Merrill Lynch/Broker Contract 96T
s .
CFI OF
Public Funds Account Authorization to Trade
TO: Merrill Lynch,Pierce Fenner & Smith, Inc.
Dear Sirs:
You are hereby authorized and empowered to open and maintain an account on your books in the name of
City of La Quinta .
I (We) certify the following "permissible investments", with related delayed settlements when indicated, to be those
permitted by applicable law:
As allowed in the attached
Investment Policies dated
AUTHORIZED PERSONS
Any one of the following "authorized persons', to wit:
Thomas P. Genovese
(Name)
John M. Falconer
(Name)
(Name)
City Manager
(Title)
City Treasurer/Finance Director
(Title)
(Title)
is hereby authorized to give written or verbal instructions by telephone or telegraph or otherwise for the purchase, sale and
settlement of transactions effected in the account
This authorization shall continue until written notice of amendment or revocation is received by you and, in the case of such
amendment of revocation, it shall continue effective as to transactions entered into prior thereto.
This authorization shall inure to the benefit of your successors or assigns, by merger, consolidation or otherwise.
I(We) warrant that I We) have the authority to execute this a m
sCity Manager
/mil (v
/ Individual)
Dated: (Si ature an Titi of Authonzed I d )
q 6 -�- r a rer
-�� Dated: (Signature arid Title of Authorized Individual)
Forrn W'9 Request for Taxpayer Give form to the
,Rev. March then) Identification Number and Certification
requester. Do NOT
Department or trio Treasury Send t0 the IRS.
internal Revenue SWv1Ce
Name (It joint names, list first and circle the n of the person or entity whose number you enter in Part I below. See Instructions on page 2 it yaw name has changed.)
/U 4
Business name (Sole proprietors see instructions on page 2.)
0
e
Please check appropriate box: Irndivdual/Sole proprietor 19 Corporation (] Putnerstwp 0 Other ► (Kj�/J//g�j
............
Address (number, street, and apt. or suite no.) Requester's name and address (optional)
ii 7 6' y`1S � c0
City, f`ate, ann
P code t2
LA U/A)T4-
Identification
Enter your TIN in the appropriate box. For
individuals, this is your social security number
(SSN). For sole proprietors, see the instructions
on page 2. For other entities, it is your employer
identification number (EIN). If.you do not have a
number, see How To Get a TIN below.
Note: If the account is in more than one name,
see the chart on page 2 for guidelines on whose
number to enter.
Under penalties of perjury, I certify that:
Sodei aeeuriq number
OR
Employe► identlneetlon numbe►
R 3�No 31
List account numWs) here (optional)
10,
For Payees Exempt From Backup
Withholding (See Part II
instructions on page 2)
1. The number shown on this form is my correct taxpayer identification number (or I am waiting for a number to be issued to me), and
2. 1 am not subject to backup withholding because: (a) 1 am exempt from backup withholding, or (p) I have not been notified by the Internal -
Revenue Service that I am subject to backup withholding as a result of a failure to report al interest or dividends, or (c) the IRS has notified
me that 1 am no longer subject to backup withholding.
Cartifkation Instructions, —You must cross out item 2 above if you have beet notified by the IRS that you are currently subject to backup
withholding because of underreporting interest or dividends on your tax return. For real estate transactions, item 2 does not apply. For mortgage
interest paid, the acquisition or abandonment of secured property, cancellation of debt. contributions to an individual retirement arrangement
(IRA), and generally payments other than interest and dividends, you are not required to sign the Certification, but you must provide your correct
TIN. (Also see Part III instructions on page 2.)
Sign
Hers Signature ► Dab P.
Section references are to the Internal
Revenue Code.
Purpose of Form: A person who is
required to file an information return with
the IRS must get your correct TIN to report
income paid to you, real estate
transactions, mortgage interest you paid,
the acquisition or abandonment of secured
property, cancellation of debt, or
contributions you made to an IRA. Use
Form W-9 to give your correct TIN to the
requester (the person requesting your TIN)
and, when applicable, (1) to certify the TIN
you are giving is correct (or you are waiting
for a number to be issued), (2) to certify
you are not subject to backup withholding,
or (3) to claim exemption from backup
withholding if you are an exempt payee.
Giving your correct TIN and making the
appropriate certifications will prevent
certain payments from being subject to
backup withholding.
Note: If a requester gives you a form other
than a W-9 to request your TIN, you must
use the requester's form if it is substantially
similar to this Form W-9.
What Is Backup Withholding? —Persons
making certain payments to you must
withhold and pay to the IRS 31 % of such
payments under certain conditions. This is
called "backup withholding." Payments
that could be subject to backup
withholding include interest. dividends,
broker and barter exchange transactions,
rents, royalties, nonemployse pay, and
certain payments from fishing boat
operators. Real estate transactions are not
subject to backup withholding.
If you give the requester your correct
TIN, make the proper certifications, and
report all your taxable interest and
dividends on your tax return, your
payments will not be subject to backup
withholding. Payments you receive will be
subject to backup withholding if,
1. You do not furnish your TIN to the
requester, or
2. The IRS tells the requester that you
fumished an incorrect TIN, or
3. The IRS tells you that you are subject
to backup withholding because you did not
report all your interest and dividends on
your tax return (for reportable interest and
dividends only), or
4. You do not certify to the requester
that you are not subject to backup
withholding under 3 above (for reportable
interest and dividend accounts opened
after 1983 only), or
S. You do not certify your TIN. See the
Part III instructions for exceptions.
Certain payees and payments are
exempt from backup withholding and
information reporting. See the Part II
instructions and the separate Instructions
for the Requester of Form W-9.
How To Get a TIN. —If you do not have a
TIN, apply for one immediately. To apply.
get Form SS-S, Application for a Social
Security Number Card (for individuals),
from your local office of the Social Security
Administration, or Form BSA Application
for Employer Identification Number (for
businesses and all other entities), from
your local IRS office.
If you do not have a TIN, write "Applied
For" in the space for the TIN in Part 1, sign
and date the forth, and give it to the
requester. Generally, you will then have 60
days to get a TIN and give it to the
requester. If the requester does not receive
your TIN within 60 days. backup
withholding, if applicable, will begin and
continue until you furnish your TIN.
Form W-9 (Rev. 3-94�
2 NVE S TMENT pOL = CY
PURPOSE:
Floca1 Policy No. 3.1
Primary objective of the Investment Policy is to ensure the
preservation of public funds by providing guidance to management in
administering the City's cash management program.
SECTION I.
POLICY
Areas covered by this policy include:
II.
Scope of Financial Funds to be Invested
III.
Investment
Policy Objectives
IV.
Delegation
of Authority for Investment Decisions
V.
Conflict of
Interest
VI.
Investment
Prudence
VII.
Investment
Instruments in which the City may
Invest,
Diversification of the Investment
Portfolio,
and Minimum Maturity Portfolio Schedules
VIII.
Management
of Joint Resources and Distribution of
Interest Earnings
IX.
Financial Institutions in which the City may Invest
X.
Investment
Strategy and Results Monitoring
XI.
Provisions
for Interim and Annual Reporting
Cash management objectives shall be developed within the
constraints of this policy statement. Cash Management Objectives
shall include:
A. A Total Percentage of Invested Cash. The City intends to
have 100% of available City funds invested.
B. Percentage of Return (Yield). A target yield should be
.stated as a goal.
C. Total Dollar Return Goal. Combines the objectives of
percentage of cash available and the percentage of yield
to obtain a total dollar return goal.
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I NVE S Tl�� NT POL = CY
Fiscal Policy No. 3.1
SECTION II. Scope
This investment policy applies to all financial funds of the City
of La Quinta, La Quinta Redevelopment Agency and La Quinta
Financing Authority (hereby referred to as the "City"). These
funds are accounted for in the City's comprehensive Annual
Financial Report and currently include the:
Operating Funds:
General Fund
La Quinta Financing JPA - Operation Fund
La Quinta Financing JPA - Debt Service Fund
Redevelopment Agency, P.A. #1 Debt Service Fund
Redevelopment Agency, P.A. #2 Debt Service Fund
Special Revenue Funds:
Gas Tax Fund
Community Service Projects
Community Development Block Grant Fund
Lighting and Landscape Special Assessment
Fund
Quimby fund
Infrastructure Fee Fund
Village Parking Fund
Capital Improvement Project Fund
South Coast Air Quality Fund
District 89-1
Redevelopment Agency, P.A. #1 Low and Moderate Income
Housing Fund
Redevelopment Agency, P.A. #2 Low and Moderate Income
Housing Fund
Trust and Agency Funds:
Arts in Public Places Fund
I.C.M.A. Deferred Compensation Fund
Special Assessment District 88-1 Fund
Special Assessment District 89-2 Fund
Special Assessment District 90-1 Fund
Special Assessment District 91-1 Fund
Special Assessment District 92-1 Fund
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=NVESTMI:NT 3P4:>L2CY
FIWA 1 Policy No. 3.1
Monies held by the California Board of Equalization and Riverside
County Treasurer for the City or Redevelopment Agency during tax
collection periods shall be governed by the State of California and
Riverside County investment policies and are not subject to the
provisions of this policy. Investments made with state or county
governmental investment pools shall only be allowed where pool
investments are consistent with the City's investment policy.
The City's investment policy shall also govern Bond proceeds and
Bond reserve fund investments. California Government Code Section
5922(d) governs the investment of bond proceeds and reserve funds
in accordance with bond indenture provisions which shall be
structured in accordance with the City's investment policy.
SECTION III. Investment Policy Objectives
The foremost objective of the City is to ensure the preservation of
principal. Each investment transaction shall first seek to ensure
capital losses are avoided, whether they are from default of
securities or erosion of market value.
The City, as a secondary objective, seeks to attain yields that are
consistent with appropriate prevailing indices. Market rate
objectives must be consistent with constraints imposed by the
primary objective of the safety of principal, internal cash flow
considerations and any City of La Quinta ordinance, restricting the
placement of public monies. The intent of any investment purchase
is to hold it to maturity. Speculative trading is not permitted.
Speculative trading are those attempting to gain market premium
appreciation through short tens market volatility resulting in
increased risk and loss exposure to the City.
In addition the City, as a prudent practice, will periodically
(every 3 - 4 years) conduct a bid process for banking and/or
custodian services.
SECTION IV. Delegation of Authority
Management responsibility for the investment program is held by the
City Manager and appointed designees. No employee may engage in an
investment transaction except as provided under the terms of this
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=IVVESTI�NT POL=CY
Fiscal Policy No. 3.1
policy and any procedures which may be established by the City.
The City Manager or designees shall approve investments made
through current market documentation.
It shall be the duty of the Finance Director to manage the day-to-
day operations of the portfolio and place actual purchase/sell
orders with institutions. In the absence of the Finance Director,
the City Clerk shall assume these duties. In the absence of the
City Clerk and Finance Director, the City Manager shall assume
these duties.
SECTION V. Conflict of Interest
The investment responsibility carries with it the added duties of
insuring that investments placed are done so without the appearance
of improper influence. The City Clerk is involved in the
investment function shall adhere to the State's Code of Economic
Interest and to the following:
1. All persons authorized to place or approve investments
shall not personally or through a close relative maintain
any accounts, interest, or private dealings with any firm
with which the City places investments, with the
exception of regular savings, checking and money market
accounts, or other similar transactions that are offered
on a non-negotiable basis to the general public. Such
accounts shall be disclosed annually to the City Clerk in
conjunction with annual disclosure statements of economic
interest.
Z. All persons authorized to place or approve investments
shall report to the City Clerk kinship relations with
principal employees of firms with which the City places
investments.
SECTION VI. Prudence
Investments shall be made with reasonable financial judgement 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 primary objective of safety of principal as well as
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SNVESTI�?ENT POLICY
Fiscal Policy No. 3.1
the secondary objective of the obtainment of market rates of
return. The Administrative Services Personnel involved in the
investment function shall adhere to the following:
1. Return on Investment: The investment portfolio of the
City of La Quinta shall be designed to attain a market
average rate of return during budgetary and economic
cycles, taking into account the City's investment risk
constraint and the cash flow characteristics of the
portfolio.
2. Maintaining the Public Trust: All participants in the
investment process shall seek to act responsibly as
custodians of the public trust. Investment officials
shall avoid any transaction that might impair public
confidence in the City of La Quintas' ability to govern
effectively.
Investment officers acting in accordance with written procedures
and exercising due prudence shall be relieved of personal
responsibility for an individual security's credit risk or market
price changes, provided deviations from expectation are reported in
an timely fashion, and appropriate action is taken to control
adverse developments.
SECTION VIZ. Investment Instruments
As a unit of local government in the State of California the City
of La Quinta is restricting itself to the investments authorized by
Government code, Sections 53600 through 53635:
1: Savings accounts and other time accounts of commercial
banks -or savings and loans commercial banks insured by
the Federal Deposit Insurance Corporation.
2. Certificate of Deposits of Commercial Banks or Savings
and Loans insured by the Federal Deposit Insurance
Corporation. Certificate of Deposit purchases are
limited to $99,000 with interest earnings paid monthly to
the City to ensure F.D.I.C. $100,000 insurance, coverage.
3. Treasury Bills, Treasury Notes, Treasury bonds and
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=NVESTI��NT POL=CY
Fiscal Policy No. 3.1
Federal agencies' securities which are guaranteed by the
full faith and credit of the United States of America.
U.S. Government or securities, such as Federal National
Mortgage Association Securities, which are not backed by
the full faith and credit of the United States, are also
permitted investments.
All securities must be purchased on a full delivery vs.
payment basis where the securities are delivered at the
time the City releases funds for their purchase. Each
Investment Purchase is limited to a maximum amount of
$1,000,000.
4. Local Agency Investment Fund (L.A.I.F.) Pool. The City
may participate in a California Investment Pool or other
similar local government pools organized in conformity
with Part 53654 or Article 1 of Title 5, which provides
specific authority for pooling of local government funds.
Each L.A.I.F. account is restricted to a maximum
investable limit of $15,000,000.
5. Money Market funds or short intermediate term bond funds
investing in U.S. Agency Securities maintaining a par
value per share.
In addition, the City may participate in repurchase agreements
provided the securities for the agreement are included in 1 through
5 above. As a matter of policy, the City must take delivery of the
securities purchased through a repurchase agreement or have
required collateralized securities in a restricted account located
at the Federal Reserve Bank if the terms of the agreement is
greater than 14 days. Repurchase agreements with terms less than
14 days shall be held in safekeeping by a banker or broker in a
designated trust department.
Repurchase agreements involving non -deliverable securities shall
only be held by the Federal Reserve Bank or by another commercial
banking institution's trust department which is not owned or
controlled by the borrowing institution. Pledged securities under
repurchase agreements must be based on market value, not face
value. Repurchase agreements involving pooled collateral shall be
avoided.. Repurchase agreements shall only be purchased from
FMMWO W:2=c=/nvrar avrsovio M C= COUSM
2 NVE S TMENT POL = CY
Fiscal Policy No. 3.1
banking institutions or primary brokerage firms. Any repurchase
agreement exceeding three days shall be transacted on a full
delivery vs payment basis.
Investment Agreements may be used as an investment option for
insured bond proceeds and/or reserve funds. Investment Agreements
are not. to be confused with Money Managers who are contracted to
manage a pre -determined amount of funds for the City. A bid
process must be administered by the City or its designee in
determining the selected institution. The informal bid process,
used for both construction and reserve fund proceeds must have a
minimum of three responses to meet the City's selection criteria.
Bond indenture provisions govern the use of investment agreements
which are also subjected to further approval by a bond insurance
firm if the debt issue has been insured.
It is the general policy of the City to concentrate its investment
efforts in, but not to be limited to, U.S. Treasury obligations,
Certificates of Deposit and Money Market Accounts issued by
financial institutions located in the State of California.
Investments will be selected on the following basis:
1. The institution offering the investment must meet all the
criteria as stated in the "Financial Institutions",
Section IX of this policy statement.
2. The duration of the investment must coincide with cash
requirements determined by the Finance Director of the
City to meet short term or long term needs.
3. The rate of interest on the investment must be at least
equivalent to the average rate of return available in the
market place.
BID PROCESS
Certificate of Deposit investments in the amount of $100,000 or
less shall have a yield analysis performed in comparing the
selected investment to others similar in nature.
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=1VVESTr�NT POLICY
Fiscal Policy No. 3.1
U.S. Treasury and Agency investments shall use a formal bidding
procedure where rates will be received from at least two
institutions with the investment placed with the highest yielding
bidder provided the institution meets the City's investment
criteria. Short Term (2 years or less) U.S. Treasury -bills or
notes which do not exceed $250,000 are not required to use the
aforementioned bidding process due to the limited variation of
yields for such instruments. However, bid comparisons are to be
chosen randomly, to ensure that quality pricing is being obtained
by the City on instruments not requiring a bid process.
All investment securities will be held in safekeeping at the City's
designated financial institution or in shares with mutual funds
complying with Governmental Accounting Standards Board's
requirements. Safekeeping account receipts will be held by the
City's Finance Department. It is the responsibility of the Finance
Director to demonstrate compliance with this section.
PORTFOLIO DIVERSIFICATION
The City will diversify use of investment instruments to avoid
incurring unreasonable risks inherent in overinvesting in specific
instruments, individual financial institutions or investment
maturities. It shall be the duty of the Finance Director to manage
a diversified City investment portfolio supported by current
financial market conditions. The diversification of investment
types will be in accordance with the following maximum percentage
compliance limits:
Investment Type Maximum 3
Savings/Operating Accounts 85%
Certificates of Deposit 60%
U.S. Government and Agency Securities 75%
Government Pool 90%
Money Market and Short Intermediate
Term Bond Funds 60%
MATURITY SCHEDULING
Investment maturities for operating funds shall be scheduled to
coincide with projected cash flow needs, taking into account large
routine expenditures (payroll, bond payments) as well as
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SNVESTNT POL=CY
Fecal Policy No. 3.1
considering sizeable blocks of anticipated revenue (sales tax,
property tax). Maturities in this category shall be timed to
comply with the following guidelines.
MATURITY SCHEDULE PORTFOLIO
TARGETS
Under 12 Months 75$
Under 24 Months 85%
The City shall adhere to Government Code State Statutes which
require each individual investment to have a maximum maturity of
five years unless specific approval is authorized by City Council.
SBCTIOM VIII. Resource Management and Interest Distribution
All investments will be in the name of the City of La Quinta, La
Quinta Redevelopment Agency and La Quinta Financing Authority and
in most cases it will be a general policy of the City to pool all
available operating cash into a Treasury Cash Management investment
portfolio. However, a specific investment purchased by a specific
fund shall incur all earnings and expenses to that particular fund.
Interest earnings from pooled funds shall be allocated to all
participating funds in the following order:
A. Payment of interest earnings shall be allocated to
designated funds from its specific investments.
B. Payment to the General Fund of an amount equal to the
total annual bank service charges as incurred by the
general fund for all operating funds as included in the
annual operating budget.
C. Payment to the General Fund of a management fee equal to
5% of the annual pooled cash fund investment earnings.
D. Payment to each fund of an amount based on the average
computerized daily cash balance included in the common
portfolio for the earning period.
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2 NVE S TIC NT POL 2 CY
Fiscal Policy No. 3.1
SECTION IX. Financial Institutions and Dealer. Authorization
As stated in Section VII it is the general policy of the City to
purchase Money Market accounts, U.S. Treasury and Agency
Securities, certificates of deposit and other time accounts
primarily from financial institutions located in the City of La
Quinta and/or Riverside County. United States government
securities are to be purchased through the facilities of commercial
banks or a securities institution as designated by the Securities
Exchange Commission (S.E.C.).
The Treasurer will maintain a list of financial institutions
authorized to provide investment services. In addition, a list
will also be maintained of approved security broker/dealers
selected by credit worthiness, who maintain an office in the State
of California. These may include "primary" dealers or regional
dealers that qualify under Securities a 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
laws.
All financial institutions and broker/dealers who desire to become
qualified bidders for investment transactions must supply the
treasurer with the following:
• Audited financial statements
• Proof of National Association of Security Dealers
certification
• Trading Resolution
• Proof of State/Province registration
•'Certification of having read entity's Investment Policy
• Resume of Financial Broker
• Evidence of Professional Liability Insurance
A current audited financial statement is required to be on file for
each financial institution and broker/dealer in which the City
invests. In addition, the City shall research the National
Association of Security Dealer's Public Disclosure Report File to
review existing reports on file for any firm and individual
conducting investment related business with the City.
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Fiscal Policy No. 3.1
Financial institutions will be required to meet the following
criteria in order to receive City funds for investment:
1. Insurance - Public Funds shall be deposited only in
financial institutions insured by the Federal Deposit
Insurance Corporation.
2. Collateral - The amount of City of La Quinta deposits or
investments not insured by agency of the federal
government shall be 110% collateralized by securities' or
150% mortgages' market values of that amount of invested
funds plus unpaid interest earnings.
3. Size - Theamount of City of La Quinta deposits or
investments must be collateralized or insured by an
agency of the federal government.
4. Disclosure - A) Each financial institution maintaining
invested funds in excess of $100#000 shall furnish
corporate authorities a copy of all statements of
resources and liabilities which it is required to furnish
to the State banking or savings and loan commissioners as
required by the California Financial Code.
The City shall not invest in excess of $100,000 in
banking institutions which do not disclose to the City a
current listing of securities pledged for
collateralization of public monies.
B) Each securities dealer shall provide monthly and
quarterly reports filed pursuant to U.s. Treasury
Department regulations. Each mutual fund shall provide
a prospectus and statement of additional information.
SECTION X. Investment Strateav and Results Monitoring
Investment strategies and results shall be reviewed by the
Investment Advisory Board (IAB). The City Manager will be
subsequently apprised of the IAB's investment strategy. A review
will be held at least quarterly to determine general strategies and
to monitor results. Documented summaries of Investment meetings
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2 NVE S TPg..NT POLICY
Fiscal Policy No. 3.1
shall be kept on file in the Finance Director's Office. Included
in the review and deliberations will be topics such as: cash flow
projections, potential risks, authorized depositories, rate of
return, maturity structure and investment transactions.
SECTION XI. ReDortina - Interim and Annual
A standard treasurer's report for City Council, and the IAB and
Staff shall be produced each month listing pertinent current
investment portfolio information. The Finance Director will also
submit a quarterly investment report to the City Manager for
distribution to the City Council, providing investment information
regarding the City's investment portfolio's financial position.
The effective date of this policy shall be the day of
, 19 .
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