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Home My WebLink AboutMINUTES - 06062006 - C.69 0� Contra TO: BOARD OF SUPERVISORS . �_ ,:. :-= •. FROM: William J. Pollacek, Treasurer-Tax Collector n„ ;;: �z Costa �•• _ y,,4 DATE: June 6, 2006 County SUBJECT: COUNTY TREASURER'S INVESTMENT POLICY as of May 4, 2006 SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION Recommendation: ACCEPT the Treasurer's Investment Report as of May 4, 2006 with changes effective July 1 , 2006. BACKGROUND/REASON (S) FOR RECOMMENDATION (S): To revise the Treasurer's Investment Policy for language consistent with Government Code Sections 53600.3, 53601 , and 53635. To include in the Treasurer's Investment Policy the amendment (AB 969-Correa, Maddox) to Government Code Section 53601 relating to local agency financing. To revise the Primary Dealer List — Federal Reserve Bank of New York. Copies of the Treasurer's Investment Policy dated June, 2006 identifying the changes are submitted to the Board of Supervisors for review and acceptance. WJP:mb Attachment CONTINUED ON ATTACHMENT: LYES SIGNATURE: RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATIOtO YBOTRD COMMITTEE _r APPROVE OTHER SIGNATURE(S / ACTION OF60#4 ON Q-Q APPROVED AS RECOMMENDED _ _ OJa9ER VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE AND CORRECT COPY OF AN ACTION TAKEN AND ENTERED ON MINUTES OF UNANIMOUS(ABSENT THE BOARD OF SUPERVISORS ON THE DATE SHOWN. /�j�Or�t�� ) AYES: NOES: ABSENT: ABSTAIN: Contact: Cc: Treasurer-Tax Collector's Office ATTESTED p�O�G CULLEN,CLERK OF THE BOARD OFSUPERVISORS D COUNTY ADMINISTRATOR BY: DEPUTY CONTRA COSTA COUNTY TREASURER-TAX COLLECTOR 625 COURT STREET, ROOM 102 MARTINEZ, CA 94553 Date: May 4, 2006 To: Treasury Oversig om ittee From: Brice E. Bins ' J L f Re: Investment Policy for fiscal year 2006-2007 The following information summarizes the revisions and/or changes that effect the Investment Policy for the fiscal year 2006-2007. Section Page Comment 1. Objectives and 1 Language consistent with Government Code Standards 2. Instruments 6, 7 Include Government Code subsection (o) of Section Authorized for 53601 as authorized for investment. Revises lettering Investment sequence of Instruments Authorized for Investment 3. Instruments 15 Revises lettering sequence of Instruments Authorized for Authorized for Investment Investment 4. Investment Report 28 Language consistent with Government Code 5. Primary Government 33 Revise Primary Dealer name. Securities Dealers.:. Attached are the revised sections in the content of the current investment policy. The changes or additions are underlined. Deletion of existing text is notated by a strikethrough and follows the deleted text. Outside Border marks indicate any type of change. 1 i wi CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 20056 OBJECTIVES AND STANDARDS §53600.3. Standard for Governing Bodies or Persons Authorized to Make rVeS.4-^;cnt Decisivr:s 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 andor 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, atrustee-is authorized te ac-quire eRvestrn t-sinvestments may be acquired.as authorized by law. §53600.5. Trustee's Objectives Regardinq Funds When investing, reinvesting, purchasing, acquiring, exchanging, selling ardor 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. I ' Number refers to Government Code number and section. 1 CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 20056 funds may be invested in shares of beneficial interest of any one mutual fund pursuant to paragraph (1). L. Moneys held by a trustee or fiscal agent and pledged to the payment of 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 sale, or other agreement, or to the extent not inconsistent therewith nr if there are not cperifi� stagoto�/ prn\/IClnr�� In a�rnrrlanra 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 that is not affiliated with the issuer of the secured obligation, and the security interest shall 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. N. Any mortgage pass-through security, collaterialized mortgage obligation, mortgage-backed or other pay-through bond, equipment lease-backed certificate, consumer receivable pass-through certificate, or consumer receivable-backed bond 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. O. Shares of beneficial interest issued by a joint powers authority organized pursuant to Section 6509.7 that invests in the securities and obligations authorized in subdivisions (a) to (n) , inclusive. Each share shall represent an equal proportional interesting the underlying pool of securities owned by the joint powers authority. To be eligible under this section, the joint powers authority issuing shares shall have retained an investment adviser that meets all of the following criteria: (1) The adviser is registered or exempt from registration with the Securities and Exchange Commission. 6 CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 20056 (2) The adviser has not less than five years of experience investing in the securities and obligations authorized in subdivisions (a) to (n) inclusive. (3) The adviser has assets under management in excess of five hundred million dollars ($500,000,000). 0-.P. Local Agency Investments — LAIF - (All references in this section to the Treasurer and the Controller pertain. to the State Treasurer and the State Controller). §1a mr,.Q. (a) All money in the Local Agenr_.y Int/egtment Fund shall be held in trust in the custody of the Treasurer. (b) All money in the Local Agency Investment Fund is nonstate money. That money shall be held in a trust account or accounts. The Controller shall be responsible for maintaining those accounts to record the Treasurer's accountability, and shall maintain a separate account for each trust deposit in the Local Agency Investment Fund. (c) That money shall be subject to audit by the Department of Finance and to cash count as provided for in Sections 13297,13298, and 13299. It may be withdrawn only upon the order of the depositing entity or its disbursing officers. The system that the Director of Finance has established for the handling, receiving, holding, and disbursing of state agency money shall also be used for the money in the Local Agency Investment Fund. (d) All money in the Local Agency Investment Fund shall be deposited, invested and reinvested in the same manner and to the same extent as if it were state money in the State Treasury. §16429.1. Existence and Appropriation of Fund; Investment and Distribution of Deposits (a) There is in trust in the custody of the Treasurer the Local Agency Investment Fund, which fund is hereby created. The Controller shall maintain a separate account for each governmental unit having deposits in this fund. (b) 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. (c) Notwithstanding any other provisions of law, 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 7 CONTRA COSTA COUNTY +. INVESTMENT POLICY JUNE, 20056 p—,Q. Investment Trust of California — CaITRUST— Pursuant to Government Codes 6500, 6502, 53601, 53630 and 53635, CalTRUST was established on January 9, 2003. The purpose of the trust is to serve as a vehicle for public agencies to jointly exercise their common power to invest funds, including tax-exempt bond proceeds. All investment activities will be in accordance with applicable California laws governing the investment of funds by public agencies. Government code 53601 (o) includes as permissible investments shares of beneficial interest issued by a joint powers authority organized pursuant to Section 6509.7 that invests in the securities and obligations authorized in subdivisions (a) to (n), inclusive. Each share shall represent an equal proportional interest in the underlying pool of securities owned by the joint powers authority. To be eligible under this section, the joint powers authority issuing the shares shall have retained an investment advisor that meets all of the following criteria: (1) The advisor is.registered or exempt from registration with the Securities and Exchange Commission. (2) The advisor has not less than five years of experience investing in the securities and obligations authorized in subdivisions (a) to (n), inclusive. (3) The advisor has assets under management in excess of five hundred million dollars ($500,000,000.00). Resolution Number 2003/48 of the Board of Supervisors of the County of Contra Costa has authorized the participation of the county in the Investment Trust of California on January 28, 2003. 15 CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 20056 INVESTMENT REPORT The Treasurer sha-Pmay 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 Debt and Investment Advisory Commission within 60 days after the close of the second and fourth quarters of each calendar year (Government Code 53646(g)). In arlrlitinn tho (`ni infw Treaciurer AIM r%m irrin " the (rnuint�i Treacuini (l�iercinht � uwuvi iv vvu1 ny h. ... y y• .y. Committee with an investment report as required by the Board of Supervisors..." (Government 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 amendment(s) have to be submitted within 60 days. PLEDGE REPORT Any securities that 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 descriptions 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 Treasurer's Quarterly Investment Report. LOCAL AGENCY INVESTMENTS 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 less 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 2906 of Title 12 of the United States Code. (Government Code.53635) 28 CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 20056 PRIMARY GOVERNMENT SECURITIES DEALERS REPORTING TO THE MARKET REPORTS DIVISION OF THE FEDERAL RESERVE BANK OF NEW YORK ABN AMRO Bank, N.V., New York Branch BNP Paribas Securities Corp. Banc of America Securities LLC Barclays Capital Inc. Bear, Stearns & Co., Inc. Citigroup Global Markets, Inc. CIBC World Markets Corp. Countrywide Securities Corporation Dred it-�u+sse-F-+tet--�3esto�-�L-C Credit Suisse Securities (USA) LLC Daiwa Securities America Inc. Deutsche Bank Securities Inc. bresdner Kleinwort Wasserstein SecuritiesLLC Goldman, Sachs & Co. Greenwich Capital Markets, Inc. HSBC Securities (USA) Inc. J.P. Morgan Securities, Inc. Lehman Brothers Inc. Merrill Lynch Government Securities Inc. Mizuho Securities USA Inc. Morgan Stanley & Co. Incorporated Nomura Securities International, Inc. UBS Securities LLC. 33 CONTRA COSTA COUNTY INVESTMENT POLICY JUNE 20056 CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 20056 OBJECTIVES AND STANDARDS §53600.3.1 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 a-ndor 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 autherized—to—aGqy*jre MvestmeRtSinvestments may be acquired as authorized by law. 453600.5. Trustee's Objectives Regarding Funds When investing, reinvesting, purchasing, acquiring, exchanging, selling ardor 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. 1 CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 20056 INSTRUMENTS AUTHORIZED FOR INVESTMENT 453601. Instruments Authorized for Investment A. Bonds issued by the local agencies, 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 p1 In VIpU1 Land In Le,est. 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, agencyor 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. Federal agency or United States government-sponsored enterprise obligations, participations, or other instruments, including those issued by or fully guaranteed as to principal and interest by federal agencies or United States government-sponsored enterprises. F. Bankers acceptances otherwise known as bills of exchange or time drafts drawn on and accepted by a commercial bank. Purchases of banker's acceptances may not exceed 180 days' maturity or 40 percent of the agency's money that may be invested pursuant to this section. However, no more than 30 percent of the agency's 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 money in its treasury in any manner authorized by the Municipal Utility District Act (Division 6, commencing with Section 11501, of the Public Utilities Code). G. Commercial paper of "prime" quality of the highest ranking or of the highest letter and number rating as provided for by a nationally recognized statistical-rating organization (NRSRO). The entity that issues the commercial paper shall meet all of the following conditions in either paragraph (1) or paragraph (2): (1) The entity meets the following criteria: (A) Is organized and operating in the United States as a general corporation. (B) Has total assets in excess of five hundred million dollars ($500,000,000). 2 CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 20056 (C) Has debt other than commercial paper, if any, that is rated "A" or higher by a nationally recognized statistical-rating organization (NRSRO). (2) The entity meets the following criteria: (A) Is organized within the United States as a special purpose corporation, trust, or limited liability company. (B) Has programwide credit enhancements including, but not limited to, overcollateralization, letters of credit, or surety bond. (C) Has commercial paper that is rated "A-1" or higher, or the equivalent, by a nationally recognized statistical-rating organization (NRSRO). Eiiyiufe commercial paper Silaii have a maximum laxil i lul i I maturity lafur IL of 27v days or is^SS. Local agencies, other than counties or a city and county, may invest no more than 25 percent of their money in eligible commercial paper. Local agencies, other than counties or a city and county, may purchase no more than 10 percent of the outstanding commercial paper of any single issuer. Counties or a city and county may invest in commercial paper pursuant to the concentration limits in subdivision (a) of Section 53635. Following are the concentration limits (Government Code Section 53635, subdivision (a)): 1 . Not more than 40 percent of the local agency's money may be invested in eligible commercial paper. 2. Not more than 10 percent of the local agency's money may be invested pursuant to this may be invested in the outstanding commercial paper of any single issuer. 3. No more than 10 percent of the outstanding commercial paper of any single corporate issuer may be purchased by the local agency. H. Negotiable certificates of deposit issued by a nationally- or state-chartered bank or a savings association or federal association (as defined by Section 5102 of the Financial Code), 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 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 53630), except that the amount so invested shall be subject to the limitations of Section 53638. The legislative body of a local agency and the treasurer or other official of the local agency having legal custody of the money are prohibited from investing local agency funds, or funds in the custody of the local agency, in negotiable certificates of deposit issued by a state or federal credit union if a member of the legislative body of the local agency, or any person with investment decision making authority in the administrative office manager's office, budget office, auditor-controller's office, or treasurer's office of the local agency also serves on the board of directors, or any committee appointed by the board of directors, or the credit committee or the supervisory committee of the state or federal credit union issuing the negotiable certificates of deposit. 3 CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 20056 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 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. 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. 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" 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 all 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 20 percent of the base value of the portfolio; 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. 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 relationship with a 4 CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 20056 local agency..."Sign ificant banking relationship" means any of the following activities of a bank: a. Involvement in the creation, sale, purchase, or retirement of a local agency's bonds, notes, or other evidence of indebtedness. b. Financing of a local agency's activities. c. Acceptance of a local agency's securities or funds as deposits. 1 AA..J'...Y [ 1 t' a .i ♦' j. Jviedium-terni motes of a maximum of live-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 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 0), inclusive, or subdivision (m) or (n) and that comply with the investment restrictions of this article and Article 2. 2. Shares of beneficial interest issued by diversified management companies that are money market funds registered with the Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1 et seq.). 3. If investment 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 ($500,000,000). 4. The purchase price of shares of beneficial interest purchased pursuant to this subdivision shall not include any commission that the companies may charge and shall not exceed 20 percent of the agency's money that may be invested pursuant to this section. However, no more than 10 percent of the agency's 5 CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 20056 funds may be invested in shares of beneficial interest of any one mutual fund pursuant to paragraph (1). L. Moneys held by a trustee or fiscal agent and pledged to the payment of 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 sale, or other agreement, or to the extent not ncons;stent tiierevvitli or if there ar not Specific stat,LV y proVisivn, III aCcordai 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 that is not affiliated with the issuer of the secured obligation, and the security interest shall 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. N. Any mortgage pass-through security, collaterialized mortgage obligation, mortgage-backed or other pay-through bond, equipment lease-backed certificate, consumer receivable pass-through certificate, or consumer receivable-backed bond 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. O. Shares of beneficial interest issued bV a joint powers authority organized pursuant to Section 6509.7 that invests in the securities and obligations authorized in subdivisions (a) to (n) , inclusive. Each share shall represent an equal proportional interesting the underlying pool of securities owned by the joint powers authority. To be eligible under this section, the joint powers authority issuing shares shall have retained an investment adviser that meets all of the following criteria: (1) The adviser is registered or exempt from reaistration with the Securities and Exchange Commission. 6 CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 20056 (2) The adviser has not less than five years of experience investing in the securities and obligations authorized in subdivisions (a) to (n) inclusive. 3 The adviser has assets under management in excess of five hundred million dollars ($500,000,000). 0-.P. Local Agency Investments — LA IF - (All references in this section to the Treasurer and the Controller pertain to the State Treasurer and the State Controller). §1106.3505.91. (a) All money in the Local Agency investment Fund shall be held in trust in the custody of the Treasurer. (b) All money in the Local Agency Investment Fund is nonstate money. That money shall be held in a trust account or accounts. The Controller shall be responsible for maintaining those accounts-o record the Treasurer's accountability, and shall maintain a separate account for each trust deposit in the Local Agency Investment Fund. (c) That money shall be subject to audit by the Department of Finance and to cash count as provided for in Sections 13297,13298, and 13299. It may be withdrawn only upon the order of the depositing entity or its disbursing officers. The system that the Director of Finance has established for the handling, receiving, holding, and disbursing of state agency money shall also be used for the money in the Local Agency Investment Fund. (d) All money in the Local Agency Investment Fund shall be deposited, invested and reinvested in the same manner and to the same extent as if it were state money in the State Treasury. §16429.1. Existence and Appropriation of Fund; Investment and Distribution of Deposits (a) There is in trust in the custody of the Treasurer the Local Agency Investment Fund, which fund is hereby created. The Controller shall maintain a separate account for each governmental unit having deposits in this fund. (b) 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. (c) Notwithstanding any other provisions of law, 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 7 CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 20056 immediate needs, may remit the money to the Treasurer for deposit in the Local Agency Investment Fund for the purpose of investment. (d) 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 nr n authorized U- r! nII %, r n n 'trustee L. Ll I „, -, to an authorized of ices - ator f�sca� agency engaged by he 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. (e) 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. (f) 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. (g) The Local Investment Advisory Board shall determine those quasi- governmental agencies which qualify to participate in the Local Agency Investment Fund. (h) 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. (i) 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. Q) Money in the fund shall be invested to achieve the objective of the fund, that is to realize the maximum return consistent with safe and prudent treasury management. (k) 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. 8 CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 20056 (1) Immediately at the conclusion of each calendar quarter, all interest earned 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 one 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. (m) The Treasurer shall prepare for distribution a monthly report of investments made during the preceding month. 9 CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 20056 ...6E-L _ TO: BOARD OF SUPERVISORS "``n- '�°':. Contra FROM: William J. Pollacek,Treasurer-Tax Collector a .„ ,. :s Costa DATE: June 24,2003 County cddnTl ell SUBJECT: Update Local Agency Investment Fund Resolution for Contra Costa County SPECIFIC REQUEST(S)OR RECOMMENDATION(S)6 BACKGROUND ANO-JUSTIFICATIOIJ RECOMMENDATION: APPROVAL of the Resolution of the Contra Costa Board of Supervisors, County of Contra Costa, State.of California, authorizing the County of Contra Costa's continued participation in the Local Agency Investment Fund(LAIF). APPROVAL of Delegation of Authority to those person(s)conducting day-to-day LAIF business for those authorized on the resolution. BACKGROUND/REASON(S)FOR RECOMMENDATION(S): Pursuant to Resolution No.77/107 of the Board of Supervisors of Contra Costa County, California, the persons or positions authorized by the resolution are 6o longer with the County of Contra Costa to order the deposit ot.withdrElwal of monies in the Local Agency Investment Fund. Copies of resolution and letter of delegation are submitted to the board for review and approval. BB:mb Attachment* CONTINUED ON ATTACHMENT: ---'YES SIGNATURE ✓ RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENIC71F BOARD DOWIITTEE APPRO OTHER SIGNATURE(S): , f ACTION OF B ON JUNE 24, 2Q03 APPROVED AS RECOMMENDED X OTHER VOTE OF SUPERVISORS X UW41MOUS 1 HEREBY CERTIFYTHAT THIS IS A TRUE AND CORRECT (ABSENT 9NE ) COPY OF AN ACTION TAVEN AND ENTERED ON MINUTES OF ' AYES: NOES: THE BOARD OF SUPERVISORS ON THE DATE SHOWN. ABSENT: ABSTAIN: DISTR)CT IN SEAT VACANT ConlacL Cc: Treasurer-Tax Collectors Office ATTESTED,H;NF 74 7f1(1i JOHN SWEETEN,CLERK OF THE BOARD OFSUPERVISORS AIJD COUNTY ADMINIST TDR BY: ,'C�V) C, 4�.X .DEPUTY 10 CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 20056 RESOLUTION# 2003/420 Contra Costa County Administration Building Martinez,California RESOLUTION OF CONTRA COSTA COUNTY - (ACCOUNT#99-07-000) AGENCY 625 Court Street,Room 102 AGENCY ADDRESS Martinez,CA 94553 PHONE NUMBER 925-646-4115 A:ITHO%TZT-NIC INVESTMENT OF MONIES I IN THE LOCAL AGENCY INVESTMENT FUND I WHEREAS,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 purpose of investment as stated therein as in the best interests of the CONTRA COSTA COUNTY. NOW THEREFORE,BE IT RESOLVED,that the Board of Supervisorsidoes hereby authorize the deposit and withdrawal of CONTRA COSTA COUNTY monies in the Local Agency Investment 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,and verification by the State Treasurer's Office of all banking information provided in that regard. BE IT FURTHER RESOLVED,that the following CONTRA COSTA COUNTY officers or their successors in office shall be authorized to order the deposit or withdrawal of monies in the Local Agency Investment Fund: William J.Pollacek Russell V.Watts Clarissa V.Javier (NAME) (NAME) (NAME) Chief Deputy Treasurer-Tax Collector Treasurer-Tax Collector Assistant Treasurer (TITLE) (TITLE) (TITLE) (SI ) (SIGNATURE) (SIGNATURE) PASSED AND ADOPTED, by the Board of Supervisors of the County of Contra Costa, State of California on .NNE 24, 2003 VOTE OF SUPERVISORS e UN nous ATTESI :, JiT� 24, 2003 (ABSENT AYES: NOES: ABSENT: ABSTAIN: DISTRICT Ili SEAT VACANT B Y; •V 11 CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 20056 DELEGATION OF AUTHORITY CONTRA COSTA COUNTY Account # 99-07-000 Local Agency Investment Fund P.O. Box 942509 Sacramento, CA 94209-0001 To Whom It May Concern: , t Pursuant to the resolution of the CONTRA COSTA COUNTY for AUTHORIZING INVESTMENT OF MONIES IN THE LOCAL AGENCY INVESTMENT FUND, this letter shall serve as delegation of authority to the following persons from the Contra Costa County Treasurer's Office to execute the deposit and withdrawal of monies on behalf of the CONTRA COSTA COUNTY. The deposit or withdrawal of monies shall only be permitted with prior written instructions from the CONTRA COSTA COUNTY to the County Treasurer. In addition, these persons from the Contra Costa County Treasurer's Office shall be given the authority to update the account as necessary upon changes in personnel, address or banking information with the Local Agency Investment Fund on behalf of the CONTRA COSTA COUNTY. Beve y R lar Brice E. Bins Aurora P. Lee Treasurer's Treasurer's Treasurer's Investment Accounting Officer Investment Officer Operations Analyst Sincerely, William J. PollaceK Russell V. Watts (NAME) Must be oaen (N ME) Must be on resolution (SI RE) (SIGNATURE) May 5, 200.3 May. 5, 2003 (DATE) (DATE) 12 CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 20056 DELEGATION OF AUTHORITY AB3107 CONTRA COSTA COUNTY Account # 11-07-007 Local Agency Investment Fund P.O. Box 942809 Sacramento, CA 94209-0001 To Whom It May Concern: Pursuant to the resolution of the AB3107 CONTRA COSTA COUNTY for AUTHORIZING INVESTMENT OF MONIES IN THE LOCAL AGENCY INVESTMENT FUND, this Ietter shall serve as delegation of authority to the following persons from the Contra Costa County Treasurer's Office to execute the deposit and withdrawal of monies on behalf of the AB3107 CONTRA COSTA COUNTY. The deposit or withdrawal of monies shall only be permitted with prior written instructions from the AB3107 CONTRA COSTA COUNTY to the County Treasurer. In addition, these persons from the Contra Cost County Treasurer's Office shall be given the authority to update the account as necessary upon changes in personnel, address or banking information with the Local Agency Investment Fund on behalf of the AB3107 CONTRA COSTA COUNTY. Y4verle K Rellar Brice E. Bins Aurora P. Lce Treasurer's Treasurer's Treasurer's Investment Accounting Officer Investment Officer Operations Analyst Sincerely, William J. Pollacek Russell V. Watts (NAME) Must be on res tion E) Must be on resolution (SI LIRE) (SIGNATURE) May 5, 2003 May 5, 2003 (DATE) (DATE) 13 CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 20056 -07-0 BOARD OF SUPERVISORS OF CONTRA COSTA COUNTY, CALIFORNIA Re: Authorizing Investment of County ) Monies in Local Agency Investment Fund ) RESOLUTION NO..771,.2 WHEREAS, pursuant to Chapter 730 of the Statutes of 1976, Section 16429.1 v.-as 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 purposes 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 Supervyisors 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 W. 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, orP ebraar^r A, 177," by the following vote: .OYES: Supervisors s :ieruiv, C. R. 1. ,rhrod2r, i{. .:ass elt :e a:lli 3o.., ess. NOES: Supervisors '.'one. ABSENT: Supervisors :-'one. ATTEST: JAMES R, OLSSOH, ClerY, ` l Board of SupervisorsChairman, Board of S visors j7 7 CERTfFlEi) COPY 1 cc-r-ttry that fh!; ;ti •; f::!: + f.: r=rrcct copy of rho ::i t'::_ In civ office. r Deputy ind that it v.c-.t:�•,.•+•; h/ ole P,nard of / P y Super�-Iscr, ri ti:r:.'" ::c, pn:iornla. nn Cr; ✓ .`,.'. eTreasurerthe dntc lha::n. '.1"i: !;` ;J_S C County. CJ:l::t Treasurer-Tax Collector Clerk rC rs nrri,InrClcrL•,::.::Id L'card cf Supervisors, Yby Dep :y 2"./ Cou:ty Alidiltor-Controller �j� FB 81977 �,:._..r t j j,_„,1_1_ST,1",._.tC i ��:.''ti-c.�-Q_.._. o❑ _.^..._._..._.. RESOLUTION NO. 77, D7 14 CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 20056 P—.0. Investment Trust of California— CaiTRUST— Pursuant to Government Codes 6500, 6502, 53601, 53630 and 53635, CaITRUST was established on January 9, 2003. The purpose of the trust is to serve as a vehicle for public agencies to jointly exercise their common power to invest funds, including tax-exempt bond proceeds. All investment activities will be in accordance with applicable California laws governing the investment of funds by public agencies. Government.code 53601 (o) includes as permissible investments shares of beneficial interest issued by a joint powers authority organized pursuant to Section 6509.7 that invests in the securities and obligations authorized in subdivisions (a) to (n), inclusive. Each share shall represent an equal proportional interest in the underlying pool of securities owned by the joint powers authority. To be eligible under this section, the joint powers authority issuing the shares shall have retained an investment advisor that meets all of the following criteria: (1) The advisor is registered or exempt from registration with the Securities and Exchange Commission. (2) The advisor has not less than five years of experience investing in the securities and obligations authorized in subdivisions.(a) to (n), inclusive. (3) The advisor has assets under management in excess of five hundred million dollars ($500,000,000.00). Resolution Number 2003/48 of the Board of Supervisors of the County of Contra Costa has authorized the participation of the county in the Investment Trust of California on January 28, 2003. 15 CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 20056 F� TO: BOARD OF SUPERVISORS �'"� '0e, Contra -a = �� FROM: William J. Pollacek, Treasurer-Tax Collector of -:�.,�,�a�.Y.s Costa DATE: January 22, 2003 nsr�'coii>+� ISQ County SUBJECT: Authorizing the Contra Costa County Treasurer-Tax Collector to Execute Joint Power Documents and Participate in the California Investment Trust (CalTrust) SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION Recommendation: APPROVAL of the Resolution of the Contra Costa Board of Supervisors, County of Contra Costa, State of California, authorizing the Contra Costa County Treasurer-Tax Collector to join with other public agencies as a participant of the California Investment Trust (CaITRUST) and to invest in shares of the trust and in individual portfolios. FISCAL IMPACT: None BACKGROUND/REASON (S) FOR RECOMMENDATION (S): The California Investment Trust (CaITRUST) is being created under provisions of the California Joint Exercise of Powers Act to provide California Public Agencies with investment management services for public funds and comprehensive investment management, accounting and arbitrage calculation services for proceeds of tax-exempt financing. This fund will offer investment opportunities that do not exist in the several funds currently available for public funds. Four(4) counties and one.Special District are scheduled to become the founding member of the California Investment Trust (CaITRUST). Contra Costa County would be one of the founding members, along with Solano, Riverside and Sonorna Counties, and Westland Water District of Fresno, CA. WJP:mb Attachment G - CONTINUED ON ATTACHMENT: X YES SIGNATURE: RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATIO 7 BOARD COMMITTEE APPROVE OTHER OTCHHEERJ_ SIG ATURE(S):�4. /ter ACTION OF B A ON JANUARY 28. 2003 APPROVED AS RECOMMENDED X OTHER VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE AND CORRECT COPY OF AN ACTION TAKEN AND ENTERED ON MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE SHOWN. UNANIMOUS(ABSENT NnNF ) . AYES: -NOES: . ABSEN7: ABSTAIN: Conlact Cc: Treasurer-Tax Colleclor's Office ATTESTED JANUARY 28,2003 JOHN SWEETEN,CLERK OF THE BOARD OFSUPERVISORS AND COUNTY/AD/MI/N�ISTR4TOR BY: � fYLy--f/1,.�� ,DEPUTY 16 CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 20056 The Trust will be governed by a Board of up to nine trustees, all of whom are officers or employees of public agencies. WiIliarn J. Pollacek, Treasurer-Tax Collector will be Contra Costa County's Trustee. The Trustees are responsible for setting overall policies and procedures for the Trust and for hiring and supervising the activities of the Investment Advisor. The Board of Trustees met on Thursday, January 9, 2002 and selected California State Association of Counties (CSAC) Finance Corp. as Fund Administrator; Metropolitan West Securities, LLC, (MetWest) as Investment Advisor; Orrick, Herrington & Sutcliffe, LLP as Counsel; and Wachovia as Custodian. Norma Lammers, Executive Director, CSAC Finance Corp was elected Secretary-Treasurer of the Board of Trustees. MetWest, the Investment Advisor, currently has over$62 billion in assets under management including$2 billion with Ca1PERS, $425 million with the California State University System, $750 million with the California Earthquake Authority, and $80 million with the City of Poway. The initial drafting of all the legal documents was done by attorneys with Paul, Hastings, Janofsky and Walker, LLP. The draft documents were then reviewed by attorneys with Orrick, Herrington & Sutcliffe, LLP in their capacity as outside counsel to the CSAC Finance Corp. Subsequently,Norma Lammers, Executive Director of the Finance Corp., arranged for a working group of county counsels to review the documents, as well, prior to their adoption by the CSAF Finance Corp. at its Fall 2002 Meeting. The Contra Costa County Treasurer-Tax Collector is requesting approval of the County's participation in this Investment Trust to provide an additional investment option for the County's Pooled Investment Portfolio. This Trust is very consistent with the Treasury policy of preservation of principal while seeking to attain a high level of current interest income. The Trust purchases only investments that are permitted by California Government Code statutes, with the exception that all leveraging of funds within the portfolio are prohibited. The Call-RUST will serve as a highly liquid account within our investment asset allocation program, and offer two (2) additional investment options, a medium term option with a target duration of 1.5—3.5 years and a long temi option of 5 —7 years. Therefore, based upon the security that this CaITRUST investment offers, the liquidity and electronic access of the funds, and the cooperation and participation of the other four (4) California public agencies, I am requesting approval of the Resolution to Participate in the California Investment Trust and authorize the Contra Costa County Treasurer-Tax Collector to execute the Declaration of Trust and all other documents required by the Trust. B03rdarderlhc 17 CONTRA COSTA COUNTY ' INVESTMENT POLICY JUNE, 20056 RESOLUTION #2003/48 Contra Costa County Administration Building Martinez, California RESOLUTION OF THE BOARD OF SUPERVISORS OF THE COUNTY OF CONTRA COSTA, STATE OF CALIFORNIA, AUTHORIZING TITS COUNTY OF CONTRA COSTA "PUBLIC AGENCY" TO JOIN WITH OTHER PUBLIC AGENCIES AS A PARTICIPANT OF THE INVESTMENT TRUST OF CALIFORNIA, CARRYING ON BUSINESS AS "Ca[TRUS T" WHEREAS, Section 6502 of Title 1, Division 7, Chapter 5 of the Government Code of the State of California (the "Joint Exercise of Powers Act")provides that, if authorized by their legislative or other governing bodies, two or more public agencies by agreement may jointly exercise any power common to the contracting parties; and WHEREAS, under Section 6500 of the Joint Exercise of Powers Act, a "public ae. ency"includes but isnot limited to the federal government or any federal department or agency, the State of California, another State or any State department or agency, a county, a county board of education, county superintendent of schools, city, public corporation, public district, or regional transportation commission of the State of California or another State, or any joint powers authority formed pursuant to the California Joint Exercise of Powers Act; and WHEREAS, public agencies which constitute local agencies, as that term is defined in Section 53630 of Title 5, Division 2, Part 1, Chapter 4, Article 2 of the Government Code of the State of California (the "California Government Code'), are authorized pursuant to Section 53601 and/or 53635 thereof to invest all money belong to, or in the custody of, the local agency in certain specified investments; and WHEREAS, the Investment Trust of California, carrying on business as CaITRUST(the "Trust") was established,pursuant to and in accordance with the Joint Exercise of Powers Act, by a Declaration of Trust, made as of January28 ,2003 (the "Declaration of Trust"), as a vehicle for public agencies to jointly exercise their common power to invest funds other than tax-exempt bond proceeds in accordance with applicable California law governing the investment of funds by public agencies; and WHEREAS, pursuant to and in accordance with the Joint Exercise of Powers Act, the Public Agency desires to join the other public agencies which are or will be Participants of the Trust by adopting and executing the Declaration of Trust, a f6rm which has been presented to this meeting; and WHEREAS, the Public Agency is a publicagency as that term is defined in the Joint Exercise of Powers Act and a local agency as that term is defined in Section 53630 of the California Government Code; 18 CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 20056 ' WHEREAS, the Public Agency is otherwise permitted to be a Participant of the Trust and to invest funds in the Trust to be managed by the Investment Advisor to the Trust, notwithstanding other investments held by the Public Agency or current investment policies that otherwise may be in effect for the Public Agency so long as the Trust invests in securities and other instruments permitted for investment by public agencies pursuant to applicable California law; and WHEREAS, there has been presented to this meeting an Information Statement describing the Trust (the "Information Statement"); NOW, THEREFORE, BE IT RESOLVED by the governing body of the Public Agency (the "Governing Body') as follows: Section 1. The public agency shall join with other public agencies pursuant to and in accordance with the Joint Exercise of Powers Act by executing the Declaration of Trust and thereby becoming a Participant in the Trust, which Declaration of Trust is hereby approved and adopted, notwithstanding other investments held by the Public Agency or current investment policies that otherwise may be in effect for the Public Agency so long as the Trust invests in securities and other instruments permitted for investment by public agencies pursuant to applicable California law. A copy of the Declaration of Trust shall be filed with the minutes of the meeting at which this Resolution was adopted. The Governing Body is hereby authorized to execute, and the Attesting Officer of Governing Body is hereby authorized to attest and deliver, the Declaration of Trust, in substantially the form presented at this meeting. Section 2. The Public Agency is hereby authorized to purchase shares in the Trust from time to time with available funds of the Public Agency, and to redeem some or all of those shares from time to time as such funds are needed,notwithstanding other investments held by the Public Agency or current investment policies that otherwise may be in effect for the Public Agency so long as the Trust invests in securities and other instruments permitted for investment by public agencies pursuant to applicable California law. Section 3. The appropriate officers, agents, and employees of the Public Agency are hereby authorized and directed in the name and on behalf of the Public Agency to take all actions and to make and execute any and all certificates, requisitions, agreements, notices, consents, warrants, and other documents, which they, or any of theiii, might deem necessary or appropriate in order to accomplish the purposes of this Resolution. Section 4. The Treasurer of the Public Agency is hereby delegated authority of the Governing Body of the Public Agency to take all actions and to make and execute any and all instruments which he might deem necessary or appropriate in order to carry out the purposes of the Governing Body in adopting this Resolution, including, without limitation, the authority to extend the maturity of any investments made pursuant to this Resolution in accordance with applicable California law. 19 CONTRA COSTA COUNTY -INVESTMENT POLICY ' JUNE, 20056 Section 5. Nothing contained in this Resolution shall be deemed to infringe upon the right of the Public Agency or the Governing Body or Treasurer of the Public Agency to make other investments outside_of the mandate of this Resolution in accordance with applicable California law to the fullest extent permitted thereunder. Section 6. This Resolution shall take effect at the earliest date permitted bylaw. PASSED AND ADOPTED this 28th day of January, 2003. SUPERVISORS: Gioia x Uilkema x Gerber x DeSauInier x Glover x Ayes: I,II,III,Iv,v Noes: None Abstain: gone Absent: None SO ORDERED. I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown. ATTESTED: V �UCLIZ� ,.� j_jtq,0 -D JOHN SWEETEN, k of the oard of Su orvlsor©apd County mfntstrator By Deputy Board.ca Trus1.Res.doc 20 CONTRA.COSTA COUNTY INVESTMENT POLICY JUNE, 20056 FURTHER RESTRICTIONS/LIMITATIONS BY GOVERNMENT CODE AND COUNTY TREASURER Further Restrictions Set bV Treasurer A. Reverse repurchase . agreements will be used strictly for the purpose of supplementing income with a limit of 10 percent of the total portfolio without prior approval of the Treasurer. B. Swaps and T rades 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 Trust Company, N.A. 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 Government Code 53600 et. seq. (As suggested by the Board of Supervisor'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 used in 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., Lowes Companies, ALTRIA Group, 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. Additional companies will be prohibited as long as said entities fall within the definition of tobacco-related companies. 21 CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 20056 I. Financial futures or financial option contracts will each be approved on a per trade basis by the County Treasurer. §53601.6. Prohibited Investments by Government Code A. A local agency shall not invest any funds pursuant to this Article or pursuant to Article 2 (commencing with Section 53630) 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 or pursuant to Article 2 (commencing with Section 53630)in any security that could result in zero interest accrual if held to maturity. However, a local agency may hold prohibited instruments until their 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,et seq.) that are authorized for investment pursuant to subdivision (k) of Section 53601. 453601. 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 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 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. 22 CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 20056 SAFEKEEPING AND CUSTODY 453601. Instruments Authorized for Investment A local agency purchasing or obtaining any securities prescribed in this section, in a negotiable, bearer, registered or non-registered 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 bank'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. Where this section specifies a percentage limitation for a particular category of investment, that percentage is applicable only at the date of purchase. Where this section does not 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 The Bank of New York Trust Company, N. A., a counterparty bank's trust department or as defined in the debt indenture and contract. 23 CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 20066 AUTHORIZED BROKERS AND DEALERS Securities for Contra Costa County and its agencies shall 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 authorized for 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 Municipal Securities Rulemaking Board. 24 CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 20056 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), are prohibited from accepting a gift or gifts aggregating more than as stated in California Government Code §89502(a) and §89503(f) in a calendar year from a single source. Beginning on January 1, 1993, the State Fair Political Practices Commission shall adjust the gift limitations in this section on January Vt of each odd-numbered year to reflect changes in the Consumer Price Index rounded to the nearest ten dollars ($10). §89503(f) Honorarium 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. Exceptions • 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 official. • 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 board or commission member's agency. Disqualification 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 economic interests. 25 CONTRA COSTA COUNTY ,'INVESTMENT POLICY JUNE, 20056 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. 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 $5,000 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 that may be imposed. The Act also provides for numerous civil penalties, including monetary penalties and damages, and injunctive relief from the courts. 26 I CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 20056 FURTHER AMENDMENTS TO THE CONFLICT OF INTEREST CODES (Pena 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 87306 et. 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 any honorarium. 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 three hundred twenty dollars ($320) 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. 27 CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 20056 INVESTMENT REPORT The Treasurer s#aflmay 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 Debt and Investment Advisory Commission within 60 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..." (Government 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 amendment(s) have to be submitted within 60 days. PLEDGE REPORT Any securities that 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 descriptions 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 Treasurer's Quarterly Investment Report. LOCAL AGENCY INVESTMENTS 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 less 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 2906 of Title 12 of the United States Code. (Government Code 53635) 28 CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 20056 METHODOLOGY OF CALCULATING AND APPORTIONING TREASURY COSTS Regular and Routine Investments C $20 per investment transaction; i.e., $20 at placement and $20 at maturity. • .00333 of interest income; i.e., $3.33 per $1,000 of interest income. Charged quarterly by journal entry. Special Reports and Research Actual staff time and materials. Special Bank Transactions Actual bank fee schedule. §53684. Alternative Procedure for Investment of Excess Funds B. The County Treasurer shall, at least quarterly, apportion any interest or other increment derived from the investment of funds pursuant to this section in an amount proportionate 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. In apportioning and distributing that interest or increment, the county treasurer may use the cash method, the accrual method, or any other method 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 proportion 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 disclose to each local agency that invests funds pursuant to this section the method of accounting used, whether cash, accrual, or other, and shall notify each local agency of any proposed changes in the accounting method at least 30 days prior to the date on which the proposed changes take effect. * In Contra Costa County, the Auditor-Controller performs these functions for fiscal control purposes. 29 CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 20056 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. • Resolution by the County Board of Supervisors authorizing the acceptance of outside participants by the County Treasury. - • Resolution by the legislative or governing body of the local agency authorizing the investment of funds pursuant to Government Code 53684. • Treasury investments will be directed transactions. Withdrawal of funds 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-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 FUNDS BY MANDATED TREASURY PARTICIPANTS The withdrawal of mandated deposits in the Treasury will coincide with investment maturities and/or authorized sale of securities by authorized personnel of the local agency. Except for funds in the California State 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 treasury pool by both mandated and non-mandated treasury pool participants shall also apply. 30 CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 20056 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 provisions 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 funds 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 30 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. 31 . CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 20056 BROKERS AND ISSUERS ABN AMBO, Incorporated American Express Credit Corporation -- Lehman Brothers; Incorporated Associates Corporation of North America Mechanics Bank Associates First Capital Mellon Bank Bank of America Merrill Lynch Bank of the West Merrill Lynch Government Securities, . Bankers Trust Company Incorporated Barclays Capital, Incorporated Morgan Stanley Dean Witter & Company Bear Stearns & Company, Incorporated NationsBanc Corporation California Arbitrage Management Program Norwest Banks Chase Securities, Incorporated Norwest Investment Services Chevron Corporation Prudential Securities, Incorporated Citigroup Funding Inc. Public Financial Management, Civic Bank of Commerce Incorporated Credit Suisse First Boston Rauscher Pierce Refsnes, Incorporated Deere & Company Salomon Smith Barney, Incorporated Donaldson, Lufkin & Jenrette Securities Sumitomo Bank of California Corporation UBS Financial Services Exxon Mobil Corporation and Subsidiaries Union Bank First Commercial Bank US Bancorp Ford Motor Credit Company Washington Mutual General Electric Capital Corporation Wells Fargo Bank General Electric Capital Services Westamerica Bank General Electric Company Gilford Securities, Incorporated Goldman, Sachs & Company Government Perspectives John Deere Capital Corporation 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 rated by Standard and Poor's, Moody's, GFI (Gerry Findley Incorporated) and other recognized rating services and reliable financial sources. 32 CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 20056 PRIMARY GOVERNMENT SECURITIES DEALERS REPORTING TO THE MARKET REPORTS DIVISION OF THE FEDERAL RESERVE BANK OF NEW YORK ABN AMBO Bank, N.V., New York Branch BNP Paribas Securities Corp. Banc of America Securities LLC Barclays Capital Inc. Bear, Stearns & Co., Inc. Citigroup Global Markets, Inc. CIBC World Markets Corp. Countrywide Securities Corporation Gr dit Cr vvisse First BeStOR LLC C I Credit Suisse Securities (USA) LLC Daiwa Securities America Inc. Deutsche Bank Securities Inc. Dresdner Kleinwort Wasserstein SecuritiesLLC Goldman, Sachs & Co. Greenwich Capital Markets, Inc. HSBC Securities (USA) Inc. J.P. Morgan Securities, Inc. Lehman Brothers Inc. Merrill Lynch Government Securities Inc. Mizuho Securities USA Inc. Morgan Stanley & Co. Incorporated Nomura Securities International, Inc. UBS Securities LLC. 33 CONTRA COSTA COUNTY �. INVESTMENT POLICY JUNE, 20056 GLOSSARY Agencies A colloquial term for securities issued by the federal agencies. Bankers Acceptances 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 once the draft is accepted. Basis Point One basis point is equal to 1/100 of one percent. For example, 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/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 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. • 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. Coupon Rate The annual rate of interest payable on a security expressed as a percentage of the principal amount. CUSIP Numbers CUSIP is an acronym for Committee on Uniform Security Identification Procedures. CUSIP numbers are identification numbers assigned each maturity of a security issue and usually printed on the face of each individual security in 34 I CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 20056 the issue. The CUSIP numbers are intended to facilitate identification and clearance of securities. - - - - Inverse Floaters An adjustable interest rate note keyed to-various indices such as LIBOR, commercial paper, federal funds, treasuries and derivative structures. The defined interest rate formula is the opposite or inverse of these indices. Interest rates and pay dates may reset daily, 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 security becomes due and payable to the holder. Medium-Term Notes (MTNs) Corporate debt obligations continuously offered in a broad range 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. Range Notes A security whose rate of return is pegged to an index. The note defines the interest rate minimum or floor and the interest rate maximum 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 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 35 CONTRA COSTA COUNTY INVESTMENT POLICY JUNE, 20056 of the RPs when the bank or dealer purchases securities from the investor under an agreement to sell them back to the investor. 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. 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 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 form of bills, notes and bonds: • Bills Short-term obligations that mature in one year or less and are sold at a discount in lieu of paying periodic interest. • Notes Interest-bearing obligations that mature between one year and 10 years. • Bonds Interest-bearing long-term obligations that generally mature in 10 years or more. Zero-Coupon Security A security that makes no periodic interest payments but instead is sold at a deep discount from its face value. TOC.InvestPolicy.JaR2005GJJune 2006 36