Loading...
HomeMy WebLinkAboutMINUTES - 01191999 - C121 .... .............................................................................................................................................................................................................. ....... .._....... .........._.._.........._... ....... ......... .........._.. ........ ........... .......... .._................... 1 / TO: BOARD OF SUPERVISORSsContra FROM: William J. P ollacek. Treasurer-Tax Collector ( '�" \�Y � DATE: January 7', '1999 r°���...... SUBJECT: GOVERNMENT CODE INVESTMENT REVISIONS FOR, INVESTMENT POLICY SPECIFIC REGUEST(S)OR RECOMMENDATION(S)&BACKGROUND ARID JUSTIFICATION RECOMMENDATION (S): Accept and Append the August 1998 Government Code Sections 536001 and 53601 (2) revision on instruments authorized for investment. FINANCIAL IMPACT None REASON (S) FOR RECOMMENDATION(S): In August of 1998 Government code sections 53601 and 53601 (2) on instruments authorized for investments were revised by the State Legislature. CONSEQUENCES OF NEGATIVE ACTION: The county Treasurer's policy is the basis of Treasury investmentactivities and reflects all legal mandates. The inclusion of the aforementioned code revisions in the Treasurer's policy will ensure legal compliance. CONTINUED ON ATTACHMENT: X YES SIGNATURE: - ff:&4AL44.4e RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMM ITT£ APPROVE OTHER SIGNATURE S ACTION OF BOARD ON. January=,- anuary i APPROVED AS RECOMMENDED ` OTHER VOTE OF SUPERVISORS X I HEREBY CERTIFY THAT THIS IS A'TRUE UNANIMOUS(ABSENT ) AND CORRECT COPY OF AN ACTION TAKEN AYES: NOES: AND ENTERED ON THE MINUTES OF THE BOARD ABSENT. ABSTAIN: OF SUPERVISORS ON THE DATE SHOWN. ATTESTED _ January 19 y 1399 Contact: Clarissa V. Javier (546-4115) PHIL BATCHELOR,CLERK OF THE BOARD OF CC: County Administrator SUPERVISORS AND COUNTY ADMINISTRATOR County Treasurer Treasury Oversight Committee BY DEPUTY CONTRA COSTA COUNTY TREASURER-TAX COLLECTOR 625 COURT STREET, ROOM 100-012 MARTINEZ, CA 94553-0063 DATE: October 28,1998 TO: Treasury Oversight Committee FROM: Alfred P. Lomeli, Treasurer-Tax Collector SUBJECT: GOVERNMENT CODE INVESTMENT REVISIONS 853601 Instruments Authorized for Investment old: . . . A counterparty bank's trust department or separate safekeeping department may be used for the physical delivery of the security if the security is held in the name of the local agency. (insert) Where this section does not specify a limitation on the term or remaining maturity at the time of the investment, no investment shall be made in any security, other than a security underlying a repurchase or reverse repurchase agreement authorized by this section . . . insert: . . .Where this section specifies a percentage limitation for a particular category of investment, that percentage is applicable only at the date of purchase. (insert at Page 2 of June 1998 Investment Policy) 853601(2) Instruments Authorized for Investment Repurchase Agreements old: (2) Investments in repurchase agreements may be made, on any investment authorized in this section, when the term of the agreement does not exceed one year. The market value of securities that underlay a repurchase agreement shall be valued at 102 percent or greater of the funds borrowed against those securities and the value shall be adjusted no less than quarterly. (insert) new insert: Since the market value of the underlying securities is subject to dally market fluctuations, the investments In repurchase agreements shall be in compliance if the value of the underlying securities is brought back up to 102 percent no later than the next business day. (Insert Page 4(1)(1)(8) of June 1958 Investment Policy. APL:cVJ:gm -44 f TO: BOARD OF SUPERVISORS Contra FROM: William J. Pollacek. Treasurer-Tax Collector = -�` s Costa BATE: County January 7, 1999 :.'sr�"M SUBJECT: GOVERNMENT CODE INVESTMENT REVISIONS FOR INVESTMENT POLICY SPECIFIC REOUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATION (S): Accept and Append the August 1998 Government Code Sections 53601 and 53601 (2) revision on instruments authorized for investment. FINANCIAL IMPACT None REASON (S) FOR RECOMMENDATION (S): In August of 1998 Government code sections 53601 and 53601 (2) on instruments authorized for investments were revised by the State Legislature. CONSEQUENCES OF NEGATIVE ACTION. The county Treasurer's policy is the basis of Treasury investmentactivities and reflects all legal mandates. The inclusion of the aforementioned code revisions in the Treasurer's policy will ensure legal compliance. CONTINUED ON ATTACHMENT: X YES SIGNATURE: 14--_RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMM tTTE 2( APPROVE OTHER SIGNATURES ACTION OF BOARD ON -- -- APPROVED AS RECOMMENDED OTHER f;fi ......... ......... ......... .. ....................._.. ._...._.. ......... ......... ......... .._...... ........ ......... ............. ......... ......... ......... CONTRA COSTA COUNTY TREASURER-TAX COLLECTOR 625 COURT STREET, ROOM 100-012 MARTINEZ, CA 94553-0063 DATE: October 28,1998 TO: Treasury Oversight Committee FROM: Alfred P. Lomeli, Treasurer-Tax Collector SUBJECT: GOVERNMENT CODE INVESTMENT REVISIONS 553601 Instruments Authorized for Investment old: . . . A counterparty bank's trust department or separate safekeeping department may be used for the physical delivery of the security if the security is held in the name of the local agency. (insert) Where this section does not specify a limitation on the term or remaining maturity at the time of the investment, no investment shall be made in any security, other than a security underlying a repurchase or reverse repurchase agreement authorized by this section . . . insert: . . .Where this section specifies a percentage limitation for a particular category of investment, that percentage is applicable only at the date of purchase. (insert at Page 2 of June 1998 Investment Policy) 553601(2) instruments Authorized for Investment Repurchase Agreements old: (2) investments in repurchase agreements may be made, on any investment authorized in this section, when the term of the agreement does not exceed one year. The market value of securities that underlay a repurchase agreement shalt be valued at 102 percent or greater of the funds borrowed against those securities and the value shall be adjusted no less than quarterly. (insert) new insert: Since the market value of the underlying securities is subject to daily market fluctuations, the investments in repurchase agreements shall be in compliance if the value of the underlying securities is brought back up to 102 percent no later than the next business day. (insert Page 4{)(1)(B) of June 1998 Investment Policy. APL:cvJ:gm ... ... ......... ......... ......... ......... ......... ......... ......... ......... _.._.._. . . __.. ......................._. ........... ......... ......... ......... ......... ......... ......... ......... .......... ........ ......... s CONTRA COSTA COUNTY INVESTMENT POLICY JUNE 1998 . ._.._. ......... ......... ......... ........._..__... . _....._. ......._..........._.. ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... ......... _ _ ........._... TABLE OF CONTENTS OBJECTIVES AND STANDARD'S 1 AUTHORIZED INVESTMENTS 2 FU'RTH'ER RESTRICTIONS AND LIMITATION'S 9 I.N,)tESTMENT MATURITY 10 QUALITY OF INVESTMENT INSTRUMENTS, ISSUERS AND SOURCES 10 SAFEKEE'P'ING AND CUSTODY 11 AUTHORIZED BROKERS AND DEALERS 12 LIMITS ON RECEIPT OF HONORARIA, GIFTS, AND GRATUITIES 13 INVESTMENT REPORT 16 PLEDGE REPORT 13 REVERSE REPURCHASE AGREEMENTS 16 TREASURER'S CHARGES 17 NON-MANDATED DEPOSITS AND WITHDRAWALS IN THE TREASURY 18 WITHDRAWAL OF FUNDS BY MANDATED TREASURY PARTICIPANTS ' 18 BROKERS AND ISSUERS 28 GLOSSARY 21 INVESTMENT POLICY OBJECTIVES AND STANDARDS: ' 553600.3. Standard for governing bodies or persons authorized to make investment decisions for local agencies. Governing bodies of local agencies or persons authorized to make investment decisions on behalf of those local agencies investing public funds pursuant to this chapter are trustees and therefore fiduciaries subject to the prudent investor standard. When investing, reinvesting, purchasing, acquiring, exchanging, selling, and managing public funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances then prevailing, that a prudent person acting in a like capacity and familiarity with those 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. Within the limitations of this section and considering individual investments as part to an overall strategy, a trustee is authorized to acquire investments as authorized by law. 553600.5. Trustee's objectives regarding funds. When investing, reinvesting, purchasing, acquiring, exchanging, selling, and managing public funds, the primary objective of a trustee shall be to safeguard the principal of the funds under its control. The secondary objective shall be to meet the liquidity needs of the depositor. The third objective shall be to achieve a return on the funds under its control. 'Numbers refer to government code numbers and section. t Mj( . . ......................................................................................................................................................................................................................................... .. ......... ..........._. ..._..... ......... _........ ......... ._....... ......... ......... ...._.... ......... ......... ......... INSTRUMENTS AUTHORIZED FOR INVESTMENT: 853601. Instruments authorized for investment. (a) Bonds issued by the local agency, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the local agency or by a department, board, agency, or authority of the local agency. (b) United States Treasury notes, bonds, bills, or certificates of indebtedness, or those for which the faith and credit of the United States are pledged for the payment of principal and interest. (c) Registered state warrants or treasury notes or bonds of this state, including bonds payable solely out of the revenues from a revenue- producing property owned, controlled, or operated by the state or by a department, board, agency, or authority of the state. (d) Bonds, notes, warrants, or other evidences of indebtedness of any local agency within this state, including bonds payable solely out of the revenues from a revenue-producing property owned,i controlled, or operated by the local agency, or by a department, board, agency, or authority of the local agency. (e) Obligations issued by banks for cooperatives, federal land banks, federal intermediate credit banks, federal home loan banks, the Federal Hoare Loan Bank Board, the Tennessee Valley Authority, or in obligations, participations or other instruments of, or issued by, or fully guaranteed as to principal and interest by, the Federal National Mortgage Association; or in guaranteed portions of Small Business Administration notes; or in obligations, participations, or other instruments of, or issued by, a federal agency or a United States government-sponsored enterprise. (f) Bills of exchange or time drafts drawn on and accepted by a commercial bank, otherwise known as bankers acceptances. Purchases of bankers acceptances may not exceed 270 days maturity or 40 percent of the agency's surplus money that may be invested pursuant to this section. However, no more than 30 percent of the agency's surplus funds may be invested in the bankers acceptances of any one commercial bank pursuant to this section. This subdivision does not preclude a municipal utility district from investing any surplus money in its treasury in any manner authorized by the Municipal Utility District Act (Division 6 (commencing with Section 1150 1) of the Public Utilities Code). 2 ............................... ....._ ......... _........ ......... ......... ......... ......... ......... ......... ......_. ......... ......... . ........ ......... (g) Commercial paper of "prime" quality of the highest ranking or of the highest letter and numerical rating as provided for by Moody's Investors Service, Inc., or Standard and Poor's Corporation. Eligible paper is further limited to issuing corporations that are organized and operating within the Unites States and having total assets in excess of five hundred million dollars ($500,000,000) and having an "A" or higher rating for the issuer's debt, other than commercial paper, if any, as provided for by Moody's Investors Service, Inc., or Standard and Poor's Corporation. Purchases of ' eligible commercial paper may not exceed 180 days' maturity nor represent more than 10 percent of the outstanding paper of-an issuing - corporation. Purchases of commercial paper may not exceed 15 percent of the agency's surplus money that may be invested pursuant to this section. An additional 15 percent, or a total of 30 percent of the agency's surplus money, may be invested pursuant to this subdivision. The additional 15 percent may be invested only if the dollar-weighted average maturity of the entire amount does not exceed 31 days. "Dollar-weighted average maturity" means the sum of the amount of each outstanding commercial paper investment multiplied by the number of days to maturity, divided by the total amount of outstanding commercial paper. (h) Negotiable certificates of deposits issued by a nationally or state- chartered bank or a state or federal association (as defined by Section 5102 of the Financial Code) or by a state-licensed branch of a foreign bank. Purchases of negotiable certificates of deposit may not exceed 30 percent of the agency's surplus money which may be invested pursuant to this section. For purposes of this section, negotiable certificates of deposits do not come within Article 2 (commencing with Section 53630), except that the amount so invested shall be subject to the limitations of Section 53638. (1) Investments in repurchase agreements or reverse repurchase agreements of any securities authorized by this section, as long as the agreements are subject to this subdivision, including, the delivery requirements specified in this section. (1) "Repurchase Agreement" means a purchase of securities by the local agency pursuant to an agreement by which the counterparty seller will repurchase the securities on or before a specified date and for a specified amount and the counterparty will deliver the underlying securities to the local agency by book entry, physical delivery, or by third party custodial agreement. The transfer of underlying securities to the counterparty bank's customer book-entry account may be used for book- entry delivery. 3 �f� .. .... ................................................................................................................................................................................................................................. ........... ......... _....._.. ......... ......... ......... ......... . ......... ......... ......... ......... ......... ._....... (A) "Securities," for purpose of repurchase under this subdivision, means securities of the same issuer, description, issue date, and maturity. (B). Investments in repurchase agreements may be made, on any investment authorized in this section, when the term of the agreement does not exceed one year. The market value of securities that underlay a repurchase agreement shall be valued at 102 percent or greater of the funds borrowed against those securities and the value shall be adjusted no less than quarterly. However, the value of the securities underlying a repurchase agreement may be 100 percent of the sales price so long as the securities are marked-to-market daily. (2) "Reverse repurchase agreement' means a sale of securities by the local agency pursuant to an agreement by which the local agency will repurchase the securities on or before a specified date and includes other comparable agreements. Reverse repurchase agreements may be; utilized only when either of the following conditions are met: The security to be sold on reverse repurchase agreement has been owned and fully paid for by the local agency for a minimum of 30 days prior to sale; the total of all reverse repurchase agreements on investments owned by the local agency does not exceed 10 percent of the base value of the portfolio; and the agreement does not exceed a term of 92 days, unless the agreement includes a written codicil guaranteeing a minimum earning or spread for the entire period between the sale of a security using a reverse repurchase agreement and the final maturity date of the same security. (3) Repurchase agreements and reverse repurchase agreements shall be made with primary dealers of the Federal Reserve Bank of New York. (j) Medium-term notes of a maximum of fire years maturity issued by corporations organized and operating within the United States or by depository institutions licensed by the United States or any state and operating within the United States. Notes eligible for investment under this subdivision shall be rated in a rating category of "A" or its equivalent or better by a nationally recognized rating service. Purchases of medium- term notes may not exceed 30 percent of the agency's surplus money which may be invested pursuant to this section. 4 4,5 (k) Notwithstanding anything to the contrary contained in this section, Section 536135, or any other provision of law, moneys held by a trustee or fiscal agent and pledged to the payment or security of bonds or other indebtedness, or obligations under a lease, installment sale, or other agreement of a local agency, or certificates of participation in those bonds, indebtedness, or lease installment sale, or other agreements, may be invested in accordance with the statutory provisions governing the issuance of those bonds, indebtedness, or lease installment sate, or other agreement, or to the extent not inconsistent therewith or if there are no specific statutory provisions, in accordance with the ordinance, resolutions indenture, or agreement of the local agency providing for the issuance. (1) Motes, bonds, or other obligations that are at all times secured by a valid first priority security interest in securities of the types listed by Section 53651 as eligible securities for the purpose of securing local agency deposits having a market value at least equal to that required by Section 53652 for the purpose of securing local agency deposits. The securities serving as collateral shall be placed by delivery or book entry into the custody of a trust company or the trust department of a bank which is not affiliated with the issuer of the secured obligation, and the security interest shalt be perfected in accordance with the requirements of the Uniform Commercial Code or federal regulations applicable to the types of securities in which the security interest is granted. (m) Any mortgage pass-through security, collaterialized mortgage obligation, mortgage-backed or other pay4hrough bond, equipment lease-backed certificate, consumer receivable pass- through certificate, or consumer receivable-backed band of a maximum of five years maturity. Securities eligible for investment under this subdivision shall be issued by an issuer having an "A" or higher rating for the issuer's debt as provided by a nationally recognized rating service and rated in a rating category of "AA" or its equivalent or better by a nationally recognized rating service. Purchase of securities authorized by this subdivision may not exceed 20 percent of the agency's surplus money that may be invested pursuant to this section. 5 ......... ......... ......... ......... ......1.111_. ... _..... . .._...... ......... ......... ......... ......... ....................................................................__ ......... ......... ............ ..... ......... .. .................................... §16429.1 Existence and Appropriation of Fund, Investment and Distribution of Deposits There is in the State Treasury the Local Agency Investment Fund,; which fund is hereby created. Notwithstanding Section 13340, all money in the fund is hereby appropriated without regard to fiscal years to carry out the purpose of this section. The Controller shall maintain a separate account for each governmental unit having deposits in this fund. NotWlthstanding any other provisions of law, a local governmental official, with the consent of the governing body of that agency, having money Wits treasury not required for immediate needs, may remit the money to the Treasurer for deposit in the Local Agency Investment Fund for the purpose of investment. Notwithstanding any other provisions of taw, an officer of any nonprofit corporation whose membership is confined to public agencies or public officials, or an officer of a qualified quasi-governmental agency, with the consent of the governing body of that agency, having money in its treasury not required for immediate needs, may remit the money to the Treasurer for deposit in the Local Agency Investment Fund for the purpose of investment. Notwithstanding any other provision of law or of this section, a local agency with the approval of its governing body, may deposit in the local Agency Investment Fund proceeds of the issuance of bonds, notes, certificates of participation, or other evidences of indebtedness of the * * * agency pending expenditure of the proceeds for the authorized purpose of their issuance. In connection with these deposits of proceeds, the Local Agency Investment Fund is authorized to receive and disburse moneys, and to provide information, directly with or to an authorized officer of a trustee or fiscal agency engaged by the local agency, the Local Agency Investment Fund is authorized to hold investments in the name and for the account of that trustee or fiscal agent, and the Controller shall maintain a separate account for each deposit of proceeds. The local govemmental unit, the nonprofit corporation, or the quasi-governmental agency has the exclusive determination of the length of time its money will be on deposit with the Treasurer. The trustee or fiscal agent of the local governmental unit has the exclusive determination of the length of time proceeds from the issuance of bonds will be on deposit with the Treasurer. The Local Investment Advisory Board shall determine those quasi-governmental agencies which qualify to participate in the Local Agency Investment Fund. 6 ........................................................................................................................................................I...-1111.11........111.11,11, . . ..... ..................................................................................................................................................................................................... The Treasurer may refuse to accept deposits into the fund if, in the judgement of the Treasurer, the deposit would adversely affect the state's portfolio. The Treasurer may invest the money of the fund in securities prescribed in Section 16430. The Treasurer may elect to have the money of the fund invested through the Surplus Money Investment Fund as provided in Article 4 (commencing with Section 16470) of Chapter 3 of Part 2 of Division 4 of Title 2. Money in the fund shall be invested to achieve the objective of the fund which is to realize the maximum return consistent with safe and prudent treasury management. All instruments of title of all investments of the fund shall remain in the Treasurer's vault or be held in safekeeping under control of the Treasurer in any federal reserve bank, or any branch thereof, or the Federal Home Loan Bank of San Francisco, with any trust company, or the trust department of any state or national bank. Immediately at the conclusion of each calendar quarter, all interest eamed and other increment derived from investments shall be distributed by the Controller to the contributing governmental units or trustees or fiscal agents, nonprofit corporations, and quasi-governmental agencies in amounts directly proportionate to the respective amounts deposited in the Local Agency Investment Fund and the length of time the amounts remained therein. An amount equal to the reasonable costs incurred in carrying out the provisions of this section, not to exceed a maximum of one-half of 1 percent of the earnings of this fund, shall be deducted from the earnings prior to distribution. The amount of this deduction shall be credited as reimbursements to the state agencies having incurred costs in carrying out the provisions of this section. The Treasurer shall prepare for distribution a monthly report of investments made during the preceding month. 7 11;1,9 BOARD Of SUPERVISORS OF CONTRA COSTA COUNTY. CALIFORNIA Re: Authorizing investment of County Monies in Local Agency Investment Fund RESOLUTION NO. 774= WI(EREAS,.pursuant to Chapter 730 of the Statutes of 1976, Section 16429.1 was added to the California Government Code to create a Local Agency Investment Fund in the State Treasury for the deposit of money of a local agency for purposes of investment by the State Treasurer; and WHEREAS, the Board of Supervisors does hereby find that the deposit and withdrawal of money in the Local Agency Investment Fund in accordance with the provisions of Section 16429.1 of the Government Code for the pusposes of invest- ment as stated therein is in the best interests of the County of Contra Costa. NOW, THEREFORE, BE IT RESOLVED that the Board of Supervisors does hereby authorize the deposit and withdrawal of County monies in the Local Agency In- vestment Fund in the State Treasury in accordance with the provisions of Section 16429.1 of the Government Code for the purpose of investment as stated therein. BE IT FURTHER RESOLVED that the following County Officers or their successors in office shall be authorized to order the deposit or withdrawal of monies in the Local Agency Investment Fund: Edward K. Leal. Treasurer-Tax Collector; Alfred P. Lomeli. Assistant Treasurer-Tax Collector. David Dezell, Investment Supervisor. PASSED AND ADOPTED by the Board of Supervisors of the County of Contra Costa, State of California, orfebruary 8, 1977 by the following, vote: APES: Supervisors J. P. Kenny, N. C. Fanden, R. I. Schroder, E. It. itasseltine and W. N. Boggess. NOES: Supervisors None. ABSENT: Supervisors None. �' j�y� f,I, men ATTEST: JAHES R. OLSSOIi. Clerk Roard of Supervisors 5airman. Gard of sons CgIx r.CUD. Cat►Y it o,"rLTYOriginal cut or: .a n tail, trot c st in oa ft Of fila ort�ic.ai dgcur'ta..,tdck to ca tut to m/urrtea. and that it ws# ov=al It"404 by tka Daard at eputy saparAtcra of Co—!,* c -ta(oaty. CAMetnta,Oct CC: /state Treasurer tho data aiheart,.AIrck".: J. It. OC338N. *Maty ctark!axerrido cicrk of said hoard or$aparys", M County Treasurer—Tax Collector b no" Q County Auditor—Controller FED g It377 County Administrator0 ob RESOLUTION NO. 77)L27 8 ......... ......... ......... ......... ......... ......... ...._.... .111....1.. ......... ......... ......... ......... ......... ......... ......... ......... .......... ........ ......... ........._1111 ......... ......... ........... ........ ........ FURTHER RESTRICTIONS / LIMITATIONS BY GOVERNMENT CODE AND COUNTY TREASURER Further Restrictions Set By Treasurer. A. Reverse repurchase agreements will be used strictly for the purpose of supplementing income with a limit of ten percent (10%) of the total portfolio without prior approval of the Treasurer. B. Swaps and Trades will each be approved on a per trade basis by Treasurer or Chief Investment Officer. C. SBA loans require prior approval of the Treasurer in every transaction. D. Repurchase Agreements will generally be limited to Wells Fargo Bank, Bank of America, or other institutions that tri-party agreements have been executed with the County treasury. Collateral will be held by a third party to the transaction which may include the trust department of particular banks. Collateral will be only securities that j comply with Government Code 53601. E. Securities purchased through brokers will be held in safekeeping at the Bank of New York or as designated by the specific contract(s) for government securities and tri-party repurchase agreements. F. Bank C.D.'s will be collateralized at 105% by government securities or 150% by current mortgages. There will be no waiver of the first $100,000 collateral except by special arrangement with the Treasurer. G. All securities purchased by the Treasurer's Office shall be of investment grade. The minimum credit rating of purchased securities shall be as defined by Government Code 53600 et. seq. (As suggested by the Board of Supervisor's Finance Committee meeting of February 3, 1997, Monday, 9:00 a.m.) 853601.6. Prohibited investments by government code. (a) A local agency shall not invest any funds pursuant to this article in inverse floaters, range notes, or interest-only strips that are derived from a pool of mortgages. (b) A local agency shall not invest any funds pursuant to this article in any security that could result in zero interest accrual if held to maturity. However, a local agency may hold prohibited instruments until their 9 ......... .......... .......... ......... .......... .......... .......... ...... .. ........ ............ ......... ......... ......... ......... ......... ......... ........ ... ......... ........... ......... ...... ........ ............ ........ .... ..... 9 maturity dates. The limitation in this subdivision shall not apply to local agency investments in shares of beneficial interest issued by diversified management companies registered under the Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1, and following) that are authorized for investment pursuant to subdivision (k) of Section 53601. 863601 Instruments authorized for investments: Maturity . . . .Where this section does not specify a limitation on the term or remaining maturity at the time of the investment, no investment shall be made in any security, other than a security underlying arepurchase or reverse repurchase agreement authorized by this section, that at the time of the investment has a term remaining to maturity in excess of five years, unless the legislative body has granted express authority to make that investment either specifically or as a part of an investment program approved by the legislative body no less than three months prior to the investment . . . . Quality of Investment Instruments, Issuers and Sources Regular financial review and analysis of issuers and sources of securities such as banks and brokerage firms shall be performed. These will be based on credit rating services' evaluations, financial documents such as audits, form 10-Q filings to the Securities and Exchange Commission, and other reliable financial information. to ............. .......... .......... .......... .......... ......... . 1111 ............. .......... .......... ......... ......... ......... .......... .......... ........ ....1.1.1.1.1.. ............... ......... ........ ........ . SAFEKEEPING & CUSTODY 853601. Instruments authorized for investment. . . . . . A local agency purchasing or obtaining any securities prescribed in this section, in a negotiable, bearer, registered, or nonregistered format, shall require delivery of the securities to the local agency, including those purchased for the agency by financial advisors, consultants, or managers using the agency's funds, by book entry, physical delivery, or by third party custodial agreement. The transfer of securities to the counterparty b'ank's customer book entry account may be used for book entry delivery. For purposes of this section "counterparty" means the other party to the transaction. A counterparty bank's trust department or separate safekeeping department may be used for the physical delivery of the security if the security is held in the name of the local agency. . . . . . . In compliance with this section, the securities of Contra Costa County and its agencies shall be in safekeeping at Bank of New York, a counterparty bank's trust department or as defined in the debt indenture, and contract. AUTHORIZED BROKERS AND DEALERS: Securities for Contra Costa County and its agencies shall be purchased from the following: 1. Primary dealers of the Federal Reserve Bank of New York and their subcontracts. 2. Banks and financial institutions who sell and buy instruments authorized for investments per Government Code 563601 et. seq. and their subcontracts. 3. Issuers of securities authorized by Government Code;53601 et. seq. Securities shall not be purchased from brokers, brokerages, dealers, or securities firms who within any consecutive 48-month period following January 1, 1996, made a political contribution in an amount exceeding the limitations contained in Rule G-37 of the Municipal Securities Rulemaking Board, to the local treasurer, any member of the governing board of the local agency, or any candidate for those offices. 12 ... ......... ......... ......... ......... ......... ......... ......... ..__..... ...._ ........ . ......... ......... ......... ......... ......... ........ ......... .......... ........ ......... .................. .... ......... ......... ......... . ........ ......... LIMITS ON THE RECEIPT OF HONORARIA, GIFTS, AND GRATUITIES Gift Prohibitions: All state and local officials who are listed in Government ;Code Section 87200, and candidates for those elective offices (except judges and judicial candidates), are prohibited from accepting a gift or gifts aggregating more than $280 in a calendar year from a single source. In addition, elected state officers, candidates for state offices, and state board and commission members are subject to a $1'0 per calendar month limit on gifts from lobbyists and lobbying firms registered with the Secretary of State. Honorarium Prohibition: All state and local officials who are listed in Government Code Section 87200, and candidates for those elective offices (except judges and judicial candidates), are prohibited from accepting any honorarium for any speech given, article published, or attendance at any public or private conference, convention, meeting, social event, meal, or like gathering. Exceptions: i The $.280 gift limit and honorarium prohibition do not apply to a part-time member of the governing board of a public institution of higher education, unless the member is also an elected official. • For state board and commission members, the $280 gift limit and honorarium prohibition are applicable only if the member would be required to report the receipt of income or gifts from the source on his or her statement of economic interests. The $10 gift limit is applicable only to lobbyists and lobbying firms registered to lobby the board or commission member's agency. Disgualification: Public officials are, under certain circumstances, required to disqualify themselves from making, participating in, or attempting; to influence governmental decisions which will affect any of their financial interests, not just those which they are required to disclose on a statement of economic interests. 13 Enforcement: The Fair Political Practices Commission may impose penalties for statements of economic interests which are filed late. The fine is $10 per day, beginning the day after the filing deadline, up to a maximum of $100. Late filing penalties can be reduced or waived under certain circumstances. In addition, the Fair Political Practices Commission may initiate investigations with respect to any suspected violation of the Political Reform Act. Other law enforcement agencies (the Attorney General or district attorney) may initiate investigations under certain circumstances. If violations are found, the Commission may initiate administrative enforcement proceedings which could result in the imposition of monetary penalties of up to $2,000 per violation. In lieu of administrative prosecution, a civil action may be brought for negligent or intentional violations by the appropriate civil prosecutor (the Commission, Attorney General or district attorney) where the measure of damages for most violations is the amount of value not properly reported. Persons who violate the conflict of interest disclosure provisions of the Political Reform Act can also be subject to discipline by their agency, including dismissal. Finally, a knowing or willful violation of any provision of the Political Reform Act is a misdemeanor. Persons convicted of a misdemeanor may be disqualified for four years from the date of the conviction from serving as a lobbyist or running for elective office, in addition to other penalties which may be imposed. The Act also provides for numerous civil penalties, including monetary penalties and damages, and injunctive relief from the courts. FURTHER AMENDMENTS TO THE CONFLICT OF INTEREST CODES (Per a Contra Costa County Board of Supervisors 'Order dated February 6, 1996): Amend all local Conflict of Interest Codes as follows: Pursuant to Government Code sections 87302 and 87306et. seq., this Board hereby amends every local Conflict of Interest Code previously approved by the Board of Supervisors to add the following: "All other provisions of this Code notwithstanding, the following provisions hereafter apply: 1. No designated employee shall accept M honorarium. 14 ..............................................................................................................................................- ...................................................................................... ......................... Subdivisions (b), (c), and (e) of Government Code section 89502 shall apply to the prohibitions in this section. This section shall not limit or prohibit payments, advances, or reimbursements for travel and related lodging and subsistence authorized by Government Code section 89506. 2. No designated employee shall accept any gifts with a total value of more than two hundred eighty dollars ($280) in a calendar year from any single source. Subdivision (d) of Government Code section 89504 shall apply to this section. This amendment is necessary to assure that all local codes comply with recent amendments to Government Code section 89502. 15 ............ .................................................................................................................................................................. .............................................................................................. I. INVESTMENT REPORT The Treasurer shall render a quarterly report to the Chief Executive Officer, the internal auditor, and the legislative body of the local agency .(Government Code 53646). In addition, the County Treasurer will provide . . "The County Treasury Oversight Committee with an investment report as required by the Board of Supervisors" . . . [Government Code 27133 (e)] PLEDGE REPORT Any security(s) that is (are) pledged or loaned for any purpose shall be reported in the Quarterly Investment Report. The transaction detail will be provided, including purpose, beginning and termination dates and all parties to the contract. The security(s) description(s) as to type, name, maturity date, coupon rate, CUSIP, and other material information will be included. REVERSE REPURCHASE AGREEMENTS All reverse repurchase agreements entered into, whether active or inactive by the end of each quarter, shall be reported in the Treasurers Quarterly Investment Report. 16 ........................................................................................................................................1.11.1....''I'll'', .......................................................................................................................................................... ................................. METHODOLOGY OF CALCULATING AND APPORTIONING TREASURY COSTS: A. Regular and Routine Investments: 1. $20 per investment transaction; i.e., $20 at placement and $20 at maturity. 2. .00333 of interest income; i.e., $3.33 per$1,000 of interest income. Charged quarterly by journal entry. B. Special Reports and Research Actual staff time and materials. C. Special Bank Transactions Actual bank fee schedule 17 NON-MANDATED DEPOSITS AND WITHDRAWALS IN THE TREASURY Following are the terms and conditions for deposit of funds for investment purposes by entities that are not legally required to deposit their funds in the County Treasury. 1. Resolution by the County Board of Supervisors authorizing the acceptance of outside participants by the County Treasury. 2. Resolution by the legislative or governing body of the local agency authorizing the investment of funds pursuant to Government Cade 53684. 3. Treasury investments will be directed transactions. Withdrawal of fund's in the treasury shall coincide with investment maturities or authorized sale of securities by the legislative or governing body of the local agency. Except for funds in the California State Local Agency Investment Fund, a five (5) business days' notification may be required when authorized sale of securities is involved. However, the section on evaluation of request for withdrawal of funds for use outside the county treasury pool by both mandated and non-mandated treasury pool participants shall also apply. WITHDRAWAL OF FUND'S BY MANDATED TREASURY PARTICIPANTS The withdrawal of mandated deposits in the treasury shall coincide with investment maturities, and or authorized sate of securities by authorized personnel of the local agency. Except for funds in the California State Local Agency Investment Fund, a five (5) business days' notification may be required when authorized sale of securities is involved. However, the section on evaluation of request for withdrawal of funds for use outside the county treasury pool by both mandated and non-mandated treasury pool participants, shall also apply. 18 l EVALUATION OF REQUEST FOR WITHDRAWAL OF FUNDS FOR USE OUTSIDE THE COUNTY TREASURY POOL BY BOTH MANDATED AND NON-MANDATED TREASURY POOL PARTICIPANTS Pursuant to Section 27136(a) "'Notwithstanding any other provision of law, any local agency, public agency, public entity, or public official that has funds on deposit in the county treasury pool and that seeks to withdraw rfunds for the purpose of investing or depositing those funds outside the county treasury pool, shall first submit the request for withdrawal to the county treasurer before withdrawing funds from the county treasury pool." The County Treasurer shall evaluate each proposed withdrawal and may request up to 34 days in order to assess the effect of the proposed withdrawal on the stability and predictability of the investments in the county treasury, and that the interests of the other depositors will not be adversely affected. 19 BROKERS AND ISSUERS American Express Bank of America Bank of the West Bankers Trust Barclays Bear Stearns Citicorp Civic Bank of Commerce Commercial Bank of Fremont CS First Boston Dean Witter Donaldson Lufkin Jenrette First Commercial Bank General Electric Glendale Federal Bank Goldman Sachs Government Perspectives Great Western Bank Home Savings of America John Deere Co JP Morgan Lehman , Mechanics Bank Mellon Bank Merrill Lynch Morgan Stanley Nationsbank Corporation Nikko Securities Paine Webber Prudential Securities Salomon Brothers Smith Barney Sumitomo Bank Union Bank of California Wells Fargo Bank Westamerica Bank Note: The County Treasury will not be limited to the above list_ Others will be included as long as all conditions for authorized brokers and dealers set forth in this policy are met Additionally, deletions and additions are based on the maintenance of required credit quality as ratedby Standard and Poor's, Moody's, GFI (Gerry Findley Incorporated) and other recognized rating services and reliable financial sources. 20 _ .............................................................................................. . ......... ......... ......... ......... ......... ......... ......... ......._. ......... . .... ............ ......... ......... ......... ......... ......... ......... ......... .......... ........ ......... ......... ......... _. ..._ _........ ............. ..... ......... GLOSSARY Agencies - a colloquial term for securities issued by the of the federal agencies. Bankers Acceptances - Bankers Acceptance is a time bill of exchange drawn on and accepted by a commercial bank to finance the exchange of goods. When a bank "accepts"' such a bill, the time draft becomes, in effect, a predated, certified check payable to the bearer at some future specified date. Little risk is involved for the investor because the commercial bank assumes primary liability onc&1he draft is accepted. Basis Point - one basis point is equal to 1/100 of one percent. If interest rates increase from 8.25% to 8.50%, the difference is referred to as a 25 basis point increase. Blue Sky Laws - common term for state securities law, which vary from state to state. Generally refers to provision related to prohibitions against fraud, dealer and broker regulations, and securities registration. Book Value - refers to value of a held security as carried in the;records of an investor. May differ from current market value of the security. Certificates of Deposit (C/D's) - C/D's are certificates issued against funds deposited in a commercial bank for a definite period of time and earning a specified rate of return. They are issued in two forms - negotiable and non- negotiable. A. Negotiable Certificates of Deposit May be sold by one holder to another prior to maturity. This is possible because the issuing bank agrees to pay the amount of the deposit plus interest earned to the bearer of the certificate at maturity. B. Non Negotiable Certificates of Deposit These certificates are collateralized and are not money market instruments since they cannot be traded in the secondary market. They are issued on a fixed maturity basis and often pay higher'interest rates than are permissible on other savings or time deposit accounts. Commercial Paper - short-term, unsecured promissory notes issued in either registered or bearer form, and usually backed by a line of credit with a bank. Maturities do not exceed 270*days and generally average 30-45 days. 21 Coupon Rate - the annual rate of interest payable on a security expressed as a percentage of the principal amount. CUSIP Numbers - (Committee on Uniform Security Identification Procedures) - Identification numbers assigned each maturity of a security issue, and usually printed on the face of each individual security in the issue. The CUSIP numbers are intended to facilitate identification and clearance of securities. Liquidity - usually refers to the ability to convert assets (such as investments) into crash. Mark to Market valuing the inventory of held securities at its current market value. Market Value - price at which a security can be traded in the current market. Maturity - the date upon which the principal of a security becomes due and payable to the holder. Medium-Term Dotes (MTNs) - Medium-Term Notes are corporate debt obligations continuously offered in a broadrange of maturities. MTNs were created to bridge the gap between commercial paper and corporate bonds. The key characteristic of MTNs is that they are issued on a continuous basis. Money Market instruments - private and government obligations of one year or less. Offer -the price of a security at which a person is willing to sell. Par Value - the stated or face value of a security expressed as a specific dollar amount marked on the face of the security, the amount of money due at maturity. Par value should not be confused with market value. Premium the amount by which the price paid for a security exceeds par value, generally representing the difference between the nominal interest rate and the actual or effective return to the investor. Repurchase Agreement or RP or REPO - an agreement consisting of two simultaneous transactions whereby the investor purchases securities from a bank or dealer, and the bank or dealer agrees to repurchase the securities at the same price on a certain future date. The interest rate on a RP is that which the dealer pays the investor for the use of his funds. Reverse repurchase agreements are the mirror image of RPsj when the bank or dealer purchases securities from the investor under an agreement to sell them back to the Investor. 22 .................... Settlement Date - the date used in price and interest computations, usually the date of delivery. SLUGS - an acronym for State and Local Government Series. SLUGS are special United States Government securities sold by the Secretary of the Treasury to states, municipalities and other local government bodies through individual subscription agreements. The interest rates and maturities of SLUGS are arranged to comply with arbitrage restrictions imposed under Section 103 of the Internal Revenue Code. SLUGS are most commonly used for deposit in escrow in connection with the issuance of refunding bonds. SWAP - Generally refers to an exchange of securities, with essentially the same par value, but may vary in coupon rate, type of instrument, name of issuer and number of days to maturity. The purpose of the swap may be to enhance yield, to shorten the maturity, or any benefit deemed by the contracting parties. Treasury Securities - debt obligations of the United States Government sold by the Treasury Department in the forms of bills, notes, and bonds. Bills - Short-term obligations which mature in one year or less, and are sold at a discount in lieu of paying periodic interest. Notes - Interest bearing obligations which mature between one year and 10 years. Bonds - Interest bearing long-term obligations which generally mature in 10 years or more. 23 ............... ......