HomeMy WebLinkAbout1996-04-25 - Resolution No. 96-04RESOLUTION 96-04
RESOLUTION OF THE BOARD OF DIRECTORS
OF THE YORBA LINDA WATER DISTRICT
SETTING FORTH PUBLIC FUNDS INVESTMENT POLICY
AND RESCINDING RESOLUTION 93-07
WHEREAS, the Government Code Section 53600 sets forth guidelines for the investment of
public funds and requires that the Board of Directors review the District's
Investment Policy annually; and,
WHEREAS, the District's Investment Policy was adopted by Resolution No. 93-07 on March
11, 1993, and was last reviewed in March 1995; and,
WHEREAS, the District is in possession of public funds that are not required for immediate
expenditure, and are available for investment; and,
WHEREAS, a policy setting forth guidelines for the investment of said funds is necessary for
compliance with State law and the principles of sound financial management; and,
WHEREAS, the Board of Directors of the Yorba Linda Water District desire to adopt the
Investment Policy set forth herein.
NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Yorba Linda
Water District as follows:
Section 1: Public funds held for investment by the District may be categorized as follows:
(1) Those funds that are allocated for immediate expenditure on District operations as
authorized by the Board of Directors at their bimonthly meetings;
(2) Those funds that are allocated for use in an intermediate time frame, such as budgeted
purchases that have not been delivered;
(3) Those funds that are allocated for future use, which do not fall into the above categories.
This policy sets forth guidelines for funds that are identified as "available for
investment."
Section 2: The Board of Directors delegates the authority for investing District Funds to the
General Manager, who may in turn delegate this authority to a designated representative.
Section 3: The General Manager or his designated representative shall maintain a cash flow
analysis for projecting cash available for investments. All funds not required for immediate or
intermediate use may be invested in accordance with this policy.
Section 4: Priorities regarding the investment of District held public funds are:
(1) The safety of the funds;
(2) The maintenance of sufficient liquidity to conduct day-to-day operations;
(3) The best return on investments pursuant to the preceding qualifications, one (1) and
two (2).
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Section 5: The District may invest funds that are available for direct investment in the following
categories:
(1) Banks or Savings and Loan institutions.
Cash will be deposited only in Federal Deposit Insurance Corporation or FSLIC insured
or fully collateralized certificates of deposit. Collateral for a given investment must be
110 percent of principal for government securities collateral and 150 percent of principal
for first mortgage collateral. The institution must maintain a net worth to asset ratio of at
least three percent, and a positive earnings record. The bank or savings and loan must be
located in California. The maximum maturity shall be five years. No limit will be placed
on the percentage total invested in this category.
(2) The State Local Agency Investment Fund (LAIF).
The amounts deposited in this category is limited to $10 million plus bond proceeds. No
limit will be placed on the percentage total in this category.
(3) Orange County Treasurer's Commingled Investment Pool.
The maximum amount deposited in this category is limited to $5 million. No limit will be
placed on the percentage total in this category.
(4) California Arbitrage Management Program.
The amounts deposited in this category shall be limited to bond proceeds and are to be
invested for the purpose of arbitrage management only. Proceeds may be invested in the
Treasury Portfolio and/or the Money Market Portfolio. No limit will be placed on the
percentage total in this category.
(5) Treasury Bills, Notes and Bonds - Government Code Section 53601 (a-c).
The District will require physical delivery of these securities to an acceptable safekeeping
account in the District name and must be properly insured. The maximum maturity shall
be limited to five years. No limit will be placed on the percentage total invested in this
category.
(6) Obligations Issued by Government Agencies - Government - Government Code Section
53601 (e).
The District will require physical delivery of these securities to an acceptable safekeeping
account in the District name and must be properly insured. Examples of these securities
include Federal National Mortgage Association, Federal Land Bank and Federal Home
Loan Bank. The maximum maturity is limited to five years and the maximum percentage
allowable for investment is 50% of the portfolio in the aggregate.
(7) Medium-Term Notes - Government Code Section 536010).
The District will require physical delivery of these securities to an acceptable safekeeping
account in the District name and must be properly insured. The corporation must be
domestic and the notes must be issued in the United States. The corporation must be
rated AA or better by a nationally recognized rating service. The maximum maturity is
limited to five years and the maximum percentage allowable for investment is 10% of the
portfolio in the aggregate.
(8) Banker's Acceptances - Government Code Section 53601 (f).
The District will require physical delivery of these securities to an acceptable safekeeping
account in the District name and must be properly insured. The maximum term may not
exceed 270 days and the maximum percentage allowable for investment is 10% of the
portfolio in the aggregate.
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(9) Commercial Paper - Government Code Section 53601 (g).
The District will require physical delivery of these securities to an acceptable safekeeping
account in the District's name and must be properly insured. The corporation must be
domestic and the notes must be issued in the United States. The Corporation must also
have total assets in excess of five hundred million dollars ($500,000,000). The
corporation must be rated AA or better by a nationally recognized rating service. The
maximum maturity is limited to 180 days and the maximum percentage allowable for
investment is five percent of the portfolio in the aggregate.
Section 6: All investments of sums of less than $100,000 do not require approval of the Board
of Directors or need to be collateralized, provided, however that all such deposits must be made in
institutions covered by the Federal Deposit Insurance Corporation.
Section 7: Investments of sums greater than $100,000 and less than $1,000,000 in a single
institution is authorized in institutions that comply following parameters:
(1) Collateral requirements as set forth in Section 5, (1) herein.
(2) Institution established as a business in California for a minimum of three years.
i (3) Must show a profit for the most recent two consecutive years.
(4) A capital ratio of: six percent for Banks; and five percent for Savings & Loans.
(5) No more than three percent foreclosures.
(6) AIDC Financial rating of "excellent" or "superior".
Section 8: All investments greater than $1,000,000 in one institution, with the exception of the
LAIF, requires approval of the Board of Directors.
Section 9: When the District uses the services of a Broker/Dealer to purchase securities, they
shall be selected by credit worthiness. These may include "primary" dealers or regional dealers,
Each security purchased thru a broker/dealer shall be registered in the name of Yorba Linda Water
District. No deposit of cash and /or securities shall be made by the broker/dealer except in a
qualified public depository as established by state law and Section 3 (1) of this Resolution. Before
a broker/dealer is used, they are subject to investigation and approval by the General Manager, or
his designated representative, and must submit the following:
(1) Certification of having read this Investment Policy Resolution and that these policies will
be followed by personnel working with the District.
(2) Proof of National Association of Security Dealers certification and state registration.
(3) Compliance with Federal capital adequacy regulations and provide documentation of
financial solvency.
(4) Provide Audited financial statements with in 120 days of fiscal year end.
(5) Provide similar services to other public-sector clients.
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Section 10: Policy on Repurchase and Reverse Repurchase Agreements, and Derivative
Products.
(1) The District staff is not authorized to initiate investments in Repurchase or Reverse
Repurchase Agreements or "Plain Vanilla OTC" and/or "More Complex OTC" Derivative
Products, as defined below, provided, however, that the staff is authorized to deposit in
the LAIF so long as LAIF invests no more than ten percent of their total portfolio in
Repurchase or Reverse Repurchase Agreements and does not use derivative products
defined below.
(2) A "Plain Vanilla OTCf9 Derivative Products is defined by the U.S. General Accounting
Office as a financial instrument whose market value is derived from a reference rate,
index, or value of an underlying asset. OTC derivatives are privately negotiated contracts
and are not traded on organized exchanges.
(3) A "More Complex OTC" Derivative Products is defined by the U.S. General Accounting
Office to have at least one of the following characteristics:
a. Their prices tend to be difficult to obtain because they are often available from only
a few dealers.
b. The payments required by the derivative contract are calculated on the basis of more
than one interest rate, currency, asset, or other factor.
C. The derivative contract has terms that are not determined until some future date.
d. The Contract involves a term that acts as a multiplier or increases the leverage of the
rate(s) used to compute payments.
e. The Contract can entail potentially unlimited risk.
Section 11: Each month the General Manager or his designated representative shall furnish the
Board of Directors with an Investment Portfolio Report including, but not limited to:
(1) A list of the previous month's investments;
(2) Institutions where investments were placed;
(3) Dates of transactions;
(4) Dates of maturity;
(5) Interest rates on said investments;
(6) Investment categories percent of total portfolio.
Section 12: That Resolution 93-07 and all conflicting Minute Orders are hereby rescinded
immediately upon adoption of this Resolution.
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PASSED AND ADOPTED this 25th day of April, 1996, by the following called vote:
Ayes:
Noes:
Absent:
Abstain:
Beverage, Armstrong, Fox, Scanlin
Korn
None
None
President, Mich 3. Beverage
Yorba Linda Water District
rtson
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