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HomeMy WebLinkAboutMINUTES - 02052002 - C91 i T{3. BOARD OF SUPERVISORS .: , F ,,� Contra FROM: William J. Pollacek, Treasurer-Tax Collector R +i, O ta DATE: February 5 2002 °sr.;- a-=- County SUBJECT: COUNTYTREASURER'S INVESTMENT POLICY AS OF JUNE, 2001 SPECIFIC REQUEST(S)OR RECOMMENDATION{S}&;BACKGROUND AND JUSTIFICATION Recommendation: ACCEPT the Treasurer's Investment Policy as of June, 2001 with changes effective January 1, 2002. BACKbROUND/REASONS FQR RECOMMENDATION S To revise the Treasurer's Investment Policy to be in compliance with the legal changes (AB 609 L Kelley) intended to clarify and alien conflicting mandates in Sections 53001 and 53535. The changes to Treasurer's Investment Policy dated June 2001 are effective January 1, 2002. Copies of the Treasurer's Investment Policy dated June, 2001 identifying the changes are submitted to the Board of Supervisors for review and acceptance. WJP:dm Attachment CONTINUED ON ATTACHMENT: YES SIGNATURE:- RECOMMUZATION OF COUNTY ADMINISTRATOR RECOMMENDATION-OF BOARD COMMITTEE APPROVE OTHER SIGNATURES: ACTION OF BOA DN APPROVED AS RECOMMENDED OTHER VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE AND CORRECT.` y: COPY OF AN ACTION TAKEN AND ENTERED ON MINUTES OF UNANIMOUS{ABSENTf ..w,. THE BOARD OF SUPERVISORS ON THE DATE SHOWN. AYES: NOES: ABSENT: ABSTAIN: - Cc: Treasurer-Tax Office ATTESTED tai °` JOHN SWEETEN,Ctt KOFT11180ARDOFSUPERVISORS AND COUNTY ADMt STRATO DEPUTY BY: � CONTRA COSTA COUNTY 11!V'ESTMENT POLICY JUNE, 200 (WITH CHANGES EFFECTIVE 01/01102) OBJECTIVES AND STANDARDS 53600.3. Standard for Governin 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 these local agencies investing public funds pursuant tothis 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 weld 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. 53600.5. Trustee's 0§11ectlyes 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 controls. 'Number refers to Government Code number and section. CONTRA COSTA COUNTY INV'ESTIeNT'PQLICY JUNE, 2001 INSTRUMENTS AUTHORIZED FOR INVESTMENT 53601. Ilnstruments Authorized for Investment A. Bonds issued by the local agencies, including bands 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. Clnited States Treasury notes, bands, bilis 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 bands of this state, including bonds payable solely out of the revenues from a rave nue-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, controlled or operated by the local agency, or by a department,board, agency or authority of the local agency. E. Gbfiga#ems issued by ba;*s fGr- oeepemtives� federal land banks, federza inleFmedifate omdit banks� federal hGme loan banks� the Federal Home Loan Book tthe Tennessee Va#W AutheftGr in obligations, Of, OF issued by,; , s of eth8F, e OF issued by, a federal ageopy eF an United States gGveFament sponsored enterp4se Federal agency or united States _aovernment- s onsored enterprise obli ations artici ations or other instruments ncludin those issued b or full uaranteed as to pringkal and interest b federal agencies or United Mates-government-sponsored+eater rises. F. alis Bankers acceptancesotherwise known as bills of exchange or time drafts drawn on and accepted by a commercial bank_, ' aGGeptaFtGeS. Purchases of banker's acceptances may not exceed 180 days maturity or 40 percent of the agency's s plue-money that may be invested pursuant to this section. However, no more than 30 percent of the agency's sures-funds money may be invested in the banker's acceptances of any one commercial bank pursuant to this section. This subdivision does not preclude a municipal utility district from investing any sufplaoney in its treasury in any manner authorized by the Municipal Utility District Act (Division 6, commencing with Section 11501, of the Public Utilities Code). 2 CONTRA COSTA COUNTY [NASTMINT Pdt,IICY JUNE, 2001 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. Mood 's), e-Standard andPoor'. peFatien ( & P), or Fitch Financial Services, Inc. (Fitch). The corporation that issues the commercial pager shall be organized and operating whin the United States end having--shall have total assets in excess of five hundred million dollars ($5001000,000) and having an shalt issue debt, other than commercial paper, if any, that is rated W or higher Fating fGF the i66U9F'6 debt, other than Gemmer-Gial paper-,4' any, a6 pfevided feF by Moody's investors , lnG., Gefpwatieb:by oody's, S & P, or Fitch pament may be se invested only the dellar- weighted aVeFage matWity of the entiFe amoust deers not ex6eed 34 days. .3 the numbeF Gf days to matWity, divided by the total amount eutstandi 1a = Eligible commercial gaper shallhave a maximum maturity of 270 days. or less. A local agengy agencythat is,a counly, or a ci!y and county may invest in commercial a r ursuant to subdivision of Section 53601 except, that the local agency shall be sub'ect to the followinq concentration limits Government Cade Section 53635, subdivision tali; 1. Not more than 40 percent of the local'a enc 's money'may.be invested in eligible commercial paper. 2. Not more than 10 Dercent of the local agency's mone may be invested gursuant to this may be invested in the outstanding commercial "paper of any single issuer. 3. No more than 10 percent, of the outstandinct commercial 'Paver of an single corporate issuer may be purchased by the local agency. . H. Negotiable certificates of eposit issued by anationally- or state- chartered bank or a she-savings association' or federal association (as defined by Section 5102 of the Financial :ode), a state or federal credit union, 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 sur-plu6-money that 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 5363(1}, except that the amount so invested shall be subject to the limitations of Section 53633. The le islative body of a local agency and the treasurer or other official of the local a-gengy having legal custody.of the money are prohibited from investing local a enc funds or funds in the custody of the local agengy,agency, in negotiable certificates of deposit, issued by a state or federal credit union if a member of the legislative bod of thelocal ggengy, or any person'with investment decision making autho!& in the administrative office man agg er's office bud et office auditor controller's office' or treasurer's office of the localagency enc also serves on the board of directors or an 3 CONTRA COSTA COUNTY lhIVESTMiNT PQL.[CY JUNE, 2001 committee agpointed by. the board of directors or the credit committee or the su rviso committee of the state or federal credit union issuing the negotiable certificates of deposit. I. 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 underrlyng securities to the local agency by book entry, physical delivery, or by third-party custodial agreement. The transferof underlying securities to the counterpartybank's customer book-entry account may be used for book-entry delivery. a. "Securities," for purpose' of repurchase under this subdivision, means securities of the same issuer, description, issue date and maturity. b. Investments in ;repurchaseagreements 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 harrowed against those securities and the value shall be adjusted no less than quarterly. 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. 2. "Reverse repurchase agreement!'I 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 e4her-allof the following conditions ins--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 prier to sale; the total of all reverse repurchase agreements on investments owned by the local agency does not exceed 4-920 percent of the base value of the portfolio~apAi the agreement does not exceed a terra of 82 days, unless the agreement includes a written codicit 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. 4 CONTRA O,,STA COUNTY IM/ESTIENT# QL1CY JUNE, 21I11 Investments In reverse repurchase agreements shall only be made with primary dealers of the Federal Reserve Bank of New York, or with a nationally- or state-chartered bank that has or has had a significant!banking relationshi with a local agency..."Signifidaht banking relationship" means any of the follorivin activities of a bank: a. ' Involvement in the creation` salepurchase, or retirement of a local a enc s bonds nates or other evidence of indebtedness. b. Financing Of a local agency's activities. c. Acceptance of a'local agency's securities or fends as deposits J. 'Meditam-term notes of a maximum of five-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 W or its equivalent or better by a nationally-recognized rating service. Purchases of medium-term nates may not exceed 84 percent of the agency's surplus money that may be invested pursuant to this section. K. 1. Shares of beneficial interest issued by diversified management companies that invest in the securities and obligations as authorized by subdivisions (a)to (j), inclusive,or subdivision (m)or(n)and that comply with the investment restrictions of this article and Article 2. 2. Sher"of beneficial interest issued by diversified management companies that are money market funds registered with the Securities and Exchange Commission ander the Investment Company Act of 1940 (15 U.S.C. See. 80a-1 and fellewi et se .). 3. If invelstment is in shares issued pursuant to paragraph (2), the company shall have met the following criteria: a. Attained the highest ranking or the highest letter and numerical rating provided by not less than two nationally recognized'statistical rating organizations. b. Retained an investment adviser registered or exempt from registration with the Securities and Exchange Commission with not less than five years' experience managing money market mutual funds with assets under management in excess of five hundred million dollars ($50Q,t Q,©g0). &.4. The purchase price of shares of beneficial interest purchased pursuant to this subdivision shall not include any commission that the companies may charge' 5 CONTRA COSTA COUNTY INVESTIV MeNT e L , Y JUNE, Q1 and shall not exceed 20 percent of the agency's surplus money that may be invested pursuant to this section. However, no more than 10 percent of the agency's surplus funds may be invested in shares of beneficial interest of any one mutual fund pursuant to paragraph (1). L. Mmoneys held by a trustee or fiscal agent and pledged to the payment of security of bonds or other indebtedness, or obligations under a tease, installment sale, or ether 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 these bonds, indebtedness, or lease installment sale, or other agreement, or to the extent not inconsistent therewith or if there are not specific statutory provision, in accordance with the ordinance, resolution, Indenture, or agreement of the local agency providing for the Issuance, M. Notes, 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 shall be pe rFected 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. N. Any mortgage pass-through security, collatedafted mortgage obligation, mortgogobacked or other pay-through bond, equipment lease-hacked certificate, consumer receivable pass-through certh7cate, or consumer receivable-bashed bead of a maximum of five years' rnaturfty. Securities eligible for investment under this subdivision shell 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 'SAA" or its equivalent or better by a nationally recognized rating service. Purchase of securities authorized by this subdivision may not exceed g percent of the agency's surplus money that may be invested pursuant to this section. 96421j lets a ce and ro riaticrn of Frnd• Investment and i tril uticrrt of Qeooalts 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 6 CONTRA COSTA COUNTY INVESTft EOLJCY ,lt,lNE, 2 0-1 shall maintain a separate account for each governmental unit having deposits in this fund. Notwithstanding any other provisions of law, a local governmental official, 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. Notwrithstar din any other provisions of law, an offer of any nonprofit corporation whose membership is confined to public agencies or public oftcials, or an officer of a qualified quasi-pvemmental 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 Leal Agency Investment Fund for the purpose of investment. Notwithstanding any other provision of lawn or of this section, a local agency; with the approval of its governing body, may deposit in the Local Agency Investment Farad 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 Fend is authorized to receive and disburse moneys, and to provide inforrraatian, directly with or to are authorized officer of a trustee or fiscal agency "aged 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 governmental 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 issuances 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. 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 rrn+ey 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. 7 CONTRA i OSTA QUINITY INSTIL ' PO ,ICY JULIE, 0 Money irr;tlre fund shall be invested to achieve the objective of the fund,t1"tat is'to realise 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 Sari 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 earned and other increment derived from investments shah be distributed by the Gontroller to the contributing governmental units or trustees or fiscal agents, nonprofit corporations f arra quasi-governmental agencies in amounts directly proportionate to the restive amounts deposited in the Local Agency Investment fond 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, riot to exceed a maximum of one-half of one percent of the earnings of this fund, shall be deducted from the earnings prior to distribution. The amount of this deduction shall be creditedas reimbursements to the state agencies having incurred costs in carrying out the provislons of this section. The Treasurer shall prepare for distribution a monthly report of investments made during the preceding month. 8 CONTRACOSTA COUNTY IN1tE�TI[��"I PC31.lCY WART) of SUpERYiSORS OF CONTRA COSTA CtXfM CALIFORNIA Rs; hutharlttog InYestment of County Konies fn Local Agtney fnvttt.Rsent 'fund RESOLUTION MO. 7%07- 1tIxtas. pursuant to Chapter 730 of the Statutes of 1976, Section 164Z99.I vis added to the Califomia Govermtept'Codt to create a Local Agency tnrestAtat fund in the Stott Treasury for the deposit of money of a local agency for purposes of jayestoent by the State Treasurer; and WHXEAS, the Board of Supervisors dots hereby (Ind that tht deposit and xithdraxai of money in the Local-h9tncy invest.rtsent Fund to accordanct with the provisions of Section 15429.1 of tht Govtrnment Code for the purposes of tnvest- „sent is stated therttn is in the best interests of the County of Contra Costa'. xo4, ruEREFORE. BE IT RE OLYCO that the hoard of Supervisors does hereby authorize the deposit and wlthdraxral of County mon e-% In the Local Agency In res€aunt fund in the State Treasury in accordancc with the Prorl'sions of Section 16424.1 of the GlytrMent' Code far the purport of investment as 'stated therein. aE IT FURTHER RESOLYEi3 that the following County Officers or their successors i'n office shall be authorized to order the deposit or withdrawal of monies in the Local Agency investment ''Fund: " Eduard it. Leal. Treasurer-Tae Collector; Alfred P. Lomeli. Assistant Treasurer-Tax Collector; Darid Otzell. InYcsLvrat Supt",isor. PASSi:O AK0 ADOPTE0 by tht Board of Supervisors of the County Of Contra Costa. Stats of California. otfebtuary £!1 ;..19T'd by the follcuin9_rote AYES: Superrlsorz J. P. Ktnny. H. C. Faxhdoa, R. Z. Schroder, E. It. liaaaeltlne and V. H.'Doggaao. WES: .Svptrrisort Hone. ARSEI : Sulatrvisors Hont. .IAKES R. OLSS A. Clerk s 'C ATZfST� - Ibar4d of Suptrrlsorx a roan. a o sots CrMfM0k Er.r a:COPY it wEls Y t+diGl t .u c EaUat+:rwct cap€at B ELa�s�t+t.Rresc+cs:. G is E'SEs lit ieey++irk+. » oat Efts k wl 01��A 04+y,*f♦7 Ste *ozi of pUty tom.+t G3a:x t`�"aa Csaytt:*aV#tit<u sa CCa estate Tz�casutrer Eft s.u.*U*96,JkT V—. t,at.oMSS:t.O."tr cowtty Tm&fuz-ar—Ux Ctilleotor 044. V OCA*( *M U"a at iFryKxLrecpt 7 Couitty. Auditor wL.ontro l.et F U 197 County Adsra ttiatmtor --w-.-- RES%UTtOA no 77)-- CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 2001 FURTHERREST.PRITIQN&L.II ITAT1QNS BY GOVERNMENT CODE AND COUNTY TREASURER Further Res __.n,. Set b Treasurer A. Reverse repurchase agreements will be used strictly for the purpose of supplementing income with a limit of 10 percent of the total portfollo without prior approval of Treasurer. B. Swaps and Trades will each be approved on a per-trade basis by Treasurer or Assistant Treasurer. 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 with whom the County treasury has executed tri-party agreements. Collateral will be held by a third party to the transaction that may include the trust department of particular banks. Collateral will be only securities that 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 or non-negotiable C.D.s will be collateralized at 105 percent by government securities or 150 percent by current mortgages. There will be no waiver of the first$100,000 collateral except by special arrangement with the Treasurer. G. All investments purchased by the Treasurer's Office shall be of investment grade. The minimum credit rating of purchased investments shall be as defined by Govel meat Code 5-3600. et. seq. (As suggested by the Board of Suporvr`sor's Finance Committee meeting of Monday,February 3, 1997,9.00 a.m.) H. All legal securities issued by a tobacco-related company are prohibited. A tobacco- related company is defined as an entity that makes smoking products from tobacco use n cigarettes,cigars or snuff or for smoking in pipes or a company that has total revenues of 15 percent or more from the sale of such products. The tobacco-related issuers restricted from any investment are British American Tobacco, Gallaher Group PLC, Imasco Ltd., Lawes Companies, Phillip Morris, Inc., RJ Reynolds Tobacco Holdings, Inc., Brooke Groupe LTD., UST, ;Inc. and Universal Corp. However, tobacco-related companies will not be limited to the foregoing list. Additionat companies will be prohibited as long as said entities fall within 'the definition of tobacco-related companies. I. Financial futures or financial option contracts will each be approved on a'per trade basis by the County Treasurer. 10 CONTRA COSTA COUNTY INVESTMENT POL1GY JUl`IE, 9001 ►M . . Prr hlblted Investrrrrants §y Government Code A. Alocal agency shall not invest any funds pursuant to this aftide -this Article or ursuant to Article 2 (commencing' with Section 5363 in inverse floaters, range rotes 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 or pursuant to Article 2 (commencing with Section 53Min any security that could result in zero Interest,Accrual N held to maturity. However, a local agency may hold prohibited instruments until their maturity dates. The limitation in this subdivision shall not apply t local agency investments in shares of beneficial interest issued by diversified management companies registered under the Investment Company Act of 1944 (15 M.S.C. Sec. 80a-1, ~-std fallew4V2.1 seg) that are authorized for investment pursuant to subdivision (k)of Section 53601. §51§91: DIMEMM21111 Ag1h.0ang,f r lnvestmen s: Aa rI 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, 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 legi=slative body no less than three months prior to the investment. ualit ref Inv s.Img t In teen Issuers andel Svu c+es Regular financial review aridanalysis 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, Fora 10-Q filings to the Securities and.Exchange Commission and other reliable financial information. CONTRA COSTA COUNTY INi ST ANT L JULIE, 20 SAFEKEEPING ANO,CUSTC D fl1. 1nstuments Authoriz d for Investment A local agency purchasing or obtaining any securities prescribed in this section, in a negotiable hearer, registered or non-registered format, shall require delivery of the securities to the local agency, including these purchased for the agency by financial advisors,' consultants or managers using the agencys fends, by boob entry, physical delivery or by third-party custodial ;agreement. The transfer of securities to the counterparty bank's customer book-entry account may be used for book-entry delivery. For purposes of this section, "counterparty'" means the ether 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, Where this section specifies Apercentage limitation for a particular category of investment, that percentage is applicable only at the date of purchase. Where this section does riot specify a limitation on the term of 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. 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. 12 CC, NTRA COVA COUNTY INiirETl' ENT P# LICY JUI!dE, 26611 AU 'MIIEI IRQKERS E1NC#ibALERS Securities for Contra Costa County and its agencies shah be purchased from the following: • Primary dealers of the Federal Reserve Bank of New York and their subcontracts. • Banks and financial institutions that sell and buy instruments authorizedfor investments per Government Code 53600 et. seq. and their-subcontracts. • 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 48.month period following January 1, 1996, made a political contribution to the local treasurer, any member of the governing board of the local agency or any candidate for those offices in an, amount exceeding the limitations contained in Rule G- 37 of the W nibipal theSecurities Rulemaking Board. 13 C +ITb C+aSTA COUNTY INYEST TENT POLICY , LIME, 2Q�1 L.I.MiffS CSN THE RECEIPT CSF MgmgffARIA LIFTS AND GRATUITIES Gift Prollibltlans All state 'and local officials who are ;listedin Government Code Section 87204, and candidates for those elective offices except judges), are prohibited from accepting a gift or gifts aggregating more than as stated in California Government Cade §89502(a) and 8g 03(f)in a calendar year from a single source. Beginning on January 1, 1993, the State Fair Political Practices Commission shall adjust the gift (imitations in this section on January 1*t of each odtl-numbered year to reflect changes In the Consumer Price Index rounded to the nearest ten dollars ($ tt). §8$503(f) (This amount is currently$300 as of January 1, 1998.) Mo�orarlu Prohibition All state'and local officials who are listed in Government Code Section 87200, and candidates for those elective offices (except judges), 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. Exc�eodns • The gift limit and honorarium prohibitions 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 of ficial. • For state board and commission members, the 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 beard or commission member's agency. ljl squad lfl+cation Public officials are, under certain circumstances, required to disqualify themselves from making, ;participating in, or attempting to influence governmental decisions that will affect any of their financial interests, not just those that they are required to disclose on a statement of ec Onorr is interests. Enforcement The Fair Political Practices Commission may impose penalties for statements of economic interests that 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. 14 v CONTRA COSTA COUNTY 1NVk TMlENT R0.L.fCY JUNE, 2001 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 that could result in the imposition of monetary penalties of up to $ ,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 property 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 Deform 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 ether penalties that may be imposed. The Act also provides for numerous civil penalties, including monetary penalties and damages, and injunctive relief from the courts. 1 CONTRAi COSTA COUNTY IN1/ESTMENT POLlVx JUNI5, 2001 IwURTHER AM. E.N JM�Nfi T 'THE hIF .lCfi CjF IN7� tB T CfJfJBS' { ®r a Cc►ntra crsta County Beard cif Supervisors' drd®r tlated February 6 1996) Amend all local Conflict of Interest Godes as follows: Pursuant to Government Cuda Sections 87302 and 37306 et. seq., this Beard hereby amends every local Conflict of Interest Cade previously approved by the Board of Supervisors to add the following: #AII other provisions of this Code notwithstanding, the following provisions hereafter apply: 1. No designated employee shall adept in honorarium. Subdivisions (b), ;(c) and (e) of Government Code Section 89542 shall apply to the prohibitions in this Section. This Section shall not HIMit or prohibit payments, advances or raimbur ernents for travel and related lodging and subsistence authorized by Government Cade Section 89506. 2. No designated employee shall wept any gifts with a total value of more than two hundred eighty dollars ($284) in a calendar year from any single source. Subdivision (d)of Government Code Section 89544 shall apply to this Section: This amendment is necessary to assure that all local codes comply with recent amendments to Government Cale Section 89542. 1fi CONTRA CG?STA COUNTY INVESTMENT PQLIC!f Jl.JIE, 2)fl1 INVEVM-ENT REPT RT The Treasurershall render a quarterly report "!..to the Chief Executive Officer, the Internal Auditor and the legislative body of the local agency..." '(Government Code 53646). The County shall submit copies of its second and fourth quarter reports to the California Cent and Investment Advisory Commission within fig days after the close of the second and fourth quarters of each calendar year(Government Code 53646(g)). In addition the County Treasurer will provide "...the County Treasury Oversight Committee with an investment report as required by the Board of Supervisors...,, (Govemment Code 27133 (e)). The County shall submit copies of its investment policy each calendar year to the California Debt and Investment Advisory Commission. All subsequent policy am ndt ergs)have to be submitted within 60 days. P[.ECGE ft 0 Any securities that are pledged or leaned 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 contrera. The security descriptions as to type, name, maturity date, coupon rate, CUSIP and: other material information will be included. REMER E RgeLJHGHASE AGREEMENTS' All reverse repurchase agreements entered into, whether active or inactive by the end of each quarter, shah be reported in the Treasurer's Quarterly Investment Report. L AL EN' Y Flit ST1 TS To be eligible to receive local agency money, a bank, savings association, federal association, or federally-insured industrial loan company shall have received an overall rating of not loss than "satisfactory" in its most recent evaluation by the appropriate federal financial supervisorial agency of its record of meeting the credit needs of California's communities, including low- and moderate-income neighborhoods, pursuant to Section 29€.6 of Title 12 of the United Mates Code. (Government Code 5W35) 17 CCITRA►COSTA CB�II' TY INUtSTMEI T POU JUNEI 2001 IfIETjjQQQ64GY OP CALCULATING AND A PORIONING TREASURY COSTS Regular and Rc��tlne Iflve,�tments • $20 per investment transaction; Le., $20 at placement and $20 at maturity. ,0033 of interest nco e; i.a., $3.33 per$1,000 of interest income. Charged quarterly by journal entry. S + Ial 12gg and Research Actual staff tithe and materials. S cial nk Fran actlans Actual bank fee schedule. 3k- .Aftehl tIu .roc dote i fo►r Investment of Excess Funds' B. The County Treasurer shall,at least quarterly!,apportion any interest or other ncrement derived from the investment of funds pursuant to this section in an amount proortlonate to the average daily balance of the amounts deposited by the local agency and to tha total average daily balance of deposits in the investment pool. In apportioning:and distributing that interest or increment, the county freasurar may use the cash method, the accrual rr tlaod, or any ether me hod in accordance with generally accepted accounting principles. Prior to distributing that interest or increment, the County Treasurer may deduct the actual costs incurred by the county in administering this section in proppition to the average daily balance of the amounts deposited.by the local agency and to the total average daily balance of deposits in the investment pool. C. The County Treasurer shall discl63e to each local agency that invests funds pursuant to this section the method of accounting used, whether cash, accrual, of other, and shall notify each local agency of any proposed changes in the accouniirag method at least 30 days prior to the date can which the proposed changes take effect. In Contra Costa County,the Auditor-Controller performs these functions for fiscal control purposes. 18 CONT R.A COSTA COUNTY IN11 1 ENT P U Y JlE, 2100 It7lMAfIATE[ 1Pf"31T Aldo iMiTH ?RA11VA1.S lIV THE TREASURY Following,,are.,ire terms and conditions for deposit of funds far investment purposes by entities that are not legally required to deposit their funds in the County Treasury, • Resolution by the County Board of Supervisors authorizing the acceptance of outsideparticipants by the County Treasury, • Resolution by the legislative or governing body of the local agency authorizing the investment of funds pursuant to Government Code 53884. Treasury investments will be directed transactions. Withdrawal of furls in the Treasury shell coincide with investment maturities or authorized sale of securities by the legislative or governing body of the local agency. Faccep for funds-in the California State Local Agency Investment Fund, a five-business- day notification may be req Iuir� ed when authorized sale of securities is involved. However; the section on evaluation of request for withdrawal of funds for use outside the Copnty treasury pool by both mandated and non-mandated treasury pool pariciparrts shell also apply. VlflTl"ly ' 'AL E'yF FUNIS BY IIAANflATE TREASURY RATIcllANTS The wftdrawal of mandated deposits in the Treasury will coincide with investment maturities and/or arthorized sale of securities by authorized personnel of the local agency. Except for funds in the California Mate Local Agency Fund, a five-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 tr"aasury pool by both mandated and non-mandated treasury pool Orficipants shall alsp apply. Evaluatt For Vl d'a al of Funds l Qr J QMtslde the Count Tr a Pcr I to cfh aI arcf lona� a Treaau Pc [ Rartlf nts Pursuant to Section 27136(a), '4htctwitlrstanding any other provisions of law, any local agency, public agency, public entity or Public Okla that Inas funds on deposit in the County treasury pool and that .seeks to withdraw funds for the purpose of investing or depositing those funds outside the County treasury pool shall first submit. the ;request for witlt€ ranral to the County Treasurer before withdrawing funds from the County treasury podl." The County Treasurer shall evaluate each proposed withdrawal and may request up to 30 relays in artier to assess the a fedt of the proposed withdrawal can the stability and predictability of the investments in the County treasury and that the interests of the ether depositors will not be adversely affected. 19 CONT'C TAC tjINITY M. -0glugx JUNE, 100' B1��KER':�1�l�IQ tS=�UERS AB I AMBO, Incorporated J. P. Morgan Securities Incorporated American Express Credit Corporation Lehman Brothers, Incorporated Associates Corporation of North America Mechanics Bare Assiates First Captll Mellen Bank Bank of America Merrill Lynch Bank of the Feat Merrill Lynch Government Securities, Bankers Trust Company Incorporated Barlncorporated Morgan Stanley.Dean Witter Bear Stens i& Company, Incorporated Morgan Stanley&Company, incorporated California Arbitage Management Program NationsBanc Corporation Chase Se€ r-ties, Incorporated Norwest Banks Citibank Norwest Investment Services Civic Bank ofmrnerce PaineWebber, Incorporated Credit Suisse First Boston Prudential Securities, incorporated L re ornpany Public Financial Management, Donaldson, Lufkin& Jenrette Securities Incorporated Corporation Rauscher Pierce Refsnes, Incorporated First Commercial Bank Salomon Smith Barney, Incorporated Ford Motor Credit Company Sumitomo Bank of California Generale0do Capital Corporation UBS Warburg LLC Gerreral electric Capital Services Union Bank General Electric Company. US Bancorp Gilford Securities, Incorporated Washington Mutual Goldman Sachs& Company Welts Fargo Bank Government Perspectives Westamedca Bank Jahn D.eereCapit ll orpo ation hift: The County Treasury will not be limited to the above list. Others will be included as long as all ct�n itIons for authorized l�r�tker s and dealers set fflrth in this poly are nrret. Additi€�nally, deletions and actcltltans a cin the. maintenance of required :credit quality as rated by. Standard and Peor's, mopdo' i=t (Merry Findlay Incorporated) and ether recognized rating services and reliable financial sources. 20 CO TRA OCTA COUNTY INVESTMENT POLICY UI Qt, o'I PRIMARY.gov. II5 SECiJIRITIBS QgALgR.§ R9PORTING TQ THE MARKET REPtITa E3SIt�l tI=TIE I~EOEAL IS�RE BANK CSI= NSW Yf3RK ABMAIS RO Incorporated BNP Paribas Securities Corp. Banc of America Securities LLC Banc One Capital Markets, Inc. Barclays Capital inc. Bear, Stearns& Co., Inc. Chase Securities Inc'. CIBC Wortd Markets Carp.: Credit Suisse I*irst Besto Corporation#Donaldson, Lubin , enrette Securities Corporation Daiwa Secuc ties America Inc. Deutsche Bank Securities Inc. Dire lner Kleinwort Benson North America LLC Fuji Serites Inc. Goldrnan Sachs&Co. Greenwich Capital Markets, Inc. HSBC Securities(USA)Inc. J. Morgan Securities, Inc. Lehman Brothers Inc, Merritt Lynch Government Securities Inc. Mean Benley Ce, Incorporated Nesbitt Burns Securities Inc. Nomura Securities International, Inc, S ►men Securities Corporation Salm Smith Barney Inc. USS Warburg LLC bons Firvt National Bank 21 C iTI A CQBTA C LINTY IN� SfiBIT'tstL19Y JUKE, 2001 GLC353RY Agencies A colloquial teen for securities issued by the federal agencies. Bankers Acceptances A time bill of exchange drawn on and accepted by a cornrnerc al bank to fl I nn 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 ., date. Little risk is involved for the investor because the cornrnercial bank assurrles primary liability once the draft is accepted. waits Point one basis point is equal to 1J100of one percent. For example, if interest ratesincrease from $.26% to 8 50%, the difference is referred to as a 25-basis-point increase. Blue Sky Laws Common terra for state securities lave, which vary from state to state. Generally refers to provision related to prohibitions against fraud, dealer and broker regulations and seourfes registration; Book Vailue Refers to value of a Meld security as carried in the records of an investor. May differ from current market value of the security. Certificates of Deposit (C/Ds Certificates issued against funds deposited in a commercial bank for a definite period of time and earning a specified rate of return. They are issued in two forms, negotiable and, non-negotiable. • Negotiable Certificates of Deposit May be sold by one holder to another prior to mdturW This isposolble beeause the issuing bark agrees to pay tine amount of the deposit plus interrest earned to the bearer of the certificate at maturity. • lonleunable Certificates of Deposit These certificates are collateralized and are not monay:market instruments since they cannot be traded in the secondary market. TMisy are issued ona fixed- maturity basis and often pay higher interest rates fifan are petissikleoncasavings crtirmdeposit amts. Commefoll 11 Paper Sham term, unsecured promissory notes issued in either registered or bearer form and usually backed by a line of credit with a bank. Maturities do not exceed 27't3 days and generally average 3D-45 days. Coupon late The annual rate of interest payable on a security expressed as a percentage of the. principal amount. CUSiP Nurtabers C SIP is an acronym for Committee on Uniform Security identification Procedures. CUTS numbers are identification icatit n nurrrber$ assigned each maturity of a s+ curity issue and usually printed ort the face of each individual security in the issue. The CUSiP numbers are intended to facilitate identification and clearance of securities. 22 ........... .......................................................... .... .................. .......... ............... CONTRA:COSTA COUNTY JUN. Inverse. Floaters Art adjustable interest rate note keyed to various ind ces such as e LIS R, commercial.:,papr, federal funds treasuries and derivative structures. The defined interest formula is the,opposite or inverse of these indices. Interest rates and.:pay:dates may:reset dA ily,weekly,monthly, quarterly, semi-annually or annually. Liquidity Usually refers to the ability to convert assets (such as investments) into cash. 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 securitybecomes, due and payable to the holder. Mdd,u.m,-T- rm Nbtew (MTNs). Corporate debt obligations continuously offered in a 4roadrangeofmatu rides. MTNS were created to bridge the gap between commercial paper and corporate bonds. The key characteristic of MT NS it that they are issued on:a continuous.basis. Money Market Instruments. Pnivate 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 doliar amount marked on the face of 1he sec.u.rit, the amount of money due at maturity. Par value should net be confused with market value. Premium The amount by which the, price paid for a security exceeds par value, generally representing the c! Iftrence between the nominal interest rate and the actual or effective return tothe invest-or. Range Notes A security whose rete of return is pegged to an:index. The note defines end the into im . m the:interest tateminimIum or floor a rest rate mamum or cap. An,example of an index.may be federal funds. The adjustable rate of:interest is determined Within the defined range of:the funds, Repurchase: Agreement or RP or REPO An agreement consisting of two sirno Itaneousrensac ions 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, oeftin: future date. The interest rate on a RP is that which the dealer pays, the investor the use cif his f nds Reverserepurchase agreeentsare the mirror image Of the RP.S when the bank or dealer;a purchases securities from the investor under an agreement to sell them back to the investor. 23 .............. ............................................................................... ............. CONTRA COSTA UNTIE INVES ,TIENT POLICY ME,2M. 1 It 84014me t 00ft The date Used in price and interest computations, usually the date of delivery. SLUGS Anacronym for State and Local Government Series. SLUGS are special United States Governmeh.t securities sold by tha Secretary of the Treasury to states, munidipalibibsi and other I at government bodies through individual subscription , .ato, menu. The interest rates and maturities.of SLUGS are arranged to com. ly with p g �.�,e 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. STRIPS US Treasury acronym for:"separate trading of registered interest and principal Of securities.- Certain registered Treasury securities can be divided into separate interest and principal components, which may then be traded as separate entities. SWAP Generally refers to an exchatige of securities, with essentially the same par value but may vary in coupon. n rate, type ofinstrument, name of issuer and number of days, to maturity. The purpo se Of the SWAP may be to enhance yield, to shorten the maturity or any benefithafit deemed by the contracting parties. Trossuiy $9putitleS Debt obligations of the United: States Government sold by the Treasury Department in the formof bills, notes and bonds: • 13111s Short-term obligations that mature irk one year or less and are sold at a discount in lieu of payiniq periodic interest, • Notes Interestobearing obligations,that mature between one year and 10 years. • Bonds lnterestbeafing: long terra obligations that generally mature in 10 years or more. Zero-Coupon Security A security that makes no periodic interest payments but instead Mea&� ns is sold ata deep discount from its face value. A ImAMMeM pokYAM 24