HomeMy WebLinkAboutStatement of Invstmnt Policy as Amnded - 02/11/2010 �
CITY OF PALM DESERT
OFFICE OF THE CITY TREASURER
Staff Report
REQUEST: ADOPTION OF THE PALM DESERT "STATEMENT OF
INVESTMENT POLICY", AS AMENDED
DATE: February 11, 2010
SUBMITTED BY: Paul S. Gibson, Finance Director
CONTENTS: 1) Excerpt from Palm Desert "Statement of Investment Policy"
2) LAIF Press Release on Deposit Limit Increase
Recommendation
By Minute Motion, that the City Council adopt the Palm Desert "Statement
of Investment Policy", as amended.
Committee Recommendation
The Audit, Investment, and Finance Committee reviewed the proposed changes at their
January 26, 2010 meeting, and unanimously recommended that the City Council adopt
the policy as amended.
Backqround
The State of California Local Agency Investment Fund ("LAIF") was established in 1977
to strengthen the financial security of local agencies. The State Treasurer, who
administers LAIF, invests local agency trust monies in a $24.8 billion diversified fixed-
income portfolio. Investments are limited, by law, to U.S. Treasury securities;
government agency securities; domestic corporate bonds; interest-bearing time
deposits in California banks, savings and loan associations, and credit unions; prime-
rated commercial paper; repurchase and reverse repurchase agreements; security
loans; banker's acceptances, negotiable certificates of deposit; and loans to various
bond funds. Local agencies can withdraw their monies on a same-day basis. LAIF has
never lost any investment principal in 32 years of operation.
On October 8, 2009, the Palm Desert City Council approved Revision No. 15 to the City
of Palm Desert "Statement of Investment Policy", as part of an annual policy review. In
that revision, the LAIF deposit limit was identified as $40 million per account (the
maximum allowed by state law at that time).
Staff Report
Adoption of Statement of Investment Policy as Amended
February 11, 2010
Page 2 of 2
On November 16, 2009, State Treasurer Bill Lockyer raised the LAIF deposit limit from
$40 million per account to $50 million per account. More deposit limit increases are
likely since LAIF is a lucrative source of income for both local agencies and the State of
California.
Staff recommends that the City "Statement of Investment Policy" be amended by
substituting language that authorizes investment in LAIF "up to the maximum allowed
by state law", as opposed to identifying a specific dollar limit. This will provide the City
with operational flexibility in the event that the LAIF deposit limit is changed again.
Fiscal Impact
There is no direct impact as a result of this action. However, the City will have the
advantage of a higher deposit limit in the LAIF account.
Submitted By:
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Paul S. Gibson, CCMT, City Treasurer Thomas W. Jeffrey, i y Treasurer
Approved By:
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Jo n M. Wohlmuth, City Manager VERIFlED BY
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Original on file with City Clerk's Office
ATTACHMENT 1
Palm Desert Treasury Policies and Procedures Revision No.
No. 2: "St atement of Investment Policy'' Adopted:
% of
No. Type of Investment Portfolio Other Restrictions
Authorized
MMF must have dollar-
weighted average maturity
of 90 days or less.
MMF must buy securities
that mature in 13 months or
less.
No commission may be
charged.
10. State of California Local See note � �^^ •":�� "�"`+ Maximum
Agency Investment Fund de�asit per account allowed
("LAIF") that is managed by by State law •-•�+�T,
the State Treasurer's Office. except for bond trustee
accounts (no deposit limit).
City Council and
Redevelopment Agency
approved participation in
LAIF on 12/12/81 in
Resolution No. 81 -161 .
1 1 . Structured Notes in the form 20% Maximum maturity: 5 years
of callable securities or
"STR IPS" issued by the
United States Treasury or by
Federal Agencies or
government-sponsored
enterprises ("GSE").
DELETED LANGUAGE REPRESENTED BY "STRIKER". ADDED LANGUAGE REPRESENTED BY
"SHADING".
Page 12
LAIF Deposit Limits ATTACHMENT 2 Page 1 of 1
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Pooled Money Investment Account
State Treasurer to Increase Local Agency Investment Fund (LAIF) Deposit Limit
Effective November 16, 2009, State Treasurer Bill Lockyer will increase the Local Agency Investment Fund's deposit limit for regular
accounts from the current$40 million to$50 million based upon a recommendation presented by the Local Investment Advisory Board
(LIAB).
Based on the needs voiced by local government participants,the LIAB has periodically requested changes to the policy related to
limits on account balance.The last time the Treasurer increased the LAIF's deposit limit for regular accounts was January 1, 2002, as
requested by the LIAB,the deposit limit was increased from$30 million to the current$40 million per regular account.
Please direct questions regarding LAIF's policies to the LAIF staff at(916)653-3001.
http://www.treasurer.ca.gov/pmia-laif/news/deposit_limits.asp 1/20/2010