Commercial Paper
Corporate Notes
Mutual Funds
Subtotal
26.246.825
39,987.007
480,000
61.031.070
-
-
2503903
$ 130:248:805 11
$ 13,700.000
11,487
720,000
65
$ 14.431.552
$ (2,000,000)
$ (100,000)
41 93
$ (2.1441!; &3$
0
(0)
2,310
0
0
— 0 1
2,310 1
$ 37.946.825
39,898,494
1,200.000
61.033.380
0
0
0
2.462,175 1
$14 0.874
11,700,000
(88.513)
720,000
2,310
0
0
0
(41,728
$ 12,292.G69
Cash
Total $ 141.237,659 $ 14.431.552 $ (13.618,047)1 $ 2,310 1 $ 142,05�3,474$ �815,815
I cerfify that this report accurately reflects all pooled invesfinents and is in compliance with the California
Government Code; and is in conformity with the City Investment Policy.
As Treasurer of the City of La 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.
A'�& &Aj I- ?-V-1
Robbey. BV, 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.
12
Treasurer's Commentary
For the Month of December 2012
Cash Balances - The portfolio size increased by approximately$ 816 thousand to end the
month at $142.05 million. The major reason for the increase was due to the receipt of
property tax revenue in the amount of $1.4 million and the Capital Improvement Program
expenditures were $574 thousand.
Investment Activity - The investment activity resulted in an average maturity decrease of 24
days from the prior month to end the month of December at 137 days. The Treasurer follows
a buy and hold investment policy.
As previously reported, during the month of November ' US Treasury Notes of $30 million
matured, of which $10 million was invested in LAIF and $20 million was reinvested in US
Treasury Notes. Due to timing differences in the maturity of the Treasury Notes and the LAIF
transfer, the $10 million invested in LAIF appeared on the December statement. In addition to
the $10 million invested in LAIF, there was an additional net increase of $1.7 million. Three
Negotiable Certificates of Deposit were purchased in the amount of $720,000 and $100,000
was transferred from Rabobank to Wells Fargo to keep the balance below $40 Million. The
sweep account earned $9 in interest income for the month of December and the bank fees for
the month were $1550 which resulted in a net decrease of $1,541 in real savings.
Portfolio Performance - The overall portfolio performance remained the same as the prior
month and ended at .36% for the month, with the pooled cash investments at .47%. The
portfolio yield should continue to stay at these levels for the near future. At this time last
year, the portfolio was yielding .48% which reflects the current interest rate environment.
Looking Ahead
In the short term, the Treasurer will be investing in negotiable certificates of deposit, short
term commercial paper or GSE paper and rolling over bond proceeds and reserves into U.S.
Treasury bills or notes.
13
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75
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69
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1
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21
INVESTMENT ADVISORY BOARD I Business Session: 1
Meeting Date: March 13, 2013
ITEM TITLE:
Consideration of the Fiscal Year 2013/2014 Investment Policy and Work Plan
BACKGROUND:
As part of the work plan, the Investment Advisory Board is asked to review the
Investment Policy and make any recommendations for the City Council's
consideration in June of each year.
Attached please find the Investment Advisory Board Work Plan.
The Policy has been rewritten (to be distributed at the March 13, 2013 Investment
Board meeting), and updated to incorporate "best practicesff for investment policies
from the Government Finance Officers Association ("GFOA") and the Association of
Public Treasurers of the U.S. and Canada ("APT"). The Policy includes all of the
requirements for the Policy to be certified as professionally accepted by the APT's
Investment Policy Certification. Program. This program provides professional
guidance in developing or improving existing investment policies in the public sector.
I have attached the application and program procedures for your review.
RECOMMENDATION:
Continued review of the Fiscal Year 2013/2014 Investment Policy and Work Plan for
approval by the City Council in June 2013.
1
P�2�� Gmr
Robbeyn 13ird, Finance Director
Association of Public Treasurers of
the United States & Canada (APT)
Investment Policy Certification
APT US&C
Investment Policy Certification Program
The Association of Public Treasurers of the United States & Canada ... oF THE UNITED STATES AND CANADA
Revised 1105 — Replaces all previous editions.
Dear Applicant:
Thank you for your interest in APT US&C's Investment Policy Certification Program.
The Investment Policy Certification Program provides professional guidance and assistance in
developing or improving existing investment policies in the public sector. Entities may request
the Investment Policy Certification Committee to review their policy to determine if they have
met the standards set forth by the Association. Those jurisdictions that comply with APT
US&C's criteria are presented with the Association's Written Investment Policy Certification.
Enclosed please find the necessary documents to apply for APT US&C's Written Investment
Policy Certification — Application Form and APT US&C Model Investment Policy. The
application form along with specified documentation must be completed and forwarded directly
to APT US&C. The information solicited will assist the assigned reviewers in analyzing your
investment policy.
Program Procedures
1. Submit five copies of the application form and appropriate doctunentation to APT US&C. The
program fee is $200 for APT US&C members ($300 for non-members). If the first submission is
unsuccessful, the application fee will be waived for a second submission. Resubmissions must be
made by June I st of the following year.
2. The submitted investment policy documentation will be forwarded to three reviewers who will
evaluate the investment policy and make a recommendation as to certification. Two out of three
members must vote in favor of awarding certification in order for the entity to receive APT
US&C's Written Investment Policy Certification. To assist the reviewers, please enclose five
copies of your investment policy, including your glossary.
3. Approximately six weeks after receipt of submission, notification of certification will be
mailed to the individual identified on the application form (Item 15) as well as the treasurer
requesting the review. Comments from the reviewers will be forwarded to both successftil and
unsuccessful applicants.
4. Investment Policy review and certification occur continually throughout the year. However,
investment policies must be submitted by June I st in order for successful applicants and entities
to receive recognition and a plaque at APT US&C's annual conference in August.
Should you have any questions about the application or the model investment policy, please
contact the Chair of the Investment Policy Certification We appreciate your comments or
suggestions relating to this certification program.
Kelley Noone
Executive Director
The Association of Public Treasurers of the United States & Canada ... oF THE UNITED STATES AND CANADA
Revised 1105 — Replaces all pmvious editions.
Application Form for a
Written Investment Policy Certification
Please return this application form along with the program fee.of $200 ($300 for non-members)
to APT US&C, Investment Policy Certification Program, 962 Wayne Avenue, Suite 910, Silver
Spring, MD 20910. Enclose five copies of the application form and five copies of your
investment policy.
1. Name of government: (as it will appear on your plaque)
Mailing Address:
2. Population of government/size of district/retirement system:
3. Size of total investment portfolio:
4. Indicate below the composition of the current portfolio:
Treasuries $ CD's $
Agencies $
Govt. Pool
Mutual Funds $
BA's $
Repos $
Other $
5. What is the average maturity of your investment portfolio? —days
6. Are you a member of APT US&C? yes no
7. Has your investment policy been adopted by the appropriate legislative body?
yes — no
(Not requiredprior to submission)
8. Does your state/province or jurisdiction specifically mandate the adoption of an investment?
policy?
State/Province yes no
Jurisdiction yes _ no '
9. Does your state/province specifically outline types of authorized investments?
yes — no
(Ifyes, attachfive copies of the legislation or a typed summary oftypes of authorized
investments).
10. Does your entity have a separate investment procedure manual? yes no
(It is not required that you sendyour procedure manual,)
The Association of Public Treasurers of the United States & Canada ... oF THE UNITED STATES AND CANADA
Revised 1105 — Replaces all Previous editiom.
11. List investment staff by title and telephone number:
12. If the policy permits investment in repurchase agreements, does your entity have a signed
Master Repurchase Agreement? yes — no — n/a
If "Yes" — A Master Repurchase Agreement is required for certification.
.13. Do you employ an active or passive approach to investing?
Active— Passive
14. Treasurer requesting review:
Name:
Title:
Add s:
Phone number:
15. In addition to the Treasurer requesting review (item 14), who should the formal
announcement
of the awarding of the Written Investment Policy Certification be addressed to?
Title:
16. Have you enclosed five copies of the following documents?
• Application Form
• Investment Policy
• Glossary
• State/Province Statutes Listing Authorized Investments
17. Date submitted
The APT US&C Model Investment Policy is intended to provide guidance in the formulation of
a structure to govern the investment of public funds. It must be implemented in conjunction with
a careful reading of and strict adherence to applicable statutes, judicial decisions and legal
opinions. It is not a guarantee against loss due to economic and market conditions or human
behavior. APT US&C strongly recommends updating your policy at least every five (5) years.
APT use only:
Date Received
Check #
Amount
Date Sent for Review
Reviewers
Result/Date
The Association of Public Treasurers of the United States & Canada ... oF THE UNITED STATES AND CANADA
Revised 1105 — Replaces all previous editions
ASSOCIATION OF PUBLIC TREASURERS'
OF THE UNITED STATES AND CANADA
Model Investment Policy
For permission to reprint the Model Investment Policy, call the APT US&C at (301) 495-5560.
1.0 Policy: (maximumpoints: 4)
SAMPLELANGUAGE:
It is the policy of the (entity) to invest public ftmds in a manner which will provide the highest
investment return with the maximum security while meeting the daily cash flow demands of the
entity and conforming to all state/province and local statutes governing the investment of public
funds.
2.0 Scope: (maximum points: 7)
Rationale:
*An investment policy should explain its scope Does the policy apply to allfunds held in the
custody ofthe governmentjurisdiction and all of its offlcqs?
SAMPLE LANGUAGE:
This investment policy applies to all financial assets of the (entity). These funds are accounted
for in the (entity's) Comprehensive Annual Financial Report and include:
2.1 Funds: (Specifically designate. Following isa sample list.)
2.1.1 General Fund
2.1.2, Special Revenue Funds
2.1.3 Capital Project Funds
2.1.4 Enterprise Funds
2.1.5 Trust and Agency Funds
2.1.6 Retirement/Pension Funds
2.1.7 (Any newfund created by the legislative body, unless specifically exempted.)
3.0 Prudence: (maximum points: 4)
Rationale:
*To burden a conscientious professional with personal responsibilityfor a default on a single
item within a diversifiedpor(folio seems unduly severe. (Accordingly, public entities with
The Association of Public Tmasurers of the United States & Canada ... oF THE UNITED STATES AND CANADA
Revised 1/05 — Replaces all previous editions,
porifilios ofsufficient size are urged to apply the prudence concept to the overall portfolio.)
Following is the prudent person standard:
SAMPLE LANGUAGE:
Investments shall be made with judgment and care —under circumstances then prevailing —
which persons of prudence, discretion and intelligence exercise in the management of their own
affairs, not for speculation, but for investment, considering the probable safety of their capital as
well as the probable income to be derived.
3.1 The standard of prudence to be used by investment officials shall be the "prudent person"
and/or "prudent investor" standard and shall be applied in the context of managing an overall
portfolio. Investment officers acting in accordance with written procedures and die investment
policy and exercising due diligence shall be relieved of personal responsibility for an individual
security's credit risk or market price changes, provided deviations from expectations are reported
in a timely fashion and appropriate action is taken to control adverse developments.
4.0 Objective: (maximum points: 10)
Rationale:
*Every investment policy should contain a concise and clear statement(s) of objectives. The
effectiveness of the investment program is set by the caliber of the staff the procedures used, the
working environment and the policy guidance provided by governing officials. Through its
statement of objectives, the governing body sets the tone and direction ofthe policy and
investment prograin.
SAMPLELANGUAGE:
The primary objectives, in priority order, of the entity's) investment activities shall be:
4.1 Safety: Safety of principal is the foremost objective of the investment program. Investments
of the (entity) shall be undertaken in a marmer that seeks to ensure the preservation of capital in
the overall portfolio. To attain this objective, the (entity) will diversify its investments by
investing fimds among a variety of securities offering independent returns and financial
institutions.
4.2 Liquidity: The (entity's) investment portfolio will remain sufficiently liquid to enable the
(entity) to meet all operating requirements which might be reasonably anticipated.
4.3 Return on Investments: The (entity's) investment portfolio shall be designed with the
objective of attaining a benchmark rate of return throughout budgetary and economic cycles,
commensurate with the (entity's) investment risk constraints and the cash flow characteristics of
the portfolio.
The Association of Public Treasurers of the United States & Canada ... oF THE UNITED STATES AND CANADA
Revised 1/05 — Replaces all previous editions.
5.0 Delegation of Authority:
Delegation of Authority: (maximum points: 4)
Rationale:
*After the investment objectives have been identified, the next logical element of an investment
policy is an explicit delegation ofauthority to investment officials responsiblefor conducting
transactions and managing the entity's investment program.
SAMPLELANGUAGE:
Authority to manage the (entity's) investment program is derived from the following: (e.g.,
trading resolutions, code citations, ordinances, statutes, etc.). Management responsibility for the
investment program is hereby delegated to the (designated official) who shall be responsible for
all transactions undertaken and shall establish a system of controls to regulate the activities of
subordinate officials, and their procedures in the absence of the (Designated Official).
5.1 Investment Procedures: (maximum points: 4)
The (designated official) shall establish written investment policy procedures for the operation of
the investment program consistent with this policy. The procedures should include reference to:
safekeeping, PSA repurchase agreements, 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 policy and the procedures
established by the (designated official). See appendix to APT US&Cs Model Investment Policy
entitled APT US&C's Guidelines for an Investment Procedures Manual.
6.0 Ethics and Conflicts of Interest: (maximum points: 4)
Rationale:
*Some governments have adopted conflict -of interest legislation that regulates the activities of
certain officers and employees. In the investment area, general code provisions, so separate
policies may be redundant, may govern certain conflicts. Some jurisdictions, however, may seek
to adopt policies regarding ethical behavior and conflicts of interest
SAMPLE LANGUAGE:
Officers and employees involved in the investment process shall refrain from personal business
activity that could conflict with proper execution of the investment program, or which could
impair their ability to make impartial investment decisions. Employees and investment officials
The Association of Public Treasurers of the United States & Canada ... oF THE UNITED STATES AND CANADA
Revised 1/05 — Replaces all previous editions.
shall disclose to the (Chief Executive Officer) any material financial interests in financial
institutions that conduct business within their jurisdiction, and they shall ftirther disclose any large
personal financial/investment positions that could be related to the performance of the (entity).
7.0 Authorized Financial Dealers and Institutions: (maximum points: 7)
Rationale:
*The investment policy should require that a set formal process be used to select depositories
and brokersldealers in money market instruments. Because the policy is intended to endure it
should not mention specificfirms or depositories. Rather it shouldprovidefor aprocess that will
screen out institutions that lack economic viability or whose past practices suggest that the safety
ofpublic capital would be impaired iftransactions were directed to or through suchfirms.
SAMPLE LANGUAGE:
The Treasurer will maintain a list of financial institutions authorized to provide investment
services. In addition, a list will also be maintained for approved or security broker/dealers
selected by
credit worthiness that are authorized to provide investment services in the State/Province of
). These may include "primary" dealers or regional dealers that
qualify under Securities & Exchange Commission Rule 15C3-1 (uniform net capital rule). No
public deposit shall be made except in a qualified public depository as established by
state/province laws. All financial institutions and broker/dealers who desire to become qualified
bidders for investment transactions must supply the treasurer with the following: (e.g. audited
financial statements, proof of National Association of Security Dealers certification, trading
resolution, proof of statelprovince registration, completed brokerldealer questionnaire,
certification ofhaving read entity's investment policy and depository contracts.)
An annual review of the financial condition and registrations of qualified bidders will be
conducted by the Treasurer. A current audited financial statement is required to be on file for
each financial institution and broker/dealer in which the (entity) invests.
8.0 Authorized & Suitable Investments: (maximum points: 10)
Rationale:
*The selection ofinvestment instruments to be allowedfor investmentpurposes is a significant
policy issuefor many governments. Although day-to-day selection of specific instruments should
be treated as a managementfunction, the policy should define the general universe.
From the governing body perspective, special care must be taken to ensure that the list of
instruments includes only those allowed by law and those that local investment managers are
trained and competent to handle.
The Association of Public Treasurers of the United States & Canada ... oF THE UNITED STATES AND CANADA
Revised 1/05 — Replaces all previous editions
SAMPLE LANGUAGE:
The (entity) is empowered by statute to invest in the following types of securities. (List types of
investments authorized by statelprovince law, ordinance, or charter. Consider appending copies
of these specific requirements to the investment policy.) (In selecting authorized investments,
consideration should be given to credit ratings on commercial paper, bankers acceptance, and
collateralization ofapplicable instruments)
8.1 Master Repurchase Agreement: (maximum points: 10)
If repurchase agreements are legal and authorized by policy, a Master Repurchase Agreement
must be signed with the bank or dealer. (e.g., a PSA Master Repurchase Agreement or
equivalent)
9.0 Investment Pools/Mutual Funds: (maximum points: 7)
Rationale:
Governmental sponsoredpools and money market mutualfunds are excellent short-term cash
managementfacilities. These poolslfunds can provide safety, liquidity andyield in a single
investment instrument. However, there is a due diligence standard, which applies to the use of
pools1funds, as there is no safety net.
If governmental sponsored pools and/or mutual funds are included in Authorized Investments,
a section on investigation and due diligence must be included.
SAMPLE LANGUAGE:
A thorough investigation of the pool/fund is required prior to investing, and on a continual
basis. There shall be a questionnaire developed which will answer the following general
questions:
— A description of eligible investment securities, and a written statement of investment policy
and objectives.
— A description of interest calculations and how it is distributed, and how gains and losses are
treated.
— A description of how the securities are safeguarded (including the settlement processes), and
how often the securities are priced and the program audited.
— A description of who may invest in the program, how often, what size deposit and withdrawal
are allowed.
— A schedule for receiving statements and portfolio listings.
— Are reserves, retained earnings, etc. utilized by the pool/fund?
— A fee schedule, and when and how is it assessed.
— Is the pool/fimd eligible for bond proceeds and/or will it accept such proceeds?
The Association of Public Treasurers of the United States & Canada ... oF THE UNITED STATES AND CANADA
Revised 1105 — Replaces all previous editions.
NOTE: The topics listed above are not all encompassing, but only a sampling ofwhat might
be covered in a questionnaire. APT US&C will be developing a questionnaire in the nearfuture
for use wh en pools1funds are part of the list of A uthorized Investments.
10.0 Collateralization: (maximum points: 7)
Rationale:
*Several states require collateralization ofallpublicfunds. In these states a collateralization
section must be includedfor any certificates of deposit. In addition, collateralization must be
required on any repurchase agreement or reverse repurchase agreement. For these items, the
policy should address such points as market valuation responsibility and timing, specific
collateral provisions such as type and maturity, safekeeping by a thirdparry, and evidence of
ownership.
SAMPLELANGUAGE:
Collateralization will be required on two types of investments: certificates of deposit and
repurchase (and reverse) agreements. In order to anticipate market changes and provide a level of
security for all ftinds, the collateralization level will be (102%) of market value of principal and
accrued interest.
The entity chooses to limit collateral to the following: —qist)— Collateral will always be
held by an independent third party with whom the entity has a current custodial agreement. A
clearly marked evidence of ownership (safekeeping receipt) must be supplied to the entity and
retained. The right of collateral substitution is granted.
11.0 Safekeeping and Custody: (maximum points: 10)
Rationale:
*Like private investors, governing officials feel more secure about their entity's investments if
they know that the securities are physically safe. Investment policies should include a clause
regarding third -party safekeeping and custody of securities and collateral.
SAMPLE LANGUAGE:
All security transactions, including collateral for repurchase agreements, entered into by the
(entity) shall be conducted on a delivery -versus -payment (DVP) basis. Securities will be held by
a third party custodian designated by the Treasurer and evidenced by safekeeping receipts.
12.0 Diversification: (maximum points: 7)
Rationale: *�..governments should state the purpose of diversification —to reduce overall
portfolio risks while attaining benchmark average rate of return. Diversification should be
conceptualized in terms of maturity as well as instrument type and issuer. thus, the
diversification concept in a cash management fund should include prohibition against over
The Association of Public Treasurers of the United States & Canada ... oF THE UNITED STATES AND CANADA
Revised 1105 — Replaces all Previous editions
concentration in a specific maturity sector, as well as constraining the reliance on specific risky
instruments and issuers.
SAMPLELANGUAGE:
The (entity) will diversify its investments by security type and institution. With the exception
of U.S. Treasury securities and authorized pools, no more than 50% of the (entity's) total
investment portfolio will be invested in a single security type or with a single financial
institution.
13.0 Maximum Maturities: (maximum points: 7)
Rationale
*To protect publicfunds_from marketprice losses resultingfirom rising interest rates, some
states and many local governments limit the maximum term to maturity on current operating
funds'investments, some limit the maximum term to maturity to current operatingfunds'
investments. Some limit the maximum maturity on cash managementfunds to 12 months. Others
find this unduly restrictive and employ a two-year rule. The latter seems reasonable, provided
that only a portion of the assets is invested beyond one year.
SAMPLE LANGUAGE:
To the extent possible, the (entity) will attempt to match its investments with anticipated cash
flow requirements. Unless matched to a specific cash flow, the (entity) will not directly invest in
securities maturing more than ( years from the date of purchase. However, the (entity)
may collateralize its repurchase agreements using longer -dated investments not to exceed
C___) years to maturity. Reserve funds may be invested in securities exceeding years
if the maturity of such investments is made to coincide as nearly as practicable with the expected
use of the funds.
14.0 Internal Control: (maximum points: 4)
Rationale:
*The development of internal controls remains a managementfunction. A statement Of
investment policy therefore should avoid specific internal control measures. Instead policy
makers should require that a system of internal controls be established The policy can also
providefor periodic reviews and monitoring ofthe controls. The review of internal controls
might be assigned to a committee or to the independent auditor.
SAMPLELANGUAGE:
The Treasurer shall establish an annual process of independent review by an external auditor.
This review will provide internal control by assuring compliance with policies and procedures.
15.0 Performance Standards: (maximum points: 4)
The Association of Public Treasurers of the United States & Canada ... oF THE UNITED STATES AND CANADA
Revised 1/05 — Replaces all previous editions.
Rationale: *Much of the investment policyfocus is directed toward control. Yield objectives are
just as important, however. The long -run interests of the jurisdiction go beyond simple prudence
and safety offunds. The investment policy shouldprovide aformal evaluation ofperformance
and occasional operational audits.
SAMPLELANGUAGE:
The investment portfolio shall be designed with the objective of obtaining a rate of return
throughout budgetary and economic cycles, commensurate with the investment risk constraints
and the cash flow needs.
15.1 Market Yield (Benchmark): The entity's investment strategy is (passive or active). Given
this strategy, the basis used by the Treasurer to determine whether market yields is being
achieved shall be to identify a comparable benchmark to your portfolio investment duration,
e.g., 90-day US Treasury Bill, 6-month US Treasury Bill, Average Fed Funds Rate.
16.0 Reporting: (maximumpoints: 10)
Rationale: Periodic required investment reports to policymakers and elected officials provide
necessary written communication regarding investment performance, risk analysis, adherence
to policy provisions, as well as other information.
SAMPLE LANGUAGE:
The Treasurer shall provide (the legislative authority) quarterly investment reports which
provide a clear picture of the status of the current investment portfolio. The management report
should include comments on the fixed income markets and economic conditions, discussions
regarding restrictions on percentage of investment by categories, possible changes in the
portfolio structure going forward and thoughts on investment strategies. Schedules in the
quarterly report should include the following:
I . A listing of individual securities held at the end of the reporting period by authorized
investment category.
2. Average life and final maturity of all investments listed.
3. Coupon, discount or earnings rate.
4. Par value, Amortized Book Value and Market Value.
5. Percentage of the Portfolio represented by each investment category.
NOTE: Depending on the degree ofcomprehension of those receiving the reports and their
desire, or lack thereof for detail, you may choose to provide the information in executive
summaryformat.
17.0 Investment Policy Adoption: (maximum points: 4)
The Association of Public Treasurers of the United States & Canada ... oF THE UNITED STATES AND CANADA
Revised 1/05 — Replaces all pnevious editions,
The (entity's) investment policy shall be adopted by resolution of the (entity's) legislative
authority. The policy shall be reviewed annually by the (7egislative authority) and any
modifications made thereto must be approved by the qegislative authority).
18.0 Glossary: (maximum points: 4)
*Because this policy is to be available to the public as well as the governing body, it is important
that a glossary of related terminology be part of die policy.
*Rationale: Adaptedftom Investing Public
Funds, Girard Miller, 1986
The Association of Public Treasurers of the United States & Canada ... oF THE UNITED STATES AND CANADA
Revised 1105 — Replaces all previous editions.
CITY OF LA QUINTA
STATEMENT OF INVESTMENT POLICY
2013/2014
POLICY
This Statement of Investment Policy is intended to identify the policies for prudent
investment of temporarily idle funds of the City of La Quinta (the "City") by
providing guidelines for suitable investments while maximizing the efficiency of the
City's Cash Management Program.
The City's Cash Management Program is designed to accurately monitor and
forecast expenditures and revenues, thus enabling the investment of funds to the
fullest extent possible.
The investment policies and practices of the City of La Quinta are based upon state
law and prudent money management. All funds will be invested in accordance
with California Government Code Sections 53601 et seq. and the City's
Investment Policy.
11. SCOPE
The Investment Policy applies to all funds and investment activities of the City
except the investment of bond proceeds, which are governed by the appropriate
bond documents. And any pension or other post -employment benefit funds held in
a trust.
Ill. PRUDENCE
The standard of prudence to be used by investment officials will be the "prudent
investor" standard, which states that, �'when investing, reinvesting, purchasing,
acquiring, exchanging, selling, or managing public funds, a trustee shall act with
care, skill, prudence, and diligence under the circumstances then prevailing,
including, but not limited to , the general economic conditions and the anticipated
needs of the agency, that a prudent person acting in a like capacity and familiarity
with those matters would use in the conduct of funds of a like character and with
like aims, to safeguard the principal and maintain the liquidity needs of the
agency.-
IV. OBJECTIVES
The primary objectives, in priority order, of the investment activities of the City are:
1 . SAFETY - Safety of principal is the foremost objective of the City of La
Quinta.
2. LIQUIDITY - The City's portfolio will remain sufficiently liquid to enable the
City to meet its cash flow requirements. It is important that the portfolio
contain investments which provide the ability of being easily sold at any time
with minimal risk of loss of principal or interest.
3. YIELD - The City's portfolio will be designed to attain a market rate of return
through economic cycles consistent with the constraints imposed by its
safety objective and cash flow considerations.
V. DELEGATION OF AUTHORITY
The management responsibility for the investment program is hereby delegated to
the Finance Director/City Treasurer. The Finance Director/City Treasurer will
monitor and review all investments for consistency with this Investment Policy.
The Finance Director/City Treasurer may delegate investment decision making and
execution authority to an investment advisor. The advisor will follow the
Investment Policy and such other written instructions as are provided.
VI. INVESTMENT PROCEDURES
The Finance Director/City Treasurer will establish investment procedures for the
operation of the City's investment program.
VII. ETHICS AND CONFLICTS OF INTEREST
Officers and employees involved in the investment process will refrain from
personal business activities that could conflict with proper execution of the
investment program, or which could impair their ability to make impartial decisions.
Vill. AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS
The Finance Director/City Treasurer will maintain a list of financial dealers and
institutions qualified and authorized to transact business with the City.
The purchase by the City of any investment other than those purchased directly
from the issuer, will be purchased either from an institution licensed by the State
as a broker -dealer, as defined in Section 25.004 of the Corporations Code, which is
a member of the Financial Industry Regulatory Authority (FINRA), or a member of a
federally regulated securities exchange, a national or state chartered bank, a federal
or state association (as defined by Section 5102 of the Financial Code), or a
brokerage firm designated as a Primary Government Dealer by the Federal Reserve
Bank.
The Finance Director/City Treasurer will investigate all institutions that wish to do
business with the City, to determine if they are, adequately capitalized, make
markets in securities appropriate for the City's needs, and agree to abide by the
conditions set forth in the City of La Quinta's Investment Policy and any other
guidelines that may be provided. This will be done annually by having the financial
institutions:
• Provided written notification that they have read, and will abide by, the
City's Investment Policy.
• Submit their most recent audited Financial Statement within 120 days of the
institution's fiscal year end.
If the City has an investment advisor, the investment advisor may use its own list
of authorized broker/dealers to conduct transactions on behalf of the City.
Purchase and sale of securities will be made on the basis of competitive bids and
offers with a minimum of three quotes being obtained.
IX. AUTHORIZED AND SUITABLE INVESTMENTS
Where this section specifies a percentage limitation for a particular security type,
that percentage is applicable only on the date of purchase. Credit criteria listed in
this section refers to the credit rating at the time the security is purchased. If an
investment's credit rating falls below the minimum rating required at the time of
purchase, the Finance Director/City Treasurer will perform a timely review and
decide whether to sell or hold the investment.
The City will limit Investments in any one non -government issuer, except
investment pools, to no more than 5% regardless of security type.
1 U.S. Treasury obligations for which the full faith and credit of the United
States are pledged for the payment of principal and interest.
2. Federal agency or United States government sponsored enterprise obligations,
participations, or other instruments, including those issued by or fully
guaranteed as to principal and interest by federal agencies or United States
government -sponsored enterprises. This will include any mortgage pass
through security issued and guaranteed by a Federal Agency with a maximum
final maturity of five years. Purchase of Federal Agency issued mortgage -
backed securities authorized by this subdivision may not exceed 20% of the
City's investment portfolio; all other investments in Federal Agency securities
are unrestricted.
3. Registered treasury notes or bonds of any of the other 49 states in addition to
California, including bonds payable solely out of the revenues from a revenue -
producing property owned, controlled, or operated by a state, or by a
department, board, agency, or authority of any of these states.
4. Commercial Paper of 'prime" quality of the highest ranking or of the highest
letter and number rating as provided for by a NRSRO. The entity that issues
the commercial paper must meet all of the following conditions in either
paragraph a or paragraph b- o
a. The entity meets the following criteria: (i) is organized and operating in
the United States as a general corporation, (ii) has total assets in excess
of five hundred million dollars ($500,000,000), and (iii) has debt other
than commercial paper, if any, that is rated "A" or higher by a NRSRO.
b. The entity meets the following criteria: (i) is organized within the United
States as a special purpose corporation, trust, or limited liability company,
(ii) has program -wide credit enhancements including, but not limited to,
over collateralization, letters of credit, or surety bond, and (iii) has
commercial paper that is rated "A-1 " or higher, or the equivalent, by a
NRSRO.
Eligible commercial paper will have a maximum maturity of 270 days or less.
No more than 25% of the City's portfolio may be invested in commercial
paper. The City may purchase no more than 10% of the outstanding
commercial paper of any single issuer.
5. Non-negotiable Certificates of Deposit (time CDs) in a state or national bank,
savings association or federal association, or federal or state credit union with
a branch in the State of California. In accordance with California Government
Code Section 53635.2, to be eligible to receive City deposits, a financial
institution will have received an overall rating of not less than "satisfactory" in
its most recent evaluation by the appropriate federal financial supervisory
agency of its record of meeting the credit needs of California's communities.
Time CDs are required to be collateralized as specified under Government
Code Section 53630 at seq. The City, at its discretion, may waive the
collateral ization requirements for any portion that is covered by fe . deral deposit
insurance. The City will have a signed agreement with any depository
accepting City funds per Government Code Section 53649. No deposits will
be made at any time in time CDs issued by a state or federal credit union if a
member of the City Council or the Finance Director/City Treasurer serves on
the board of directors or any committee appointed by the board of directors of
the credit union. In accordance with Government Code Section 53638, any
deposit will not exceed the total net worth of any institution.
6. Negotiable Certificates of Deposit issued by a nationally or state -chartered
bank, a savings association or a federal association (as defined by Section
5102 of the Financial Code), a state or federal credit union, or by a federally -
or state- licensed branch of a foreign bank. No more than 30% of the City's
portfolio may be invested in negotiable CDs.
7. Medium -Term Notes issued by corporations organized and operating within the
United States or by depository institutions licensed by the U.S. or any state
and operating within the U.S. Medium -term corporate notes will be rated in a
rating category "A" or its equivalent or better by a NRSRO. No more than
30% of the City's portfolio may be invested in medium -term notes.
8. Shares of beneficial interest issued by diversified management companies that
are money market funds registered with the Securities and Exchange
Commission under the Investment Company Act of 1940 (15 U.S.C. Sec.
80a-1, at seq.). To be eligible for investment pursuant to this subdivision
these companies will either: (i) attain the highest ranking letter or numerical
rating provided by at least two NRSROs or (ii) have retained an investment
advisor registered or exempt from registration with the Securities and
Exchange Commission with not less than five years of experience managing
money market mutual funds and with assets under management in excess of
$500,000,000. No more than 20% of the City's investment portfolio may be
invested in money market funds.
9. State of California's Local Agency Investment Fund (LAIF) an investment pool
run by the State Treasurer. The City can invest up to the maximum amount
permitted by the State Treasurer.
10. Shares of beneficial interest issued by a joint powers authority Local
Government Investment Pools) organized pursuant to Government Code
Section 6569.7 that invests in the securities and obligations authorized in
subdivisions (a) to (o) of California Government Code Section 53601,
inclusive. Each share will represent an equal proportional interest in the
underlying pool of securities owned by the joint powers authority. The Pool
will be rated in a rating category "AAA" or its equivalent by a NRSRO. To be
eligible under this section, the shares will maintain a stable net asset value
(NAV) and the joint powers authority issuing the shares will have retained an
investment adviser that meets all of the following criteria:
a. The adviser is registered or exempt from registration with the Securities
and Exchange Commission. I
b. The adviser has not less than five years of experience investing in the
securities and obligations authorized in subdivisions (a) to (o) Government
Code Section 53601, inclusive.
c. The adviser has assets under management in excess of five hundred
million dollars ($500,000,000).
X. INVESTMENT POOLS/MONEY MARKET FUNDS
A thorough investigation of investment pools and money market funds is required
prior to investing, and on a continual basis. The City does not allow investments in
CIDARS.
XI. MAXIMUM MATURITY
Maturities will be based on an analysis of the receipt of revenues and maturity of
investments. Maturities will be scheduled to permit the City to meet all
disbursement requirements.
The City may not invest in a security whose maturity exceeds five years from the
date of purchase unless City Council has provided approval for a specific purpose
at least 90 days before the investment is made.
XII. PROHIBITED INVESTMENTS
Investments not described herein, including, but not limited to, reverse repurchase
agreements, stocks, inverse floaters, range notes, commercial mortgage -backed,
interest -only strips, or any security that could result in zero interest accrual if held
to maturity are prohibited for investment by the City.
XIII. INTERNAL CONTROL
The Finance Director/City Treasurer will establish an annual process of independent
review by an external auditor. This review will provide internal control by assuring
compliance with policies and procedures.
XIV. CUSTODY OF SECURITIES
All securities owned by the City except time deposits and securities used as
collateral for repurchase agreements, will be kept in safekeeping by a third -party
bank's trust department, acting as an agent for the City under the terms of a
custody agreement executed by the bank and the City.
All securities will be received and delivered using standard delivery versus payment
procedures.
XV. REPORTING
The Finance Director/City Treasurer will provide a monthly investment report to the
City Council and the Investment Advisory Board showing all transactions, type of
investment, issuer, purchase date, maturity date, purchase price, yield to maturity,
and current market value for all securities.
XVI. POLICY REVIEW
This Investment Policy will be reviewed at least annually to ensure tis consistency
with:
• The California Government Code sections that regulate the investment and
reporting of public funds.
• The overall objectives of preservation of principal, sufficient liquidity, and a
market return.
XVIL 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:
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.
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."
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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.
Appendix C
City of La Quinta Municipal Code
Chapter 3.08
INVESTMENT OF MONEYS AND FUNDS
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)
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)
Appendix D
SEGREGATION OF MAJOR INVESTMENT RESPONSIBILITIES
Function
Develop and Recommend Modifications
to City's Formal Investment Policy
Review City's Investment Policy
Recommend City Council Action
Adopt Formal Investment Policy
Implement Formal Investment Policy
Review Financial Institutions & Select Investments
Acknowledge Investment Selections
Execute Investment transactions
Confirm Wires (if applicable)
Record Investment Transactions in City's
Accounting Records
Investment Verification (match broker confirmation
to City investment records)
Reconcile Investment Records
to Accounting Records and Bank Statements
Reconcile Investment Records
to Treasurers Report of Investments
Security of Investments at City
Security of Investments outside City
Responsible Parties
Investment Advisory Board
and City Treasurer
City Manager and
City Council
City Council
City Treasurer
City Treasurer
City Manager or his/her
designee
City Treasurer or City
Manager
Accounting Manager or
Financial Services Assistant
Accounting Manager or
Financial Services Assistant
City Treasurer and Financial
Services Assistant
Financial Services Assistant
Accounting Manager
Accounting Manager or
Senior Secretary
Third Party Custodian
Review Internal Control Procedures External Auditor
Appendix E
LISTING OF APPROVED FINANCIAL INSTITUTIONS
1. Banking Services Wells Fargo Bank, Government Services,
Los Angeles, CA (Banking Services)
Rabobank N.A., Government Banking
Group, Roseville, CA (Collateralized Bank
Deposits)
2. Custodian Services Bank of New York/Mellon
3. Deferred Compensation International City/County Management
Association Retirement Corporation
4. Broker/Dealer Services Banc of America Securities/ Merrill Lynch,
San Francisco, CA, Morgan Stanley, San
Rafael, CA, CitiGroup, Costa Mesa, CA,
First Empire Securities
5. Government Pool State of California Local Agency
Investment Fund - City of La Quinta
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
2011 RDA Project Area 2 - US Bank
2011 Financing Authority Housing 1 &2
US Bank
Assessment Districts - US Bank
No Changes to this listing may be made without City Council approval
Appendix F
BROKER/DEALER QUESTIONNAIRE AND CERTIFICATION
1. Name of Firm:
2. Address:
3. Telephone:
4. Broker's Representative to the City (attach resume):
Name:
Title:
Telephone:(—)
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:
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
• BA's
% Commercial Paper
% CD's
• Mutual Funds
• Agencies (specify)
% Repos
% Reverse Repos
% CMO's
% Derivatives
% Stocks/Equities
_% Other (specify):
9. References -- Please identify your most directly comparable public sector clients
in our geographical area.
Entity
Contact
Telephone
Client Since
Entity
Contact
Telephone
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.
11. 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 you 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 take
13. Explain your clearing and safekeeping procedures, custody and delivery
process.
Who audits these fiduciary responsibilities?
Latest Audit Report Date
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
If yes, explain primary and excess coverage and carriers.
No
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:
No, Latest audited financial statements.
11� Samples of reports, transaction confirmations and any other
research/publications the City will receive.
10- Samples of research reports and/or publications that your firm regularly
provides to clients.
0- Complete schedule of fees and charges for various transactions.
'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 Representative
Date
Title
Sales Manager and/or Managing Partner*
Date
Title
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:
Robbeyn Bird
Finance Director/Treasurer
La Quinta, CA
P.O. Box 1504
La Quinta, CA 92247-1504
(760)777-7150
1. 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.
11. 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, CA] [Board/Council]
approves selection and awards contract.
Ill. FORMAT FOR PROPOSALS
Please format your response to this RFP in the following manner:
A. Organization
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.
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.
C. Assets Under Management
1. Summarize your institutional investment management asset totals by
category for your latest reporting period in the following table:
Number of Operating Funds
Clients
Governmental
Governmental Pension
Non Governmental
Pension
Corporate
High Net Worth Client
Endowment/Foundation
Number of Other Restrictive
Clients Funds
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
2. Provide the number of separate accounts whose portfolios consist of
operating funds.
I 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 11 (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.
D. Philosophy/Approach
1. 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.
E. Portfolio Management
1 . 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.
F. 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.
3. Is there a minimum annual fee?
G. 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 transaction sent directly by the
broker/dearler to the client?
8. Do your reports include rating information on investments which is
required by GASB 40?
H. 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.
1. Insurance Requirements
Exhibit A defines the insurance requirements that will need to be met prior
to the [Board/Councill's approval of any agreement for services.
J. 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, CA) and
addressed to:
City of La Quinta, CA
78-495 Calle Tampico
La Quinta, CA 92247-1504
Attention: Robbeyn Bird, Finance
Director/Treasurer
2. Proposal must be received no later than [Time] PST on [Month, Day,
and Year].
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
Appendix H
City of La Quinta
Permissible Investment Chart — Professional Portfolio Management Firm
(1) (2) (3) (4) (5) (6) (7) (8)
California
Government
Investment Category
Maximum
Authorized Investment
Credit
Rating
Comments
Allowed
per
Allowed per
Professional
Code Section
Maturity
Limits (% of Portfolio)
Limits
C Po
lty llcy
Portfolio
Management Firm
53601 (a)
Local Agency Bonds
5 Years
None
None
No
No
53601 (c)
State of California
5 Years
None
None
No
No
Obligations
53601 (d)
CA Local Agency
5 Years
None
Multiple
No
No
Obligations
53601(i)
Repurchase Agreements
I Year
None
None
No
No
53601 (i)
Reverse Repurchase
92 Days
20% of the base value of
None
No
No
Agreements
the portfolio
53601 (i)
Securities Lending
92 Days
20% of the base value of
None
No
No
Agreements
the portfolio
53684
County Pooled
Investments
None
None
None
No
No
53632
Interest bearing active
None
None
None
Colla
Yes
Yes
deposits
1teralized
10%
53601
Bankers Acceptances
180 Days
40%
None
'AA" or better
No
Yes
53601 (h)
Negotiable CD's
5 Years
30%
None
"AV or better
Yes
Yes
53601(k)
Mutual Funds
None
20%
Multiple
No
Yes
53601(n)
Asset Backed Securities
5 Years
20%
AA
No
Yes
Cash and Equivalents
None
None
None
Yes
Yes
16429.1
LAW
None
None
None
Yes
No
53601 (b)
US Treasuries
5 Years
None
None
Yes
Yes
53601 (a)
US Agencies
5 Years
None
None
Yes
Yes
53601(g), 53635
Commercial Paper
270 Days
25% of portfolio
A-1 / P-1
Yes
Yes
F-1
53601 (k)
Medium Term Notes
5 Years
30%
A
Yes
Yes
Money Market Mutual
None
20%
Multiple
Yes
Yes
Funds
53601 (m)
Time Deposits
5 Years
None
None
Yes
Yes
Collateralized Bank
Deposits
(including non-negotiable
5 Years
None
None
Yes
Yes
CD's)
Source of Columns (1) through (5) - Investment: Investment Portfolio Reporting Practices CA Debt and Investment Advisory Commission.
Note: The Professional Portfolio management Firm (PPMF) is not required to adhere to the City's buy and hold policy and does not need City Manager
or City Treasurer approval to make permissible deposits and investments as detailed in column (8).
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 anyL�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 securi-
ties.
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 ... 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
Appendix J
GLOSSARY
Banker' Acceptances are short-term credit arrangements to enable businesses to
obtain funds to finance commercial transactions. They are time drafts drawn on a
bank by an exporter or importer to obtain funds to pay for specific merchandise.
By its acceptance, the bank becomes primarily liable for the payment of the draft at
maturity. An acceptance is a high-grade negotiable instrument.
Broker -Dealer is a person or a firm who can act as a broker or a dealer depending
on the transaction. A Broker brings buyers and sellers together for a commission.
They do not take a position. A dealerects as principal in all transactions, buying
and selling for his own account.
Certificates of Deposit
1. Negotiable Certificates of Deposit are large -denomination CDs. They are
issued at face value and typically pay interest at maturity, if maturity is less
than 12 months. CDs that mature beyond this range pay interest semi-
annually. Negotiable CDs are issued by U.S. banks (domestic CDs), U.S.
branches of foreign banks (Yankee CDO, and thrifts. There is an active
secondary market for negotiable domestic and Yankee CDs. However, the
negotiable thrift CD secondary market is limited. Yields on CDs exceed
those on U.S. treasuries and agencies of similar maturities. This high yield
compensates the investor for accepting the risk of reduced liquidity and the
risk that the issuing bank might fail. State law does not require the
collateralization of negotiable CDs.
2. Non-negotiable Certificates of Deposit are time deposits with financial
institutions that earn interest at a specified rate for a specified term.
Liquidation of the CD prior to maturity incurs a penalty. There is no
secondary market for these instruments, therefore, they are not liquid. They
are classified as public deposits, and financial institutions are required to
collateralize them. Collateral may be waived for the portion of the deposits
that are covered by FDIC insurance.
Collateral refers to securities, evidence of deposits, or other property that a
borrower pledges to secure repayment of a loan. It also refers to securities pledged
by a bank to secure deposits. In California, repurchase agreements, reverse
repurchase agreements, and public deposits must be collateralized.
Commercial Paper is a short term, unsecured, promissory note issued by a
corporation to raise working capital.
Federal Agency Obligations are issued by U.S. Government Agencies or
Government Sponsored Enterprises (GSE). Although they were created or
sponsored by the U.S. Government, most Agencies and GSEs are not guaranteed
by the United State Government. Examples of these securities are notes, bonds,
bills and discount notes issued by Fannie Mae (FNMA), Freddie Mac (FHLMC), the
Federal Home Loan BANK system (FHLB), and Federal Farm Credit Bank (FFCB).
The Agency market is a very large and liquid market, with billions traded every day.
Issuer means any corporation governmental unit, or financial institution that
borrows money through the sale of securities.
Liquidity refers to ease and speed with which an asset can be converted into cash
without loss of value. In the money market, a security is said to be liquid if the
difference between the bid and asked prices is narrow and reasonably sized trades
can be done at those quotes.
Local Agency Investment Fund (LAIF) is a special fund in the State Treasury that
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 of $50 million for any California public agency. It
offers high liquidity because deposits can be converted to cash in twenty-four
hours and no interest is lost. All interest is distributed to those agencies
participating on a proportionate share determined by the amounts deposited and
the length of times they are deposited. Interest is paid quarterly via direct deposit
to the agency's LAIF account. The State keeps an amount for reasonable costs of
making the investments, not to exceed one -quarter of one per cent of the earnings.
Market Value is the price at which a security is trading and could presumably be
purchased or sold.
Maturity is the date upon which the principal or stated value of an investment
becomes due and payable.
Medium -Term Notes are debt obligations issued by corporations and banks, usually
in the form of unsecured promissory notes. These are negotiable instruments that
can be bought and sold in a large and active secondary market. For the purposes
of California Government Code, the term "Medium Term" refers to a maximum
remaining maturity of five years or less. They can be issued with fixed or floating-
rate and non -callable. Corporate notes have greater risk than Treasuries or
Agencies because they rely on the ability of the issuer to make payment of
principal and interest.
Money Market Fund is a type of investment comprising a variety of short-term
securities with high quality and high liquidity. The fund provides interest to
shareholders and, must strive to maintain a stable net asset value (NAV) of $1 per
share.
Principal describes the original cost of security. It represents the amount of capital
or money that the investor pays for the investment. I
Repurchase Agreements are short-term investment transactions. Banks buy
temporarily idle funds from a customer by selling U.S. Government or other
securities with a contractual agreement to repurchase the same securities on a
future date at an agreed upon interest rate. Repurchase Agreements are typically
for one to ten days in maturity. The customer receives interest from the bank.
The interest rate reflects both the prevailing demand for Federal Funds and the
maturity of the Repo. Repurchase Agreements must be collateralized.
U.S. Treasury Issues are direct obligations of the United State Government. They
are highly liquid and are considered the safest investment security. U.S. Treasury
issues include:
1. Treasury Bills which are non -interest -bearing discount securities issued by
the U.S. Treasury to finance the national debt. Bills are currently issued
in one, three, six and twelve month maturities.
2. Treasury Notes that have original maturities of one to ten years.
3. Treasury Bonds have original maturities of greater than 10 years.
Yield to Maturity is the rate of income return on an investment, minus any premium
above par or plus any discount with the adjustment spread over the period from the
date of the purchase to the date of maturity of the bond.
CITY OF LA QUINTA
Investment Policy
Fiscal Year 2012120122013/2014
Table of Contents
Section
Pane
Executive Summary
2
1
General Purpose
11
Investment Policy
4
111
IV
Scope
Objectives
4
4
11, Safety of Principal
10 Provide Liquidity
11� Yield A Risk -Based Market RatiVpf
Return
V
Maximum Maturities
6
VI
Prudence
,
"
6
VII
Vill
Authority i i
Ethics and Conflicts of Interest
7
lX
1
Authorized Financial Dealers a'n'd Institutions
7
11- Broker/Dealers
11, Financial Institutions
X
P ermissible DepplatWand,investmenti,
Nilw 1 1
8
X1
Investment I`Qi,"
1-1,m
13
X11
Payment and CusJ?dy A
13
Xill
Interest Earning 616ibution olicy
13
XIV
Internal Cqntrols arl'aliny,1' 881m!Aud itor's'l!
I '.
14
XV
Reporting �"ndards
15
XVI
Wa'lnl�ial Ass�t;!�hd Inv esimprit Activirfl,,Not Subject to this Policy
15
XVII
41,
Irive'irtment of BoQ�roceedkt
fill;
15�
Xill
111k ii,
lnvea� ant Advisory 84'ard - City f La Quinta
16
XIX
Investnight Policy Adoplilln
16
Appendices
Topic
IC
Page
A
Sim
u mary of Peirir�lqsib[410 posits and Investments
18
B
I �WII -
City of L Quinta Municipal Code Ordinance 2.70 - Investment Advisory Board
20
C
City of L: Ouinta MJ%M'cipal Code Ordinance 3.08 - Investment of Moneys and Funds2l
D
Segregation of Major Investment Responsibilities
23
E
Listing of Approved Financial Institutions
24
F
Broker/Dealer! Questionnaire and Certification
25
G
Request for Proposal for Professional Portfolio Management Firm
29
H
Permissible Iri'vestment Chart - Professional Portfolio Management Firm
35
1
Investment Management Process and Risk
36
J
Glossary
37
CITY OF LA QUINTA
Investment Policy
Fiscal Year 2012�20122013/2014
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 loca�ls,�" titites and applies to all deposits
and investments of the City of La Quinta, Successor1l' �ency to the City of Le Quinta
Redevelopment Agency, and the City of La Q AT t.,
uinta;�Finahcing and Housing Authorities
(the"City').
It is the City's policy to deposit and invest publicli6nds in a manner,that shall provide:
pill, 1114.
I- Safety of principal; 411
I- Liquidity to meet all of the City's obligationkand requirements that gy be reasonably
tit i
anticipated;
N, A risk -based market rate of r u
It is the City's policy to hold securities dhP,othdil.fipstmentsumil maturity. This buy -and -hold
policy shall not prevent theleale of a as I 9�
cLifity to mWirnize losAf principal when an issuer or
backer suffers declining6NNi' rthiness iiii It
or when ith, 94i, ui
that a security be solill I It- V q Iii dity Rieids of the portfolio require
Authori to anage t 4'1 itl Nf
ty invest ant portfolio is derived from the City Ordinance.
Managementires, o I( - HIR tit'
,.i n i ilit , or it 11" set nt program is delegated to the City Treasurer, who
1'. 1 It . I
shall est I Is e0"' ht n 'r' i4or the operation of the City's investment
, It 11 11 1., � I i fit i.
program r�CVsistent wit t, Inv a t V a Treasurer shall establish and implement a
system 011lip'ternal c ntr I c Ili h t a following objectives:
P. Safegull as ts;
P. a r a a effii i conduct of its business, including adherence to all City
1yIHJ
ne mentpolici S;
0
d
0 r vemion or Ste i flerrors and fraud;
a c " I ' titaness of accounting records;
111 a curacy andl' a
11- i el preparation liable 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, 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
and/or dollar limitations and, where applicable, through the bid process requirements. Permissible
deposits and investments include, in general:
0, FDIC -insured Checking, Savings, and Sweep Accounts;
1� Collateralized Bank Deposits;
0, Certificates of Deposit;
0- Negotiable Certificates of Deposit
0- U.S. Government Agency Securities and Federal Gov'Jr�mlent Securities;
Prime Commercial Paper; i 1;i.
I- Local Agency Investment Fund (LAIF);
I- Money Market Mutual Funds;
P, Corporate Notes; 11 tiff'
0- Professionally Managed Accounts. i1i
The City's deposits and investments are gi
However, the projected amount of funds not
invested in notes and bonds maturiq6twe,
invested for up to ten 0 0) years as ft1!'q'*f'Q'r'1c
The City's Investment Policy does not
rate of return on its inv0,tMbnt port
,-I, .k, it
monthly report will disp , 14 a t
Vth ol
and two-year U.S. T48Lry Note, con
for the State Treasurei'%�!Local Age c
I , . '11111� dfl[ii
The InvestroAlINlipy shall bil'a'do'Ple
I ., I J " .1
basis. T ' I e'st 'en"t wiii[be
ic I! a
This Executive umm i18116ly at,
summary cl�lelsljhot constitute'il, mple
of the pages harlelin. i
ilill
five years'116aximum maturity.
isbursed within, if ive years may be
years. Adclitionaiiy, funds may be
on V.
ile,benchrribirk i as a goal or target yield for a
�i6ia!for comi6ison only, the Treasurer's
i three-mr,,lh Bill, six-month Bill, and the one
dI , H?f,
rates for -commercial paper, and the yield
Fund (LAIF).
the La Quints City Council on an annual
end of June of each year.
of the City's Investment Policy. Reading this
, which can only be accomplished by reviewing all
City of Le Quints
Statement of Investment Policy
July 1, 201-213 through June 30, 201-314
I Adopted by the City Council on june 19, 2012
The general purpose of this document is to provide the rules
in administering the City of La Quinta's deposits and invesi
It is the policy of the City of La Quinta to del"Ifi5nd invest
provide:
that must be followed
a in a manner that shall
111!�
> Safety of principal;
llilt 11:;11 11
1i, It, 11 1!, 111,
> Liquidity to meet all of the Clty�s, obligations �nd 'requirements that may be reasonably
it
anticipated;
A risk -based market rate of retUM.
III Mli.
The Investment Policy con1ftTm.sIt 'lil I'll,
oall ta n locil at' utes governing the investment of public
an
funds and sets forth,1 permissible a o ts a in at,, ts of the City's funds and the
limitations thereon
di,
III S
Except in
rt er eta action 11, t isliAvest ant Policy applies to all deposits and
invest n I I t a it of uinta;� uccessor gency to the City of La Quints Redevelopment
Agenc a ity of La Q I il ....
a Finan g an ousing Authorities (hereafter referred to in this
docum t a it -). The" 'fun s a' i iiiported in the City's Comprehensive Annual Financial
Report I a clude all f ithin the following fund types:
0, General iq[
I� SpeciBI Kevenue ill
0 Capital Projects
0 Debt Service
I- Enterprise
Pit Internal Service
0 Trust and Agency
I- 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:
Safety of Principal
Safety of principal is the foremost objective of the City's investment program.
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 GovernmiaW-Vs'hall be diversified by allocating
assets between different types of permissible inve'�it"M"ents, maturities, and issuers as a
means to mitigate credit risk and interest rate,r
Is
A.
B.
Credit Risk is the risk of loss frorc� ,
.the failure
Credit risk may be mitigated by:111101'
11- Limiting investments to invesim6hit
11- Diversifying the issuers of the secur
potential losses clue tolitsuer failure
minimized. 11111111hzz.
Interest Rate Risk is the rikk thaf'ffibrket valuail
"f) 11110
decline cluetti0hanges in general interest rates. fi
by: vuowl
lid
issuer or backer.
at
as as permitted in Section X;
iestment po�Volio so that
'I "
securities down I grades may be
securities in the portfolio will
test rate risk may be mitigated
so that securities mature to meet cash
, thereby avoiding the need to sell securities
securities.
ity Ris '16 the riskithat a security cannot be liquidated because of its unique
as or sti64i re or'�96ause it is thinly traded. Liquidity risk is not a material
for the C4,1111portfoll� , 'because of the permissible deposits and investments
;,Rction X) aNg because the City maintains a buy -and -hold policy and holds
Us. and othdr investments to maturity. A discussion of the City's investment
, llil, "ffil
Ss anq,!iq�,Wpresented in Appendix 1.
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.
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 sindi0enchmark as a goal or target yield
for a rate of return on its investment portfoliciii T' I I' folio's rates of return will be
?*11 1 1 1 it
influenced by several factors, including aciitins b I T Federal Reserve Board, the
0�lk ""bns.
marketplace, and overall economic perceptions and con iti These factors will not
affect yield during the securities' ol I It,
ariod because thlellbity's buy -and -hold policy
fixes the securities' yi I at the ti a 6�11,. c ase.
As a basis for compar 111!�E Wl,
I , t a reasurer's orit I r orts will display the rates of
return on the three-m t I I" 'six- 1 0 th 113' d ne an two-year WS., Treasury Note,
comparable -period rat a r a at, a ,,,t a yield for the State Treasurer's
Local Agency Invest t IF)t a Tr a . urer ay use these or any other
published rates of ret r at t asurar, eams a r riate for comparison to the return
on the City's inves, o f Ii t !� 1;�
0!
ILI
It is the Citylsl"16yito hold hebdritibi MO. i t
ther imM4 ments until maturity, thus avoiding the risk
of markervabue fluctuations wit'k overall markevinteMst rates. This buy -and -hold policy shall not
p 1,
$ 111 SIT 'M�
revent , , i sale of a ;14�,ity tot im ze osv principal when an issuer or backer suffers
declining I IT, .1 H" V
credit worthiness briwhen &ii�iquidity needs of the City require that a securitybesold.
olicy requit4
The buy- n -9�1'1 a that t a ity's investment portfolio be structured so that
sufficient Ii uidilul" are availab"le fro aturing investments and other sources to meet all
I
reason I -anticipat , cash n4di . o eat anticipated cash needs, it is essential that the
Treasur r have reliable I ', " 1 11
OHIO , rK P
.9e..mi', repare cas flo projections.
Annually, the Treasurer shalVproject the amount of f unds not expected to be disbursed within ten
years. For FY 20 1 2/2G 132013/2014, the amount of such f unds is projected to be,$30 million. (Formatted: High4ght
Funds up to that amount may be invested in U.S. Treasury notes and bonds, LocaC Agency
Obligations, and California Local Agency Obligations maturing between 3 and 10 years. For all
other funds, investments are limited to five years maximum maturity.
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.
EJ
I
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 f or speculation, but for investment, considering the probable safety of their capital as
well as the probable income to be derived."
Vil AUTHORITY
Authority to manage the City's My estment portf olio is deny
il�� sections 35607 and 35608 of
City Ordinance 3.08.010. Management responsibility forithel6estment program is delegated to
the City Treasurer for a period of one year pursuant to'§f al 'bi.t.;y'lCouncil's annual adoption of the
Investment Policy.
The City Treasurer shall establish ritten ro for the o ratiowof the investment program
consistent with the Investment olicy. ce"Ut oul inclu a refe I'll.
rence to safekeeping, wire
transfer agreements, banking iervice contrac of ateral/deposiio"N� agreements. Such
procedures shall include explicit dele ation of M, . .-.i
t I J,ilirsons respohsi& for investment
transactions. No person may a i1nian inve t " I
Is, " '� ided under the
ng action except as prov
terms of this Investment Policy an t 0 oce ure as lished by the City Treasurer. The City
fo
Treasurer shall be responsible r 11 t ns 01 ons un rtaken and shall establish a system of
controls to regulate the activities 0 su r inate6fficials. hil ity Manager or his/her designee
shall acknowledge in writiri fpurchases ; I.. I'l— Hll�
andsalesof1l estmentsprior to their execution by the
City Treasurer. lint
Vill E FLICTS . I
snager, City, Treasurer an lit 10 ees involved in the City's banking and
The City I
investnii 411process shaiil�cilonduc`t-t? a it 'a siness in an ethical manner and refrain from any
Oil fl I
activity or, 'e,,lationshi t tima, q�
, : y 0, ave t a appearance of, a conflict of interest. Any
q tio !�'l ' tivity or r I tiqnshl, ql,,e re orte immediately and in compliance with the
uestionab e3ar p a
V V� 1 40
"L
fl
procedures se t!h, in ctio 0 icts of Interest and Acceptance of Gifts and other
Gratuities of the*8 of La uin" ersonnel anual. sporting must be made in accordance with
4 1 - "' t d
the personnel policie Jof the Ci
!Y, n , until resolve , the officer or employee shall refrain from
participating in the Cityls busihess relate to the atter;
'
The City Manager, City
ressurer 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.
1 Broker/Dealers who desire to become bidders for direct investment transactions must
supply the City with the following:
P. Current audited financial statements;
101 Proof of Financial Industry Regulatory Authority (FINRA) Certification;
I- Trading resolution;
I- Proof of California registration;
11 Resume of Financial broker; and
I. Completion of the City of La Quinta Broker/Dealer questionnaire (see Appendix F)
which contains a certification of having read thlilCity's Investment Policy.
41 tjV
The City Treasurer shall evaluate the documenlatiXs I ubmitted by the broker/dealer and
independently verify existing reports on file -mmIll,
dfovanyhfirm and individual conducting
investment related business. il IV IP2
i
The City Treasurer will also contact the �qll&vin agencies du"iiin
the verification process:
I. Financial Industry Regulatory Aut Nty (Fl Public 19616sure Report File (1-
800-289-9999).
it [III0
Oa
I. State of California N' rtment of rporations (1-916- 5-3 62).
The City Treasurer maintains 'ii listihg� 6f,,financial �irikitutlons which are approved for
investment purposes. All Broker/Dealers and financial Inetitutions that provide investment
Ct
services will be su " ' Ito City Council approval!",
00Q, q��, '!,
PIP 1kil, fl!!, .1aill" , 411111,
Each securities deall4r:j all provdolmoni h ya ' 14(tarterly rejoofts filed pursuant to U.S. Treasury
mut A
U u
Department regulations. ach nd h Hit rovide a prospectus and statement of additional
information.
2. qi& Is
Mc I,1nj flons will 66 required'W Yneet �he following criteria in order to receive City
f; jft!L_ n'v'6iiment (as 'Itil'i
depo�jtj jb,� I a Appendix E, "Listing of Approved Financial
A. ln�
c %ru - Publi6lfunds ifi'all be deposited only in financial institutions having
,pnca "�, the Federal Deposit Insurance Corporation (FDIC).
a rm insured t'
P
B. Collaterell'�,Thviihount of the City's deposits or investments not insured by the
MIC-sha4lUla'Olateralized by securities with market values of 110%, or by
mortgages wlt� 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 collateralization in public monies.
PERMISSIBLE DEPOSITS AND INVESTMENTS
Permissible deposits and investments are summarized below. A more comprehensive list is
included in Appendix A.
Permissible Investments and Limitations
Maximum
maximum
(See Appendix A for Additional Information)
Allocation
Maturity
Restrictions
Checking & SaAngs Accounts FDIC Insured & S�eep Accounts
85% Portfolio
cumarul
S�eep Account
U.S. Treasuries
On Demand
andfor GSE's
Interest bearing aCOW bank deposits - nom FDIC insured collateralized by
i0lif
Current
$40 million
110% of eligible securities
60% Portfolio
On Demand
W bank
Gerlificales of Deposit - FDIC Instead
1160% Pordoholl
5 Years
$260.000.
including Interest
per institution
�= S250,000
Negotiable Cerdncales of Deposit - FDIC Insured
30% Portfolio
�Sream
including Interest
per institution
�=$30,000.000
U.S. Treamry Bills, Notes and Bonds. and Go%,lammkill atonal
060ortfolk,
5 Years
maturing 3.10
Mortgage Associatior, (GNMA) Securities
Ym.
1,
�=W,(100,000
it
j
maturing 3A0
Local Agency Bonds/California Local Agency Obligations It
loyears
Ym
ill!oorxpo
Long term
'A,
A2, Aor
better
U.S. G(munmrd Agency i's and Fedel-1,66ve Me siWili9d I
- m'
"W,
co
le,capt latanalized mort=gage IfiIidions (CMO'a)lor structured Fiqlal
which coftsn embedded rate optioned!
liliji,
- Federal National, Mo".e Association (FNIVI41
$20,000,000
5 Years
a I
-FedemIliom*'L&4�64%es&Bond (W,46� 1
$25,000,000
5 Years
Federal Farrin Credit Soft (FFCB) It I 1111,
I'll 1.
$30,000.000
5 Years
.,�
Federal HorolkLoan Mortgage Colpthinfil
$20,000.000
5 years
Prinns C . far . aplAperincludingre V Liquidity Guarantee
$5.000.000 per
Pmgmm(TLGP)
5% Portfolio
90 Days
Iss.ermacannum.
Local Agency Investment Fund!
(LAW)
$50.000.000
Cumerd/
$50 million
On Demand
per account.
ijijV
Money morket mutual funds regulated tvy,dm SEC that consist only of US
20% Portfolio
Current
Maintain $1 per
Treasury Smudges or GSFs and maintallie per nlue of $1 per sham
On Demand
sham par �Iue
$5,000.000 rmu,
Corporate Notes
10%
3 Years
per issuer AA
rated or better
$10,000.000 mfor
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-
Appm�ed RFP
Long -Term Scale
S&P AAA, AA +, AA, AA-, A+, A
Moody's Asa, Aal, Aa2, Aa3, Al, A2
Fitch AAA, AA +, AA, AA, A+, A
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 $50,000 target balance may be maintained in conjunction with the checking
account.
In addition, the Treasurer may invest in an interest
approved per Government Code Section 53632
collateralized with securities that are in accordan6
53632.51c). In addition, the market value ofit"H41
maintained in accordance with 53652 (a), and be$el�
the requirements of Government Code Sectlon'Sj651!
of the deposit account shall be cleterminedi'Alaiccorcla
53658. 'ff
2. Certif icates of Deposit - As authorized in b6vi
Deposit are fixed term investments which 'W
are
150% depending on 1h
the specific security
Government Code Section 5flOJIlThere are
i
for this investment vehicle. 'lihil"llilih
mount. The tyk'M_�Rhteral is
Iways be heldl�,Yian indepoiNqent
of Deposit to thillCity. Evije'rlce
be supplied to the I Q , ty, and!
blain
B.
110%
The City's
portf olio.
bearing active deposit account as
liThe deposit account must be
,with Government Code Sections
,collateralized securities must be
[by a custodian in accordance with
�h�d�proposition of the City's share
ice with Government Code Section
'od r, 649, Certificates of
8 Sectio
ra'
,to be collate' 6ed f rom 110% to
as collateral i �1111
accordance with
)Iio limits on the amount or maturity
WlCertific&46of I Depdtiilin excess of the FDIC insured
limited to,,dty authorized investments. Collateral will
thA140 ?irom tRAin'stitution that sells the Certificates
,il I
of conV t�arnce with State Collateralization policies must
,ad by t6'!Pity Treasurer as follows:
The City Treasurer may waive
icess of FDIC Limits: The amount not federally insured
sit securities or 150% mortgages market value of that
plus unpaid interest earnings.
limits the percentage of Certificates of Deposit to 60% of the
The City does not allow investments in CDAR's.
3. Negotiable Certificates of Deposit - The City may invest in Negotiable Certificates of
deposit issued by a nationally or state -chartered bank, a savings association or a federal
association (as defined by Section 5102 of the Financial Code), a state or federal credit
union, or by a federally- or state- licensed branch of a foreign bank. No more than 30% of
the City's portfolio may be invested in negotiable CDs.
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
10
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.
> The City's Investment Policy does not allow investments in 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 GSE's include
Federal National Mortgage Association (FNMA), FederailHome Loan Mortgage Corporation
(FHUMQ and Student Loan Marketing Associatioff(kMA), Non -publicly owned GSIE's
include the Federal Home Loan Bank (FHLB),,,F,9,de"rai!Farm Credit Bank (FFCB), Federal
Land Bank (FLO) and Federal Intermediate Credit Bank (FICB).
[IN". 'iiie
The City's Investment Policy allows investment only in secur "s,of FNMA, FHLMC, FHLB
,Hw 141.h
and FFCB. For Fiscal Year 2013/2014,11he maximum face amount per issuer is $20
million for FNMA and F L , 5 illio , n. , 61 HLB and, $30 millionlitir FFCB. Inacklition,
"'sted in all G§i'a combined with a
"I ve
no more than 30% of the 0 foliosurplus' a p
maximum $10 million face "ciunt er purch'
per pur
5. Prime Commercial Pa at - a a' 6rizedlin Gov r lent. ode action 53601 (gi, a portion
of the City's portfolio ay a in I as I d in'clil' mercial r of the highest rating (A-1 or P-
1) as rated by Moog �101 �q,
,V'Slor tender nd oor's are r� nu bar of other qualifications
regarding inve tments m1co erciall a erN 0 1 n ... e financial strength of the
si ;� 1. � �1,1101
corporation z he i Vest n . 1"ity's Investment Policy permits
, " i I � Me t
h thd'�following limitations:
per
per
per
per
investments in mercial per it
Urn I digh 4
B. axi mum turit of, d
y 1; 11
11111io or issuer.
C. aximum mi
The lim ta i ive than the State code allowed amounts of 25% of the
i tons are core r stdic�-
lio ith at�_ ties up to 270 days with no per -issuer limitations.
total o rl
111 1 Ill !M
he ity i I er ittedito invest in commercial paper issued under the FDIC Temporary
I
iquidity u r tea, r jlrtim' subject to the aforementioned commercial paper limitations.
6. tate Tre a r r's Local oencv Investment Fund (LAIF) - As authorized in Government
Ude 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 $50 million per account in LAIR
The City's investment in LAW 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 G ty has !we aeliswAts with LAIF and 11IT1046 ;R--tl*leAt to 2QPA 64
!he poWelie.
11
7. Money Market Mutual Funds - As authorized in Government Code Section 53601 W, local
agencies are authorized to invest in shares of beneficial interest issued by diversified
management companies (mutual f unds) 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 (11 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 invest
ts in utual fun a that are money
�Hu ml�
market funds maintaining a par value of $1 parii r , at invest in irect issues of the
U.S. Treasury and/or US Agency Securities witk'!n veirla"a aturit f their portfolio not
'I ...
exceeding 90 days and the City limits sudh invest ants t'612 f t a portfolio.
Corporate Notes - As authorized in Gover'nment Cod ectiolil
8. n 1 (j), local agencies
may invest in corporate notes. The notes"must be issue by c r 1; r i. ions organized and
operating in the United States or by deposiGr' ; if SIC 'It
,y in tu
�� sti .... n I a s he United States
StWIT14p I I it,
or any other state and operatiri�lin,the United a. T a C ty' v tment Policy allows
il it -
investment in corporate note4lauthorized by tAu"Ibovernment Code with the following
limitations:
til
III Matu tin ath t a cee a as
I *fipur hase.
ate, o C
11, Eligibi shall " a re Is' te a deld in the marketplace.
11 if� Itt
It. Eligib shaiN ;r:ate F1 tt
11, Total a a , il
n t x a oft a ortfolio for non -Temporary Liquidity
Guar r N�
r I a otes and 20% of the portfolio for TLGP
Cdr t MI!
F -I I I
1111,1111" r t nv t ent� shall not exceed $5 million face amount for
The'
1, each issda"e"111.
This lsIM,9re restrictiv6,then the'State code allowed amounts of 30% of the total portfolio
to fivb,years with no per -issuer limitations.
iities up �,!,.Irmitted to invest in corporate notes issued under the FDIC
with tV
m
'I
The Ciltly �ip alSor
am rary Liq� idily GiJarantee Program subject to the aforementioned corporate note
limi po a
tation , exce ifiatle'Orporate notes issued under the Temporary Liquidity Guarantee
Program or otherwise'l6acked 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;
(b) Knowledge and working familiarity with State and Federal laws governing and
restricting the investment of public funds;
12
10.
W Substantial experience providing investment management services to local public
agencies whose investment policies and portfolio size are similar to those of the
City;
W) Professional liability (errors and omissionil insurance and fidelity bonding in such
amounts as are required by the City;
(a) 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 theXity's Investment Policy with the
following exceptions: ,fill!"
M The PPIVIF may be granted the dis
in accordance with Appendix I of
(g) The PPMF is not required to ac
Investment Policy, and;
IN The PPIVIF does not need City,�
permissible investments as detailo
Policy.
Local Agency Bonds and Callfornib !Loci
California local agency obligati6hik,pur%U4
to investing in bonds issued by alb�al a6
the local agency 53001 (a) pertai�ijto in
Of a local agenc�105!6'41r' Mont boar I d I a
State of CalifoM, , tj
mia. Iiii , 'fill
The City's lnvest�ijh
Local Agenfyigbligatic
0 M I -
litl6n, thill�Qpnc
dil", ,I)!
better by S&P MQ(
',lilt 411
In the base of an initial
d "' m the Bond
i'ec"�*"o
on the appV%I'�ed Brok(
,i'
Oli,
X1
There are three (3) types of il
it&odrchase and sell investment securities
!ii I
nviistm�n'lijP,olicy;
to the buysland-hold policy of the City's
or City Treasurer approval to make
'&:H of this Investment
im8 of Appen
Obligations - The City may invest in
)1la),and53301(e). 53601(a) pertains
irtnii , nt, board, agency or authority of
bond's if,
and other defined indebtedness
4tho.rity of the local agency within the
; in Local Agency Bonds and California
with up to a ten year maximum maturity.
�sted in the long term rating of A, A2, A
3, including refinancings, the Treasurer may purchase
If the case of secondary issues, the Treasurer will rely
pools:
W State -run pools (e.g., LAIF);
I, Pools that are operated by a political subdivision where allowed by law and the political
subdivision is the trustee (e.g., County Pools);
W 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
13
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 POUCY
Interest earnings are generated from pooled investn
Pooled Investments - It is the general policy
of the City of La Quints, Successor Age I
t
Agency and La Quints Financing and ousil
the following order, as follows:
A. Payment to the General Fund of an
charges as incurred d ii.
y1the general
annual operating buddeC�Iqlil ;j
B. Payment to the General Fl.Ind ofe
pooled cash, fb"O,jnvestme;��arnin
C. Paymdhl Ito each f UAd of an a
daily ca4k6lance i W
ncluded in
2.
x1v
investments.
(the City td1pool all available operating cash
11 t
V, to the Cit�! �f 1 La Quints Redevelopment
Authorities a4alliocate interest earnings, in
i ld!, 'I 1111 11 111,
1bunt equal to the total annual bank service
t�;f,IM � M1
i ,or all operating funds as included in the
-1.
equal to 5% of the annual
on the average computerized
portfolio for the earning period.
by a fund shall incur all earnings
The City Treasurer shall'oijoblish 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.
14
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 an .111111
collateral (as defined by State Law) shall be placed Yt bank or dealer including appropriate
owith an independent third party for
custodial safekeeping. 111p:11h i
4. Avoidance of physical deliver securiti s M1,
cook entry securities are much easier to
transfer and account for Inca actual eliVil of a document lil�l
n"er takes place. Delivered
securities must be prop orly safe uar'i"Ja ainst loss or destr& 11
Ar�l ciion. The potential for
fraud and loss increases ith physically deifivered securities.
T
if , dill 411
5. Clear delenation of such 11,1.1 , hinbers. Subordill staff members
must have a clear unclerstancliri� ofitheir authority�and responsibilities to avoid improper
actions. Clear delegation Or aut fit 11 reserve'� the internal control structure that is
ty ,
MO
contingent on the various staff poaltio a aAd air res ctive responsibilities as outlined in
the Segregation of I I 0-t., fill,
1 Molor Invest an! PO i ities a penclices.
I till 11I," aiii'l It 111111!� "'
6. Written confirmation or 1�lllh 9 61tio for tments and wire transfers. Due to
the potential foV6iror and inioroprietiesWii - ing from telephone transactions, all telephone
transactions shall 66uppofWd by written'lbommunications or electronic confirmations and
go.
approVi8lby,ithe a�pha'W �ejrabn. Written communications may be via fax if on
letterhead and the safekeeping institution -has a list of authorized signatures. Fax
Orr spondence'muM be suo d b
1.11 1 1 1 pprte y evidence of verbal or written follow-up.
This aoiitorent shouldidWine OW'various controls, security provisions, and delineate
responsi614` 11 1
p!,of each p"y making and receiving wire transfers.
The System of InternaillConti6W developed by the City, shall be reviewed annually by the
independent auditor in conQctOn with the annual audit of the City's Financial Statements.
The independent auditor's tter 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 f or cash
and investment activities.
See Appendix D, 'Segregation of Major Investment Responsibilities.
15
I
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 shell summarize cash and investment activity and changes in balances and
include the following:
A certification by the City Treasurer. I
A listing of purchases and sales/maturities of lirlily'allstments.
Cash and Investments categorized by authorized investments, except for LAW
which will be provided quarterly and shiiwyieldland maturity.
Current year and prior year monthly history �ii6sh and investments for trend
analysis.
Distribution of cash and investrr�tjl Itlirblalances by fund'.1h
• yearto date historical cash flo'Wenalysis and projectionifor the next six months.
• two-year list of historical interWilrates III, h.
1. i1fl,
1111liz.
XVI FINANCIAL ASSETS Al
The City's Investment Policy
' wHIII
W Cash a 11nue, at
11, Funds,114'in trt
programs;I11,
111. Cash and ln'6st
fritutions for c
Short kW, Ibng tei
11' Short ter""I ip. us
111�,either betwgMll
!Agency.
,'III,
XVII INVESTAt OF SOM
n' o icy i
The City's Investme I P, I'
California Code Section ' all
accordance with bond inderhi.
City's Investment Policy.
other post -retirement benefit
by banks or other financial
nade1plotherr entities by the City or Agency; and
" �M
or long'Itsern (Advances from/to) obligations made
nd its funds or between the City and Successor
1.
IH govern bond proceeds and bond reserve fund investments.
governs the investment of bond proceeds and reserve funds in
provisions which shall be structured in accordance with the
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
16
I
is the City's position to continue maximization of yield and to rebate excess earnings, if
necessary.
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 statutptl or at any time if a change in
circumstances warrants, each board member will providelthe City Council with a disclosure
Al It,
statement which identifies any matters that have a bearing on the appropriateness of that
member's service on the board. All board members1sh,6111ii4ort annually to the City Clerk on
,-I, ilm
Form 700, Statement of Economic Interests, any activities, interests, or relationships that may be,
or have the appearance of, a conflict of interes6lili� ill,,
... i
The IAB must meet at least quarterly, but usually meets monthly, to:9111
Review at least annually the it a tm�
Inve ant f end appropriate
y 4ii , Tollcy and recornm
changes; �Ii ii,
Review monthly treas 6e i
2. repo In' '10 PI ith the Investment Policy and
ury land com anc
adequacy of cash and invest eNisl for,alnlii i a a
c P.t d o ]I ations;
1 gibit,reoorts br6vi d b a v reasurer:
3. Receive and con'slJOW ii, a lil it'
4. Meet with the'i6dependentiAuditor aftdi! completion of the annual audit of the City's
MO I� 11
financial statements), pndj1A6eive and'46'nsider the auditor's comments on auditing
procad'U'W�i ternal" �Aal116U!findings io"rcash and investment activities, and;
- - I'M
5. $ ftis as a resd6iiik 1
1 1 A' I
internal controls, use
The IAB will *ort to the
'. 1,; �
correspon ence atia, r gular
Provisions." I
XIX INVESTMENT PCILICN
Treasurer on matters such as proposed investments,
financial institutions, custodians, brokers and dealers.
bil after each meeting either in person or through
meeting. See Appendix B: 'Investment Advisory Board
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.
17
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C14
City of La Quinta Municipal Code
Chapter 2.70
INVESTMENT ADVISORY BOARD PROVISIONS
Sections:
2.70.010
General Rules Regarding
2.70.020
Board meetings.
2.70.030
Board functions.
2.70.010 General rules regarding appointr
A. Except as set out below, see Chapter 2.1
B. The Investment Advisory Board (the"boa
members from the public that are appointed by
C. Applicants for the board should have a b
and/or experience in markets, controls Illlf!h�
ardlacci
be requested and potential candidates mu1,J,agl
D. On an annual basis, in conjunction With i
any time if a change in circumi,*'hces warraMs
with a disclo V
sure statemenilW'hic'klt"q'qptifies an
URV
appropriateness of that member's serVice on th
limited to, changes in employni-prit, cH.ipges in
E. To promote,qqntinuitV
a �l 111—il
staggered. Th '41 6-i � of �dry
,111111 111!
2.70.020 "Bbard meetin
lilt
The Boari UO?BIIY will
meetings upon th I li�
a concurrer
be determined by the'94ro
General
Appendix B
of five (5)
d in�fihance, preferablg'with knowledge
)rsecurities. Background information will
cko I round check and verification.
I R�io"im Act disclosure statutes, or at
ii4fVar will provide the City Council
lard me
that have a bearing on the
S 'M' atters may include, but are not
uc m
I, or changeg in clients.
; of the members of the board shall be
or two terms expiring each year.
�,lbut this schedule may be extended to quarterly
r8talnd the City Council. The specific meeting dates will
meetings may be called for on an as needed basis.
2.70.030 Board functiShilL.
A. The principal functions ofj,�he 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
21
I
correspondence at a regular City Council meeting.
Appendix C
City of La Quinte Municipal Code
Chapter 3.08
INVESTMENT OF MONEYS AND FUNDS
Sections:
'I I
'fidl,
3.08.010 Investment of city moneys and dep ii se
3.08.020 Authorized Inirestments.
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. 1;i,
3.08.010 Investment of city mongo"ghd deposit df4ecuritles.
Pursuant to, and in accordance wilh, and!to the exNht allowed by, Sections
"tlCode:ft authoritylto invest and reinvest
53607 and 53608 of he, Governmen '6 � W"
moneys of the city, td �;iiilo'l�!exchange!6ecuritiFf�'n'd
40, 1, q , &!q, deposit them and provide for
their safekeeping, iafdelegate�jtb the ciiy",!Iraa1's1urer. 2 § 1 (part), 1982)
I;" QjAll
if i
3.08.020 Authorized I I I It 1�
III." I V
Pursue , j1d,t q t rit in Section 3.08.010, the city treasurer is
lj� h _ , dele a j !M, I
authc 4o �6 r%'h%,, at ii �lr r in'a le orl'a'fter they have been issued, securities
which'*,' er issibleii ve er ny provision of state law relating to the
investin eneral cit Wl 11 t
u in I i ut not limited to Sections 53601 and 53635 of
the Go ennI ant o a, as secti 'a no read or may hereafter be amended, from
money in is &�st dy ic a not';e uired for the immediate necessities of the city
and as a a ee ise a!' ex a ient, and to sell or exchange for other eligible
'Im tilt
securities an reinve t e, as a of t a securities so purchased. (Ord. 2 § 1 1part),
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;
22
I
provided, however, that the bonds may be held uncancelled and while so held may be
resold. (Ord. 2 § 1 (part), 1982)
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. jOrd. 2 § 1 (part), 1982)
3.08.060 Deposits of securities.
Pursuant to the delegation of authority
authorized to deposit for safekeeping, the
invested pursuant to this chapter, in any inst
of any state law, including but not limited to
it now reads or may hereafter be amended
treasurer shall take from the institution on
deposited and shall not be responsible forlthi
the institution or depository until they are I
JOrd. 2 § 1 (part), 1982
3.08.070 Trust fund
Any departmental trust fund
36523 of the Government Code st
with Se
provisio
23
in Section 3;.Q8.010, the city treasurer is
ecurities,injWhich city moneys have been
tution orMepository authorized by the terms
SectionIS 6 of the overnment Code as
,Ili, .14 1
ln� ordanceI, ith said section, the city
;,If � 1 11.
do itory a recei t for the securities so
s
se itie de iver Ito and receipted for by
hdrawn therefrorn'bylthe city treasurer.
t,,j I
�l. oJ1111
�N H-P!,
H ! N
by theld'it,y council pursuant to Section
stered by the city treasurer in accordance
Wh ,
limm nt 6
All
Co jend any other applicable
lip
Appendix D
SEGREGATION OF MAJOR INVESTMENT RESPONSIBIUTIES
Function Responsible Parties
Develop and Recommend Modifications
Investment Advisory Board
to City's Formal Investment Policy
and City Treasurer
Review City's Investment Policy
ifl,l'City
Manager
and Recommend City Council Action
and City Attorney
Adopt Formal Investment Policy
itv Council
Implement Formal Investment Policy
Review Financial Institutions & Select Ir
I
Acknowledge Investment Selection'sillill
II �
Execute Investment
Confirm Wires lif ap
Record
to City inv6%,!ment records)'(11!
Reconcile Investhip
nt Records
to Accounting a 'or's and Bar
11 ,111, ,1
Reconcile Invest ant ed 8!
to Treasurers Report of In '11,1;
sta
Security of Investments at City
Security of Investments outside City
Review Internal Control Procedures
City Treasurer
istmeAll. City Treaiurer
City Manageirior his/her
lill designee
it' 'I!.1jCity Treasurer or City Manager
I.
Ul'i f�!u "iiIII,, Accounting Manager or
Financial Services Assistant
Accounting Manager or
Financial Services Assistant
firmation City Treasurer and Financial
Services Assistant
24
Financial Services Assistant
Accounting Manager
Accounting Manager or Senior
Secretary
Third Party Custodian
External Auditor
LISTING OF APPROVED FINANCIAL INSTITUTIONS
1. Banking Services
2. Custodian Services
3. Deferred Compe ti ' 11
4. Broker/Dealer Services
Appendix E
Wells Fargo Bank, Government Services,
Los Angeles, CA (Banking Services)
Government Banking
, CA JCollateralized Bank
of New YorIUMellon, Los Angeles,
City/Countyllianagement
� 'n
I'Itio
.Jv4ion Retirement Corporation
of kheri.ca Securities/Merrill Lynch,
111!,,,111��&gahlStanley, San Rafael, CA
[CitiGroup , , tI Costa Mesa, CA
�'rs' Empire Securities
111
Siarte of Cal ifornia Local Agency
finvestment Fund
City of La Quints Account
25
1991City 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
2011 RDA Project Area 2 - US Bank
2011 Fin Auth Housing 1 &2 - US Bank
Assessment Districts - US Bank
No Changes to this listing may be made without City Council approval
BROKER/DEALER QUESTIONNAIRE AND CERTIFICATION
I . Name of Firm:
2. Address:
3. Telephone: J_)
4. Broker's Representative to the City
Telephone: (_)
5. Manager/Partner-in-charge
6. List all
7.
above
8. Which instrumbAts are 61fired
" 11 E 10, 111 v
U.S. Trees i a
BA's
Commercial Paper
CD's
Mutual Funds
% Agencies (specify):
I
IS
Appendix F
ling with -or quoting securities to City employees (attach
TI!
`Mfi,
the City's Investment Policy?
regularly by your local office? (Must equal 100%)
_% Repos
_% Reverse Repos
—%CMO's
_% Derivatives
• Stocks/Equities
• Other (specify):
26
9. References -- Please identify your most directly comparable public sector clients in our
geographical area.
Entity Entity
Contact Contact —
Telephone Telephone —
Client Since Client Since
10. Have any of your clients ever sustained a loss on a soixirities transaction arising from a
misunderstanding or misrepresentation of the risk chillf, a, ii
explain. JJ!;i!1' eteristics of the instrument? If so,
11. Has your firm or your local office ever b ill,,
eanisubject,0ja regulator�116r state/ federal
agency investigation for alleged improper, iraliduleAt,i8isreputable �'r!�hfajr activities
related to the sale of securit 'll—, -1,1111M. '�!
so, explain. jli�,ave any of �qigjemployees been so investigated? If
12. Has a client evericlaimed in riting tha .40u were responsible for an investment loss?
—Wo fyqsi,,pIease'Oi6vide action taken
Yes
Has Allent ever clairAed in writi6i; that your firm was responsible for an investment
h7— NoWk I I f yes, please provide action taken
loss? Yes,
Do you 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
27
Who audits these fiduciary responsibilities?
Latest Audit Report Date
14. How many and what percentage of your transactions failed?
Last month? % $ 1
Last year? % $
15. Describe the method your firm would use to a
lis'h
10ital trading limits for the City of
La Quinta. ar 11 h
16. Is your firm a member in the S.I.P.C. insM
ur,
If yes, explain primary and excess coverage
17. What portfolio information, if
18. What
19. Doi 41
20. Does,
If yes,
and *0 frfact#'bonfirmatjo�al!or any other research publications will the City
firm offiViiivestmliNtaraining to your clients? Yes No
firm have prIssional4isibility insurance? Yes No
saprovide the insurance carrier, limits and expiration
11 . 1. date.
21. Please list your FINRANASID Registration Number
22. Do you have any relatives who work at the City of La Quints?
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 Guinta or Riverside County? Yes— No-
25. Please enclose the following:
11- Latest audited financial statements.
28
0- Samples of reports, transaction confirmations and any other research/publications the
City will receive.
I- Samples of research reports and/or publications that your firm regularly provides to
clients.
ll� Complete schedule of fees and charges for various transactions.
***CERTIFICATION...
I hereby certify that I have personally read the Statement ofllri�estment Policy of the City of La
Quints, and have implemented reasonable proceduresl �.V
an&q system of controls designed to
preclude imprudent investment activities arising outofi ransactions conducted between our firm
and the City of La Quints. All sales personnel will bJdyo'u"tiney informed of the City's investment
objectives, horizons, outlooks, strategies and risk constraints whenever we are so advised by the
11-1i� 11q,
City. We pledge to exercise due diligence iminforming the City of La'Quinta of all foreseeable
k
risks associated with financial transactions con"riucted with our firm. li!111,
�q ilin djlh� , fin�
By signing this document the City o La Ouinta is a 'ij n tb conduct an 0111
u 0 y 80� all background
checks. i Illi!!
Under penalties of perjury, the response re true and accurate to the best of
othis Westionnai a
*1 It `411 t . (ih
my knowledge. .11, P 11 :!, 1,
Broker Representative
Date It
Sale anager and/or
Date
29
Appendix G
Request for Proposals
Professional Portfolio Management Finn
City of La Quints, CA
The City of La Quints, CA is soliciting Requests for Proposals (RFP) from interested firms for the
provision of a discretionary investment management services for City of La Quints, CA. The
portfolio to be managed of the invested assets is will be I ii�roximately 10% of the City's
investment portfolio and will be invested between 0 - 5 y4ale'sW'
The investment of City of La Quinta, CA's funds is gujIde'd' b"y'[the applicable State statutes and
the City of La Quinta, CA's investment policy. A copy'of the Iriv stment policy is attached for
your information.
Questions regarding this RFP should be directedIto:
1-6obli'l 1 "'Bird
Name: John IM Palo
Title: On
nance Director/Treasurer
City of: LWOulma, CA
Address: P.O.lBox!1604
City, State, Zip Code: La Quints, CA192247-1504��
—1 It -Ij�
Phone Number: (760)77i7-715O it
1. CRITERIA FOR EVALUATION W14D SELECT140'Nif
a Experience of iHejirmj6jIprovWing s�iv'lces to public sector entities of similar size
rofess nillex tencei and qualif iO
'o iltions'of the individuals assigned to the
account-, lz�j
10 ces, investment philosophy and approach;
,,?,folio manage"nt resou
Responsiveness to di!� RFP, I 06municating an understanding of the overall
• Repol
• Fees.
It. SELECTION
A. (Month, Day and Year] Proposals due by [Time] PST.
B. [Month, Day and Year] Proposals evaluated! to be determined
C. IMonth, Day and Year] [City of La Quints, CA] [Board/Council) approves selection
and awards contract.
01
I
Ill. FORMAT FOR PROPOSALS
Please format your response to this RFP in the following manner:
A. Organization
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.,lindillment management, institutional
research, etc.) and comment on your fir Is I* ancial con ition.
HP, 1; ,
een any silit)
3. Within the past three years, have th6i�e, , I i,!icant developments in your
organization le.g., changes in own .... Ki , ne business ventures)? Do you expect
1 1 11
any changes in the near futur0i
4. Describe any U.S. Securities and ExO n a 0imission )-censures or litigation
involving your organization, any ofiite"r,� .11l :
'p, I Yee a an time in the last ten
years.
Is fidu iar "]I ilit an /or1jerrors and omissions insurance
5. Describe the fir fl, 11 1 1,
101 ll.fly
coverage. Include ollar a unt of qdver, a.
I IlkB. Personnel it 11'
I'LlIhnumbe of, p
1 . Identify th r rofessi n I a ployed by your firm by classification.
2,,1111 frovid�lan org lion C a, :0 irng function, positions, and titles of all the
lit ipo
I professionals in yo"Ur "aniza 091
3. Pr vide biogr I I in Ir' ation on investment professionals that will be involved
i. 'T a fe deals
�1n he decision � mtking pro' for our portfolio, including number of years at your
t tit
,I)dentify e,,e,rson ho will be the primary portfolio manager assigned to the
. 1
4. Describe 11 VjoUcj�mii's compensation policies for investment professionals and
address anyl4entive compensation programs.
C. Assets Under Management
1. Summarize your institutional investment management asset totals by category for
Your latest reporting period in the following table;
Omer Resbicdvq
Number Operedng Funds Number of Funds
of Cillems Crients
31
I
I
Governmental
Governmental Pension
Non Governmental
Pension
Corporate
High Net Worth Client
Enclowmental/Foun-
dation
2. Provide the number
I unds.
3. List in thilf 0M..
ollowing
u a .. � -in4rig
nd r all ve
p i 0 11glo
er d!JI,
iftions
;Ith
aUdi AAA -AA
11
rated A
rated BBB or
lower
Other
N/A
N/A
N/A
N/A
N/A
N/A
IN�
N/A
1/1�
�j
N/A
N/A
lilt
se portfolios consist
of operating
I
b ',valu
m2lel
of aggregate
assets
3 gement for your latest reporting
III,
Percent by Market
Value
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.
32
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 fundi.
7. Provide a copy of the firm's Form ADV, Parts I and 11 (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.
D. Philosophy/Approach A
oHIJ �1,1;1
1. Describe your firm's investment philosd or : lic clients, including your firm's
philosophy regarding average durati6h; turityJ , "Ost am types, credit quality,
and yield. 1; 11
HIli
2. Describe in detail your invest r cess, a ou out 1,'ariply it to City of La
Quints, CA's p .........
3. What are the primary a rat ies for addingIvIlalue to portfolios?
4. Describe the process yoU. 'o' I 'Irec
for establishing the investment
objectives an a aCC,Q nt.
,J,constraints�Yliir t i ......
illll� .:AIPI I
5. DescrIldn'detai It y . our procoU of. �eyidit *hik; management, including how you
analyA Rll, �11,
a crilioit quali V,,, monitor Credits on an ongoing basis, and report credit to
,,Describe ytiNifirrn'tildillicision-making process in terms of structure, committees,
'Westing i�lku
I I h . .. Mlt _Kg
,,Tembership, -.i ncy, responsibilities, integration of research ideas, and
8. =your rebelsirch capabilities as they would pertain to governmental
hat.,t 111,
ypes of analysis do you use?
9. Describe th �ft m's approach to managing relationships with the broker -dealer
community.
E. Portfolio Management
1 . 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
Quints, CA?
33
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.
F. Fees Charged
1 . Please include a copy of your firm's fee schedule applicable to this RFP.
2. Identify any expenses that would not be covafi h
dithrough this fee structure and
would be required in order to implement the firm's program.
011111 ,
3. Is there a minimum annual fee? 1 11 f; 11 lll�
G. Performance Reporting fill,
1 . Please report on all accounts und r, $100 million.
goverlWe accounts]for the last five
2. Please provide perforniqnce histor, if'4; ;n mal
years. (11 It,
ji
3. Please provide risk me 'a
urvmsnt�, for governments[ accounts for the last five
years. lki. iliilu� !Ik,,
4.
1111,
Dompiled in accordance with
Research (AIMR/CFA Institute)
standardfli I.
5. Nll.
rts p6f6r folt a taiiiil of California reporting standards? Are you
12F,u repo
1' set our specifications?
no tolcustom 2ie ur r
yl f inv at ant transactions?
w I' i notify us';,
6. IlllHow il . I I
Ilh ' 10! "' Ill,,
7. Ai?,,ponfirmationslo,fi es�tl am transactions sent directly by the broker/dealer to
the
8. Do your I r . aports'uriblude rating information on investments which is required by
GASB 40PI1111111f,
H. 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 Quints,
CA. Include length of time managing the assets, contact name, and phone number.
1. Insurance Requirements
Exhibit A defines the insurance requirements that will need to be met prior to the
[Board/Councill's approval of any agreement for services.
34
J. 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, CA) and addressed to;
City of La Quints, CA
P.O. Box 1504
La Quinta, CA 92247-1504
j,
Attention: jehn FaleeRefflobbevii Bird, Finance Director/Treasurer
2. Proposal must be received no later thanffiriiifl PST on [Month, Day, and Year].
3. Proposals should be verified beforla'submission. The! it of La Quints, CA shall
not be responsib "IF of the respondent in
le for errors or, omi6ions on t a pa fit-.
i
preparation of a to osal. he' -ltV.of La uint , C res" as the right to reject
any and all propo als, to aiv ny, 1 u
rreg laritle , or infor ' 111ties in the
proposals, and to a otiate Zdaifice ti ft�t6l;li;l I
on a roposa.
Enclosures;
pi t
'dIIIIIIIIIIIIHI, "111! 11 . �
lit
J�f I
it
35
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E
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 retu r�ilt .
rn�or yield on invested funds
(Government Code Section 27000.5 specifies the same objectni'40or county treasurers and board of
supervisors). al't'lli,
Risk is inherent throughout the investment process. There i " .. Mi. . k
investment activity and opportunity risk related to ind '0 ,, a investmentirts associated with any
"derived from exposure to
ability Market rifik"is
overall changes in the general level of interest rat4iIiAie credit risk is the'frilik of loss due to the failure
of the insurer of a security. The market value of �iW6rity varies inversely v�;ihithe level of interest
rates. If an investor is required to sell an investmentN;ith a five percent yield in't'a"comparable seven
percent rate environment, that security will be sold at'a"icals. Thr�'�6gnitude of th'a'i[Ioss will depend on
the amount of time until maturity. fit i I , -k
I �f I Of
Purchasing certain allowable secut ':11:11filli.
nbes with a - Oil.
maturity of grea r
the governing board (see Goverr ISecticnI, J,, sn five years requires approval of
536011. a � - that approval process involves
assessing and disclosing the,risk and possible"v�olatilitly'olfllon er-t ri"investments
Another element of mar4flilsk Wfid6klity risk.'itistrunie"n't"s' ififh1tinique call features or special
striuctunis, or those isi4i y little lil"o'nim comptirikii!1a're exampiIislbf "story bonds" and are often
thinly traded. Their uniqliaiss o fir xll�
ften makes finding pr?'spective buyers in a secondary market more
itile) as
difficult and, consequently, curift,'� Tarketability, and price are discounted. However, under
certain ar a "" -'i lon , I 'f, Im 11 11,
co ainsi le, esia types of securities-
,,( Ill— 1111 ifill lift
Default 3tielpIresen t a 35i at I a In r ay be unable to repay the obligation as
schedullea'.1 *anerally, secu IN
' , t overnment and its agencies are considered the
ad,* e federal
most secur ile securiti i y it , cc orations or negotiable certificates of deposit issued
bycommercel", I a ave re de r a trisk. ecurities with additional credit enhancements,
I I
such as banks so tanc: , col ralize re urchase reements and collateralized bank deposits are
somewhere be ee'n'li t o on t �6'lhsk spect
The vast majority of Port1bilbs itiriiihaged within a buy and hold policy. Investments are purchased
with the intent and capacit
yitd hold that security until maturity. At times, market forces or operations
may dictate swapping one secu I , Ity for another or selling a security before maturity. Continuous analysis
if
and fine tuning of the investment portfolio are considered prudent investment management.
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.
Cheddar It. Farral libefrefiernient
laical Agency trevaearreent Guideline. 20 10 Issued by California Debt and mestreent Advisory Cornmisenoo
37
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 usOirin� !miunicipal investing.
AGENCIES: Federal agency securities and/or
Government -sponsored enterprises.
I
ASKED: The price at which securities; are offered.
BANKERS' ACCEPTANCE IBM: A draft or bill or
exchange accepted by a bank or trust company.
The accepting institution guarantees pay hl 1?�,f
the bill, as well as the issuer. 4�"
flit, Iiihil,
BID: The price offered by a
fWhen you are selling secu
bid.) See Offer. 11
BROKER: A broker brings
together for a commi . ssion.
with a spei maturity
certificate. Large�,d t
qnomma
negotiable. I!)),
COLLATERAL: Securiti": levid
other property which a 4�,q
secure repayment of a loa if
n.
securities pledged by a bank to
public monies.
ift-ThOl6fficial annual report for the City of
Mr �t,,
uinta. It includes five combined statements
each indi�ik4'61 11 fund and account group
ared in conformity with GAAP. It also
idea supportini'lliiahecluies necessary to
onstra*complianc6 I '�ith finance -related legal
bont.�111i,
ractual provisions,extensive introductory
".: - 1 , " I ,
vlsd�jand a detailed Statistical Section.
iCONDUITIFINANCING: A form of Financing in
01 ill 11 .... Mu
T securities: Which a government or a government agency
fo k for 61111 end nameRtb a bond issue, although it is
u as
11;� scii ;y is a conduit between a specific project
419
!18"Ad on holders. The bond holders can look only
1 and 'sellers
11 1 to the revenues from the project being financed
11111ij 6 repayment and not to the government or
0
Ill 'i�cy whose name appears on the bond.
a �COUPOW (a) The annual rate of interest that a
Ily bond's issuer promises to pay the bondholder on
11�1 the bond's face value. (b) A certificate attached
i. to a bond evidencing interest due on a payment
or date.
to
to DEALER: A dealer, as opposed to a broker, acts as
Of a principal in all transactions, buying and selling
for his own account.
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
38,
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.
principal and interest.
DERIVATWES: (1) Financial instruments whose
2. FHLBs (Federal Home Loan Bank Notes and
return profile is linked to, or derived from, the
ionds) - Issued by the Federal Home Loan
movement of one or more underlying index or
iank System to help finance the housing
security, and may include a leveraging factor, or
industry. The notes and bonds provide
(2) financial contracts based upon notional
liquidity and home mortgage credit to savings
amounts whose value is derived from an
and loan associations, mutual savings banks,
underlying index or security (interest rates,
cooperative banks, insurance companies, and
foreign exchange rates, equities or commodities).
mortga �u
. 9131,lending institutions. They are issued
irre'RW4 for various maturities. The
DISCOUNT: The difference between the cost
mAiArn denomination is $5,000. The notes
price of a security and its maturity when quoted
111121 M1
lare? issuedi,with maturities of less than one
at lower than face value. A security selling
11110 4ar ancilnierest is paid at maturity.
below original offering price shortly after sale also
Alffli,
is considered to be at a discount. ff!1111:13.
I
a (Federal Ja I nd Bank Bonds) - Long-term
ortgage credit provided to farmers by Federal
DISCOUNT SECURITIES: Non -interest bearing
Th;...
Landt'hanks , as, I bonds are issued at
money market instruments that are issued a
'114rrai.1117 times for various maturities ranging
discount and redeemed at maturity for 411�fqce
�illl
from a few months to ten years. The
Ii
value, e.g., U.S. Treasury Bills. 11
mihiTyT denomination is $ 1,000. They carry
semi-annual coupons. Interest is calculated on
-1M
DIVERSIFICATION: Dividing investment fun6
pi�,
'tjj� 360-day� 30 day month basis.
W I_
among a variety of aed6rities offeriz"
�iffl
J�IJJJP
independent returns. I I 111, '111
14 FFCbii1(FederaI Farm Credit Bank) - Debt
it
instrumants used to finance the short and
FEDERAL CREDIT AGENC41t Agencies of the
III$,
intermediate term needs of farmers and the
Federal governmenf,i?gt up to swpp.1 dit ito
11�l
various clas$4 instittons an4�4tVn s,
u
national agricultural industry. They are issued
)monthly with three- and six-month maturities.
1 1, S11i 11,
e.g., S&L'all 11 bu�ill eiie-fir '01istudent , �1;
W
The FFCB issues larger issues (one to ten
I, �
farmers, far'rih operatives, a po
111IN
dj�
year) on a periodic basis. These issues are
I
1 FNMAs Pit.
highly liquid.
. (Federal Natio M (lade
Association) - L IIWI,GNMA wgilicharter ad
5. FICBs (Federal Intermediate Credit Bank
under the 111 Mortgage
'!IFNMAJis
bebentures) - Loans to lending institutions
Association Act in A a federal
used to finance the short-term and
corporation working underitho auspices of the
land
intermediate needs of farmers, such as
Department of Housing'!, I I I Urban
seasonal production. They are usually issued
Development (HUD). It is the largest single
monthly in minimum denominations of $3,000
provider of residential mortgage funds in the
with a nine -month maturity. Interest is
United States. Fannie Mae, as the corporation
payable at maturity and is calculated on a 360-
is called, is a private stockholder -owned
day, 30-day month basis.
corporation. The corporation's purchases
include a variety of adjustable mortgages and
6. FHLMCs (Federal Home Loan Mortgage
second loans, in addition to fixed-rate
Corporation) - a government sponsored entity
mortgages. FNMA's securities are also highly
established in 1970 to provide a secondary
liquid and are widely accepted. FNMA
market for conventional home mortgages.
assumes and guarantees that all security
Mortgages are purchased solely from the
holders will receive timely payment of
Federal Home Loan Bank System member
39
lending institutions whose deposits are
insured by agencies of the United States
Government. They are issued for various
maturities and in minimum denominations of
$10,000. Principal and interest is paid
monthly. Other federal agency issues are
Small Business Administration notes ISBA's),
Government National Mortgage Association
notes (GNMA's), Tennessee Valley Authority
notes
(TVA's), and Student Loan Association notes
(SALLIE-MAE's).
FEDERAL DEPOSIT INSURANCE CORPORATION
(FDIC): A federal agency that insures bank
deposits, currently up to $250,000 per deposit
through December 31, 2013.
FEDERAL FUNDS RATE: The rate of interest at
which Fed funds are traded. This rate is "Al . I
pegged by the Federal Reserve through IlWt ... I
i cps
market operations. i
FEDERAL HOME LOAJ UOU (FHLbii
Government sponsored;l, wholeilallal bank'
(currently 12 regional bino),,Ihich Will fund:
and provide correspondent Whkin T'Irvh c e a to
11, g S, k .-
member comimer I anks, th4ft i 't , Aut
credit unions U�L Xe
mission of to' OPI-Ba us '8111�iplu':f7yVA,
,, ousing
related asseWil' its members;44ho st purchase
stock in their d'Mfict Bank. If I mhu "Iiil,
FEDERAL OPEN MARIfET COMMITTEE IFOMC);
� W, 11Z
Consists of seven members of �,ha Federal
Reserve Board and five ofilthe tw6k;e Federal
Reserve Bank Presidents ' "flWilPAUident of the
New York Federal Reserve Ba`kiis"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
Ell]
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 faitKiiind credit of the U.S. Government.
Ginnie,lylas
securities are backed by the FHA, VA
or FURI'Mimortgages. The term 'pass-throughs" is
off OUii4i6..describe Ginnie Mass.
I"IF (Local Agiir4y Investment Fund) - A special
fund i T -1�
n the State Treasury which local agencies
may use to deposit fuln'ds for investment. There is
'66 minimum investmeAtIp'eriod and the minimum
transaction is $5,000, in'linultiples of $1,000
8 bovisl that, with a maximum balance of
$ 50, 000!000 for any agency. The City is
Irestrict4i6,a maximum of ten transactions per
%"10'nth. It offers high liquidity because deposits
,mle6sericonvii�d to cash in 24 hours and no
far t �islllost. All interest is distributed to those
1, "' ,
agencies participating on a proportionate share
ll�asis determined by the amounts deposited and
ithe length of time they are deposited. Interest is
1
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.
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 I taxes under the laws of this state,
which hasisebregated for the benefit of the
Commis" k "eligible collateral having a value of
n
not leii�*an its maximum liability and which has
beirilgIipr&'�acl by the Public Deposit Protection
Commissior;Y61h9ld public deposits.
OF RETURMJIThe yield obtainable on a
V based on its p6rchase price or its current
I .
NEGOTIABLE CERTIFICATES OF DEPOSIT: Issued 1 . if )
IihaTket Price. This mayibelthe amortized yield to
�.MV . I
by a nationally or state -chartered bank, a savings r4iontylon a bond the cNent income return.
E Mr II -I I
association or a federal association (as clefripd'�y
Section 5102 of the Financial Code), a s1ple"& REPURLSE AGREEMENT (RP OR REPO): A
or r
federal credit union, or by a federally 1111 holder d1s6curitles sells these securities to an
licensed branch of a foreign bank. No more an investor wii'Alan agreement to repurchase them at
111. mI
30% of the City's portfolip I Ma'yV $6 1 invested'in'l aifixedIprice on a'fixed date. The security 'buyer'
negotiable CDs. I ljt�jheffeciliiihds the 'seller' money for the period of
It W
I'll the agreement and the terms of the agreement
OFFER: The price asked by aIIIIIIIIer of �Iil6urities.I, Yjare struc , tured' to compensate him for this.
(When you are buying securiti
es,jyo as Dealers use RP extensively to finance their
u 9,r,,jn
offer.) See I
A I n 8 p6tions. Exception: When the Fed is said to be
d
lh� 11doing RP, it is lending money that is increasing
OPEN MA 11 OPERATIO41SM11Purch as and
sales of governmint and certainloith mi; .
er securities
in the open markeiliby the New' 'jork Fede4rai
Reserve Bank as dAoj" by the 311
MC in order
to influence the volume money credit in
the economy. Purc ases� i '6 res Tv"e's into the
bank system and at ulate gr H111"' neyand
il of mo
credit; sales have the op o i ele'Iffect. pen
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
41
reserves.
REVERSE REPURCHASE AGREEMENTS IRRP 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 Tendered
by banks for a fee whereby securities and
valuables of all types and descriptions are held in
the bank's vaults for protection.
I
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 yiell.4'11p"41rve.
SURPLUS FUNDS: Section , 5,3601 of 'the,
'California Government Code 4fl;48' rp, us un a
.as any money not sequined fort immediat
111�1
.necessities of the local ag - ncy. T ity has
defined imm all, to a pa ant due
within one week_,,�,._ q I 't, Afflllliz�,�
TREASURYI! JP(ILLS: A ....... p-,interdtdili,bearing
discount secuft issued by thle'JU.S. Treasury to
finance the naii�k re issued to
.Vdebt. Most 616 a 't "'
mature in three mb hs, six montkslor one 'U"Ar.
TREASURY BONDS: L6iibiterrn co6pon-bearing
U.S. Treasury securiti6i h lissuedi as direct
obligations of the U.S. Go�tft�lri"nl
' _ and having
initial maturities of more then Wil-
vears.
TREASURY NOTES: Medium -term coupon -bearing
U.S. Treasury securities issued as direct
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
42
indebtedness to liquid capital of 15 to 1; also
called net capital rule and not 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.
)DENT INVESTOR ACT: The State of
adopted this Act. The Act contains
ig sections: duty of care,
review of assets, costs,
id�ieterminations, delegation of
terMs,of prudent investor rule, and
application.
YIELD: Theirate of anhl�ihl income return on an
�11J, it ... i
inv6sitrMM, expressed aWl!a percentage. Is)
� . t
INCOME YIELD is obtained by dividing the current
'in
dollar 'come by the current market price for the
security'!& NET YIELD or YIELD TO MATURITY is
ih�rcurren'tTiiricome yield minus any premium
above4ppr or;fplus any discount from par in
purchase price, with the adjustment spread over
the period'iro'm the date of purchase to the date
of maturity of the bond
cear 4 4 a"
mEETiNG DATE.: June 19, 2012
rmm- TITLE: Approval'of the Investment Advisory Board
2012/2013 Work Plan
RECOMMENDATION:
AGENDA CATEGORY:
BUSINESS SESSION:
CONSENT CALENDAR:
STUDY SESSION:
PUBLIC HEARING:
Approve the Investment Advisory Board 2012/2013 Work Plan.
FISCAL IMPILICATIONS:
Fiscal implications consist of Board Members meeting expenses, budgeted at $4,500,
and staff support time.
CHARTER CITY IMPLICATIONS:
None.
BACKGROUND AND OVERVIEW:
Municipal Code Section 2.70.030 sets forth the work plan items for the Investment
Advisory Board for each year as follows: I
The principal fun * ctions 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
181
INVESTMENT ADVISORY BOARD Correspondence & Written
Material Item I
Meeting Date: March 13, 2013
TITLE:
Month End Cash Report for January 2013 and February 2013 and
Pooled Money Investment Board Report for December 2012 and January 2013
BACKGROUND:
The January 31, 2013 and February 28, 2013 Month End Cash Report is hereby
submitted for your review. This cash report is not a complete Treasury Report and
excludes petty cash, deferred compensation and fiscal agent balances. Selected
cash balances are reported to provide current cash balances to the Board.
In addition, the Pooled Money Investment Board report for December 2012 and
January 2013 is included in the agenda packet.
RECOMMENDATION:
Information item only.
Robbeyn %lird, Finaince Director
130
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Bill Lockyer, State Treasurer Alm
Inside the State Treasurer9s Office
Local Agency Investment Fund (LAIF)
PMIA Performance Report
217/2013
0.29
0.30
235
2/8/2013
0.29
0.30
236
2/912013
0.29
0.30
236
2/10/2013
0.29
0.30
236
2/11/2013
0.29
0.30
234
2/12/2013
0.29
0.30
234
2/13/2013
0.29
0.30
233
2/14/2013
0.29
0.30
232
211512013
0.29
0.30
233
2/16/2013
0.29
0.30
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2/1712013
0.29.
0.30
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2/18/2013 1
0.291
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2/19/2013 1
0.291
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2�9
2120/2013 1
0.291
0.301
230
*Daily yield does not reflect capital gains or losses
LAIF'Performance Report
i
Quarter ending 12/3112012
Apportionment Rate:
Earnings Ratio:
Fair Value Factor:
Daily:
Quarter To Date:
Average Life:
0.32%
.00000881899236296
1.001127231
0.32%
0.33%
208
PMIA Average Monthly Effective Yields
JANUARY 2013 0.300%
DECEMBER 2012 0.326%
NOVEMBER 2012 0.324%
Pooled Money Investment Account
Portfolio Composition
$61.5 Billion
01/31/13
Loans
Commercial 1.95%
Paper
6.67%
Time 1
6.'j
CDs/BNs
11.15%
Agencie
11.41%
Treasuries
61.67%
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http://www.treasurydirect.gov/RI/OFNtebnd 2/27/2013
Printer Version - Board -of - Go—vemors of 11Fe FTd�r—al-R7es—erve Sy—sTe�mpageq-or-4--
Selected Interest Rates (Daily) - H. 15
Current Releas Release Dates Daily Update Historical Data About Announcements
DAyUpdate....
Release Date: February 27, 2013
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.
February 27, 2013
Selected interest Rates
Yields in percent per annum
Instruments
2013
Feb
25
2013
Feb
26
Federal funds (effective) 12 1
0.15
0.14
Commercial Paper A!! 5 6
Nonfinancial
1-month
0.13
0.16
2-month
16
0.17
3-montli
qgO.
0.19
0.19
Financial
1-month
n.a.
n.a.
2-month
0.13
0.12
3-month
0.16
0.15
CDs (secondary market) 37
1-month
0.18
0.18
3-month
0.21
0.21
6-month
0.27
0.27
Eurodollar deposits (London)
1-month
0.24
0.24
3-month
0.29
0.29
6-month
0.46
0.46
Bank prime loan 139
3.25
3.25
http://www.federalreserve.gov/releases/H I 5/update/ 2/27/2013
Printer Version - Board of -Govemors oCtFe_FFde_ra1'Reserve STsfe-mrW-z-ui--F-
Discount window primary credit 2 10
0.75
0.75
U.S. government securities
Treasury bills (secondary market)
4-week
0.09
0.11
3-month
0.12
0.14
G-month
0.14
0.14
1-year
0.15
0.16
Treasury constant maturities
Nominal 11
1-month
0.09
0.11
3-month
0.12
0.14
6-month
0.14
0.14
1-year
0.16
0.17
2-year
0.25
0.25
3-year
0.37'
0.37
5-year
0.78
0.78
7-year
1.25
1.25
10-year
1.88
1.88
20-year
2.69
2.69
30-year
3.08
3.08
Inflation indexed 1-2
5-year
-1.41
-1.40
7-year
-0.96
-0.96
10-year
-0.62
-0.62
20-year
0.14
0.13
30-year
0.54
0.56
Inflation -indexed long-term average 13
0.05
0.06
Interest rate swaps V4
1-year
0.32
0.33
2-year
0.40
0.39
3-year
0.53
0.51
4-year
0.73
0.69
5-year
01.98
0.92
7-year
1.47
1.40
10-year
2.04
1.95
http://www.federalreserve.gov/releases/Hl 5/update/ 2/27/2013
Printer Version - Board Wf —Govemors of the FedFra-I'Re—serve STstemrage-.5-orw-
30-year
3.02
2.91
Corporate bonds
Moody's seasoned
Aaa i_5
3.84
3.82
gas
4.77
4.78
State & local bonds 16
Conventional mortgages 17
n.a. Not available.
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.
4. 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
lre�M e �10% rdcllw� CIL).
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. Source: Bloomberg and CTRI3 [CAP Fixed Income & Money Market Products.
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 die 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.federalrese�e.gov/boarddoes/presslbcreg/20021'200210312/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 wiN,w.fedcraircsc�e.gov/releuc.�'h I 5,data.htm.
11. Yields on actively traded non -inflation -indexed issues adjusted to constant maturities. The 30-year Treasury constant maturity
http://www.fedemlreserve.gov/releases/H I 5/update/ 2/27/2013
Printer Version - Elo-a—rd-af G-o—vemors of 1IFe FEdFraffIK—eserYe-Syste—m --rageworr
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.treasury.pov/resource-center/data-chart-ccnter/iiiterest-mte.s/. 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.treasury.gov/rcsource-center/data-chart�
center/interest-rate .
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 (ISDAV) 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 Intercapitad ple and published
on Reuters Page ISDAFIX&I. ISDAFIX is a registered service mark of ISDA. Source: Reuters Limited.
15. Moody's Aaa rates through December 6, 2001, are averages of Ann 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 SurveyS data provided by
Freddie Mac.
Note: Weekly and monthly figures on this release, as well as annual figures available on the Boar(rs historical H. 15 web site
(see below), are averages of business days unless otherwise noted.
Current and historical H.1 5 data ate 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).
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.
http://www.federalreserve.gov/releases/H I 5/update/ 2/27/2013
Printer Version - BoatUof Uo-vemors oFtIle-Fede-ral-Keserv"y r-dBr-r=J-
Commercial Paper
Summary Rates Volume Statisti Outstanding Year -en Mpturity Distribution About Announcement Technical
Q&As
Commercial Paper Rates and Outstanding SummaryDenved from data supplied by The Depository Trust & Clearing
PcIrporation
--------_----------- ------------- I ----------
Data as of February 26, 2013 Posted Februar
27, 2013
The commercial paper release will usually be posted daily at 9:45 a.m. However, the Federal Reserve Board makes no
guarantee regarding the timing of the daily posting. This policy is subject to change at any time without notice.
Rates
AA nonfinancial
A2/P2 nonfinancial
Period
1-
1-
7-
is-
30-
60-
90-
7-
is-
30-
60-
go -
day
day
day
day
day
day
day
0.33
day
day
day
day
day
Feb.
20
0.12
0.10
0.12
0.12
0.16
0.19
0.35
0.34
0.37
0.40
n.a.
Feb.
21
0.11
0.11
0.12
0.15
0.16
0.19
0.33
0.34
0.35
0.37
n.a.
0.42
Feb.
22
0.11
1 0.08
0.12
7
n.a.
0.33
0.36
0.37
0.39
0.38
0.36
Feb.
25
0.11
0.09
0.11
0.13
0.16
0.19
0.34
0.35
0.38
0.36
Feb.
26
0.11
0.09
0.12
0.16
0.17
0.19
0.34
n.a.
Note: n.a. indicates that trade data was insufficient to support calculation of the particular rate.
AA financial
AA asset
-backed
Period
1-
1-
7-
is-
30-
60-
90-
7-
is-
30-
60-
go -
day
day
day
day
day
day
day
0.21
0.22
day
day
day
day
day
Feb.
20
0.09
n.a.
0.10
0.10
0.11
0.13
0.22
0.21
0.21
0.23
0.25
Feb.
21
0.06
0.16
n.a.
0.22
0.0t60.12
0.
0.27
0.22
0.21
0.23
0.25
Feb.
22
1 0.09 1
0.09
1 0.10
0.12
1 0.15
0.18
1 0.21
0.26
0.25
0.23
0.25 1
0.27
Feb.
125
0.06
n.a.
n.a.
n.a.
0.13
0.20
0.21
0.21
0.22
0.24
0.25
Feb.
]0.16
26
0.09
0.09
n.a.
n.a.
0.12
0.1.5
0.15
0.20
0.24
0.19
0.22
0.24
0.26
http://www.federaireserve.gov/releases/cp/ 2/27/2013
Printer Version - B-oard-af -Go-vemors offlieH'Wr-al-Re-serve Systehrft-rage-L-ur-j-
Note: n.a. indicates that trade data was insufficient to support calculation of the particular rate.
Outstanding Levels
Seasonally adjusted
Billions of dollars
Period
Tota I
Nonfinancial
Financial
Asset-
backed
Other
Tota�estic
Dom
Foreign
ta,
T�0�
mestc
Do��
Foreign
Monthly -end levels
2DU-Seot.
976.0
179.4
139.8
39.6
495.0
269.9
225.1
301.3
.3
Oct.
967.9
182.3
136.8
45.5
493.01
284.4
208.6
292.3
3
Nov.
984.5
190.0
140.7
49.4
500.81
284.7
216.0
293.1
Dec.
1,009.7
207.8
158.8
48.9
508..2
297A
210.8
293.3
.5
2013-3an.
1,080.9
215.1
165.9
49.2
75.0
555.0
1 �5
312 .6
312.6
242.4
309.8
1.0
Weekly (Wednesday) level. -
Jan. 23
1,125.5
219.7
168.21
51.5
585.6
331.7
253.9
319.6
.7
Jan. 30
1,124.9
225.4
173.11
52.3
581.0
331.6
249.4
317.6
.9
Feb. 6
1,111.8
229.7
178.6
51.0
569.8
324.4
245.4
311.3
.9
Feb. 13
1,085.3
226.0
175.7
50.2
550.6
316.0
234.6
307.7
.9
Feb. 20
1,062.9
234.6
185.5
49.1
529.2
310.7
218.5
298.2
.9
Not seasonally adjusted
Billions of dollars
Period
Total
I
I Nonfinancial
Financial
Asset-
backed
Other
I Total
I DomesticTForeign
Total
Domestic
Foreign
Monthly -end levels -
2012-Sept.
957.2
175.2
136.0
39.2
476.1
276.7
199.3
305.5
.5
Oct.
948.4
200.9
157.7
43.2
451.3
272.1
179.2
295.7
.5
Nov.
953.3
197.4
155.2
42.2
458.3
265.7
192.7
297.1
.5
Dec.
952.3
170.8
130.3
40.4
477.4
274.3
203.1
303.7
.5
2013-3an.
1 1,059.9
1 207.5
163.5
44.0
545.7
302.2
243.5
305.6
1.0
Weekly (Wednesday) levels
Jan. 23
1,045.6
196.9
153.4
43.6
540.7
297.3
243.4
307.2
.7
Jan. 30
1,062.2
205.5
160.3
45.3
549.2
303.8
245.5
306.4
1.0
Feb. 6
1,067.3
208.9
166.0
42.9
551.8
303.0
248.7
305.7
.9
Feb. 13
1,064.5
208.0
166.0
42.0
549.5
303.3
246.2
306.1
.9
Feb. 20 1
1,045.2 1
213.9
172.9
41.0 1
530.9
301.1
229.9
299.4
.9
http://www.federalreserve.gov/releases/ep/ 2/27/2013
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0.31
225
1/17/2013
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230
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0.31
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Apportionment Rate:
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Fair Value Factor:
Daily:
Quarter To Date:
Average Life:
0.32%
.00000881899236296
1.001127231
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0.33%
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PMIA Average Monthly Effective Yields
DECEMBER 2012 0.326%
NOVEMBER 2012 0.324%
OCTOBER 2012 0.340%
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Pooled Money Investment Account
Portfolio Composition
$63.2 Billion
12/31/12
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Commercial Paper
2.53%
Time Deposits
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10-31-2014
0 250
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99 910331
912,028TIJ4
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ID-31 2U17
0�m
0,714
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08-31-2011
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08-31,200
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1.081
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08 is 2012
08-0-2bls
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LhasalaInSfInLinnation Act I at�s�b 1kis aw 0 U
http://www.treasurydirect.gov/RI/0FNtebnd 2/5/2013
Printer Version - Boa-rd-iif , G-ovemors of tITe-Fi5-de-ral7K7se-rv6-�i-yster-ff�rage-i-oT-,r-
Selected Interest Rates (Daily) - H. 15
Current Releas Release Date Daily Update Historical Data About Announcements
--- ------- ---------- - --------- - - ------ -- -------
Release Dute: February 1, 2013
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.
February 1, 2013
Selected Interest Rates
Yields in percent per annum
Instruments
2013
Jan
28
2013
Jan
29
2013
Jan
30
2013
Jan
31
Federal funds (effective) 123
0.14
0.12
0.12
0.15
Commercial Paper A 4 5 6
Nonfinancial
1-month
0.11
0.14
0.11
0.15
2-month
n.a.
n.a.
n.a.
0.15
3-month
n.a.
n.a.
n.a.
n.a.
Financial
1-month
0.11
0.08
n.a.
0.09
2-month
0.26
0.15
0.13
0.13
3-month
0.26
0.18
0.16
0.18
CDs (secondarV market) 37
1-month
0.19
0.19
0.18
0.18
3-month
0.23
0.22
0.22
0.22
6-month
0.31
0.28
0.27
0.27
Eurodollar deposits (London) 38
1-month
0.24
0.24
0.24
0.24
3-month
0.29
0.29
0.29
0.29
6-month
0.48
0.48
0.48
0.48
Bank prime loan 239
3.25
3.25
3.25
3.25
http://www.federaireserve.gov/releases/H I 5/update/ 2/5/2013
Printer Version - Board of Go-v-e--m-o-r-s-oTWe-FZi'de-raFICeser-ve NyBtem rzgc-z-ur-�
Discount window primary credit 2 10
0.75
0.75
0.75
0.75
U.S. government securities
Treasury bills (secondary market)
4-week
0.03
0.03
0.04
0.04
3-month
0.07
0.07
0.07
0.07
6-month
0.11
0.11
j 0.11
0.12
1-year
0.15
0.14
0.14
0.14
Treasury constant maturities
Nominal
1-month
0.03
0.03
0.04
0.04
3-month
0.67
0.07
0.07
0.07
6-month
0.11
0.11
0.11
0.12
lwyear
0.16
0.15
0.15
0.15
2-year
0.29
0.30
0.27
0.27
3-year
0.45
0.43
0.42
0.42
S-year
0.89
0.90
0.88
0.88
7-year
1.38
1.40
1.39
1.38
10-year
2.00
2.03
2.03
2.02
20-year
2.76
2.79
2.80
2.79
30-year
3.15
3.18
3.19
3.17
Inflation indexed 12
Sryear
-1.35
-1.37
-1.38
-1.45
7-year
-0.97
-0.97
-0.96
-1.03
10-year
-0.55
-0.53
-0.54
-0.57
20-year
0.21
0.24
0.22
0.22
30-year
0.52
0.55
0.56
0.53
Inflation -indexed long-term average L3
0.06
0.10
0.10
0.06
Interest rate swaps 14
1-year
0.35
0.35
0.34
0.34
2-year
0.45
0.43
0.44
0.43
3-year
0.59
0.57
0.58
0.57
4-year
0.79
0.79
0.78
5-year
1.04
1.01
1.05
1.03
7-year
1.51
1.48
1.54
1.52
10-year
2.06
2.03
2.09
2.07
http://www.fedemireserve.gov/releases/H I 5/update/ 2/5/2013
Printer Version - Board of Gow—emors of _tlFe FRe—r—al-Re—serve System Fa]g�3_0174 -_
30-year
2.99
2.96
3.03
3.02
Corporate bonds
Moody's seasoned
Aaa IS
3.87
3.91
3.93
3.90
Bee
4.82
4.84
4.87
4.84
State & local bonds 1:1
3.67
Conventional mortgages 17
3.13
n.a. Not available.
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.
4. 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
(� ww.federalreserve.pov/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. Source: Bloomberg and CTRB ICAP Fixed Income & Money Market Products.
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.federEilreserve.pov/boarddoes/press/bci*cg/2002"200210312/defatilt.htni. 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.fedemircse�e.gov/rcleasesfh I 5/dat1litm.
11. Yields on actively traded non -inflation -indexed issues adjusted to constant maturities. The 30-year Treasury constant maturity
http://www.federalreserve.gov/releases/Hl 5/update/ 2/5/2013
Printer Version - Board of Go—vemors of-diFe F�'de—ral'Re—ser—v-e-STsti5m—rage-4-ol-q—
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-ycar constant maturity in order to estimate a 30-year nominal
rate. The historical adjustment factor can be found at www.trcusurv.pov/resource:g-Ltit�er/data-chaii-ceiiter/iiiterest-rates/ 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 x%ww.treasurv.t!ov/resource-center/data-cliart-
center/interest-rate .
13. Based on the unweighted average bid yields for all TIPS with relmainingterms to maturity of more than 10 years.
14. International Swaps and Derivatives Association (ISDAO) mid -market par swap rates. Rates we for a Fixed Rate Payer in return
for receiving three month LIBOR, and we based on rates collected at 11:00 &in. Eastern time by Garban Intercapital pIc and published
on Reuters Page ISDAFIXV. 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 andAaa industrial bond rates. Asof December7,2001,
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 Survey8 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. IS 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.fiederaIreserve,gov/). For
information about individual copies or subscriptions, contact Publications Services at the Federal Reserve Board (phone 202-
452-3244, fax 202-728-5886).
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 secut ities. 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 I 0-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.
http://www.federaireserve.gov/releases/H I 5/update/ 2/5/2013
Printer Version - Board ofIG-ovemors of ifie-FEde-r-al'Re-s-er-v-e-5-y-stem-rage-ror-.z-
Commercial Paper
Summary Rites Volume statistic nutstanding Year-end Maturity Distribution About Announcement
Commercial Paper Rates and Outstanding Summary Derived from data supplied by The Depository Trust & Clearing
qarporation
--------- --- ___._ ------------------- --------- ------- ---------------
Data as of FebruarT 4, 2013 Posted Februa ry 5, 2013
The commercial paper release will usually be posted daily at 9:45 a.m. However, the Federal Reserve Board makes no
guarantee regarding the timing of the daily posting. This policy is subject to change at any time without notice.
Rates
Period
AA nonfinancial
1-
day
0.32
0.31
0.33
0.33,
A2/P2
nonfinancial
1-
day
7-
day
is-
day
30-
day
60-
day
90-
day
7-
day
is-
day
30-
day
60-
day
so -
day
Jan. 29
0.09
0.06
0.10
0.14
n.a.
n.a.
0.35
0.31
0.37
0.37
0.35
Jan. 30
0.09
0.09
0.10
0.11
n.a.
n.a.
0.37
0.34
0.39
0.34
0.37
Jan. 31
0.10
0.10
0.11
0.15
0.15
n.a.
0.34
0.34
0.40
0.38
0.38
I Feb. 1 1
0.11 1
0.09
1 0.101
0*12
0 14
014
0*38
0.34,
0.40
1 037
038
IFeb. 4 1
0,101
0.061
0.11
0.1
3.38
�O4 0
Note: n.a. indicates that trade data was insufficient to support calculation of the particular rate.
Period
AA financial
1-
day
0.18
0.19
0.21
0.19
0.20
AA asset
-backed
1-
day
7-
day
15-
day
30-
day
60-
day
90-
day
7-
day
is-
day
30-
day
60-
day
90-
day
Jan. 29
0.08
n.a.
0.08
0.08
0.15
0.18
0.28
0.26
0.23
0.27
0.21
Jan. 30
0.08
0.08
0.09
n.a.
0.13
0.16
0.17
0.19
0.22
0.23
0.25
Jan. 31
0.05
0.06
0.07
0.09
0.13
0.18
0.29
0.21
0.22
0.24
0.26
Feb. 1
0.12
0.12
0.13
n.a.
0.17
0.20
0.21
0.22
0.23
0.25
0.28
Feb. 4
0.09
0.13
0.12
0.11
0.15
0.14
0.18
1
0.20
1
0.23
1
0.26
1
0.28
1 1
Note: n.& indicates that trade data was insufficient to support calculation of the particular rate.
Outstanding Levels
Seasonally adjusted
Billions of dollars
http://www.federalreserve.gov/releases/cp/ 2/5/2013
Printer Version - Board of Go-v-e-m-o-rs-otthTre-ciCraI7Keserve-ziysi r-abC-z-UI-.C--
Period
Total
Nonfinancial
Financial
Asset-
backed
Other
Total
Domestic
Foreign
Total
09n
Monthly -end levels
2012-Sept.
976.0
179.4
139.81
39.6
495.0
269.9
225.1
301.3
.3
Oct.
967.9
182.3
136.8
45.5
493.0
284.4
208.6
292.3
.3
Nov.
984.5
190.0
140.7
49.4
500.8
284.7
216.0
293.1
.5
Dec.
1,009.7
207.8
158.8
48.9
508.2
297.4
210.8
293.3
.5
2013-3an.
1,080.9
215.1
165.9
49.2
555.0
312.6
242.4
309.8
1.0
Weekly (Wednesday) levels
Jan. 2
1,081.8
209.3
159.6
49.8
561.6
314.8
246.9
310.3
.5
Jan. 9
1,105.0
214.7
163.4
51.3
574.1
327.7
246.4
315.6
.6
Jan. 16
1,132.8
220.5
167.8
52.7
591.8
339.9
251.9
319.9
.6
Jan. 23
1,125.5
219.7
168.2
51.5
585.6
331.7
253.9
319.6
.7
Jan. 30
1,124.9
225.4 1
173.1
52.31
581.0 1
331.6 1
249.41
317.61
.9
Not seasonally adjusted
Billions of dollars
Period
Total
I
Nonfinancial
Financial
Asset
Other
Total
DomesticT
Foreign
Total
Domestic
Foreig4nbacke
Monthly -end levels
2012-Sept.
957.2
175.2
136.0
39.2
476.1
276.7
199.3
305.5
.5
Oct.
948.4
200.9
157.7
43;2
451.31
272.1
179.2
295.7
.5
Nov.
953.3
197.4
155.2
42.2
458.3
265.7
192.7
297.1
.5
Dec.
952.3
170.8
130.3
40.4
477.4
274.3
203.1
303.7
.5
2013-Jan.
1,059.9
207.5
163.5
44.0
545.7
302.2
243.5
305.6
1.0
Weekly (Wednesday) levels
Jan. 2
955.1
173.0
132.5
40.5
477.9
276.2
201.6
303.7
.5
Jan. 9
1,001.5
190.3
145.2
45.1
502.5
284.9
217.6
308.1
.6
Jan. 16
1,030.4
198.2
152.1
46.1
522.8
291.8
231.0
308.9
.6
Jan. 23
1,045.6
196.9
153.4
43.6
540.7
297.3
243.4
307.2
.7
Jan. 30
1,062.2
205.5
160.3
45.3
549.2
303.8
245.5
306.4
1.0
Return to top
http://www.federalreserve.gov/releases/cp/ 2/5/2013
POOLED MONEY INVESTMENT ACCOUNT
SUMMARY OF INVESTMENT DATA
A COMPARISON OF JANUARY 2013 WITH JANUARY 2012
(DOLLARS IN THOUSANDS)
�'JANUARX?011 [.:PjANU:AkY20 I I
Average Daily Portfolio
$
58,322,531
$
65,023,797
$
.6,701,266
Accrued Earnings
$
14,868
$
21,204
$
-6,346
Effective Yield
0.300
%
0.386%
-0.086%
Average Life -Month End (In Days)
226
246
-19
Total Security Transactions
Amount
$
19,896,419
$
16,812,434
$
+4,082,985
Number
398
318
+80
Total Time Deposit Transactions
Amount
$
4,226,800
$
3,703,800
$
+623,000
Number
141
136
+5
Average Workday Investment Activity
$
1,148,677
$
976,812
$
+172,866
Prescribed Demand Account Balances
For Services
$
1,474,327
$
1,828,496
$
-354,169
1
BILL LOCKYER
TREASURER
STATE OF CALIFORNIA
INVESTMENT DIVISION SELECTED INVESTMENT DATA
ANALYSIS OF THE POOLED MONEY INVESTMENT ACCOUNT PORTFOLIO
(000 OMITTED)
January 31, 2013
DIFFERENCE IN
PERCENT OF
PERCENT OF
PORTFOLIO FROM
TYPE OF SECURITY
AMOU
PORTFOLI
PRIOR MONTH
Government
Bills
$
22,662,328
36.72
+5.05
Bonds
0
0.00
0
Notes
15,331,927
24.95
+1."
Strips
0
0.00
0
Total Government
$
37,8iM
+6.69
Federal Agency Debentures
$
1,520,704
2.47
-0.26
CertMeates of Deposit
6,850,002
11.15
+2.92
Bank Notes
0
0.00
0
Bankers'Acceptances
0
0.00
0
Repurchases
0
0.00
0
Federal Agency Discount Notes
5,094,093
8.29
+3.23
Time Deposits
4,153,"0
6.76
-0.110
GNMA9
3
0.00
0
Commercial Paper
4,099,200
6.67
+4.14
FHLMC/Romics
242,733
0.39
.0.02
Corporate Bonds
0
0.00
0
AB 55 Loans
232,676
0.38
+0.02
GF Loans
964,400
1.57
-16."
NOW Accounts
0
0.00
0
Other
399,962
0.66
+0.02
Reversed Repurchases
0
0.00
0
Total (All Types)
$
61,451,668
INVESTMENT ACTIVITY
JANUARY 2013
DECEMBER 2012
NUMBER
AMOUN
NUMBER
AMOUNT
Pooled Money
398
$ 19,895,419
2" $
14,197,504
Other
3
56,327
25
352,266
Time Deposits
141
75
Totals
542
$ 24,178,6"
3" $
16,083,770
PMIA Monthly Average Effective Yield
0.300
0.326
Year to Date Yield Last Day of Month
0.340
0.346
Pooled Money Investment Account
Portfolio Composition
$61.5 Billion
01/31/13
Loans
Commercial 1.95%
Paper
6.67%
Time 1
6.'
CDs/BNs
11.15%
Agencie
11.410%
IV
reasuries
61.67%
POOLED MONEY INVESTMENT ACCOUNT
SUMMARY OF INVESTMENT DATA
A COMPARISON OF DECEMBER 2012 WITH DECEMBER 2011
(DOLLARS IN THOUSANDS)
1,61, 1 1 11 7
012 C1 7
27
ECEMBER 611161ilk,26111 r 6H�
[_!E
Average Daily Portfolio
$ 58,927,396 $
64,492,821 $
.6,565,425
Accrued Earnings
$ 16,322 $
20,892 $
-4,670
Effective Yield
0.326 %
0.382%
-0.066%
I Average Lffe-Month End (in Days) 208 256 -48
Total Security Transactions
Amount
$
14,197,604
$
17,298,374
$
-3,100,870
Number
284
347
-63
Total Time Deposit Transactions
Amount
$
1,634,000
$
2,209,000
$
-676,000
Number
75
106
-31
Average Workday Investment Activity
$
786,675
$
928,923
$
-142,348
Prescribed Demand Account Balances
For Services
$
1,463,670
$
1,736,967
$
-273,297
BILL LOCKYER
TREASURER
STATE OF CALIFORNIA
INVESTMENT DIVISION SELECTED INVESTMENT DATA
ANALYSIS OF THE POOLED MONEY INVESTMENT ACCOUNT PORTFOLIO
(000 OMITTED)
December 31, 2012
DIFFERWE IN
PERCENT OF
TYPE OF SECURI
PERCENT OF
PORTFOUO FROM
Government
AMOUN PORTFOLIO
PRIOR MONTH
Bills
$ 20,014,369 31.67
-0.10
Bonds
0 0.00
0
Notes
14,732,479 23.31
-1.24
Strips
0 0.00
0
Total Government
$ 34,746,838 '54.98
.1.34
Federal Agency Debentures
$ 1,726,174
2.73
+0.84
Certificates of Deposit
5,200,000
8.23
+2.15
Bank Notes
0
0.00
0
Bankers'Acceptances
0
0.00
a
Repurchases
0
0.00
0
Federal Agency Discount Notes
3,194,941
5.06
-0.26
Time Deposits
4,333,640
6.86
-0.41
GNMAq
5
0.00
0
Commercial Paper
1,599,601
2.53
+0.03
FHLMC/Remlcs
266,335
0.41
-0.04
Corporate Bonds
0
0.00
0
AB 55 Loans
228,082
0.36
0
GF Loans
11,511,400
18.21
-0.93
NOW Accounts
0
0.00
0
Other
399,962
0.63
-0.04
Reversed Repurchases
0
0.00-0
Total (All Types)
$ 63,196,978
DECEMBER 2012 NOVEMBER 2012
NUMBER AMOUN NUMBER AMOUN
Pooled Money 284 $ 14,197,504 371 $ 18,455,789
Other 25 352,266 21 673,975
Time Deposits 75 1,634,000 97 1,670,480
Totals 384 $ 16,083,770 489 $ 20,800,244
PMIA Monthly Average Effective Yield 0.326 0.324
Year to Date Yield Last Day of Month 0.346 0.350
Pooled Money Investment Account
Portfolio Composition
$63.2 Billion
12/31/12
Treasudes
54.98%
BOARD MEMBER ITEMS