HomeMy WebLinkAboutRes - 2006.12 - Notice of Completioni
Board Memorandum Date: June 27, 2006
From: Brian W. Tompkins, CFO
Subject: Investment policy.
Recommendation:
Approve: Resolution No. 2006.35 adopting the attached
investment policy for the 2006-07 fiscal year.
Background:
Government Code section 53646(a) requires that the Treasurer of a local agency annually render to the
legislative body a Statement of Investment Policy for consideration at a public meeting.
Attached and submitted for your consideration is East Valley Water Districts' investment policy as
adopted in previous years. It should be noted that the District's policy is more restrictive than the
Government code in that certain types of investments allowed by Code section 53601 are not
incorporated into the attached policy. The excluded investment types are:
Bankers acceptances -maximum 180 day maturity
Cornmercial paper -restricted to highest Moody's rating; issued by US Corporations with in-excess-
of $500 million in assets -maximum 270 day maturity
Repurchase and Reverse Repurchase agreements
Mortgage securities
Medium term corporate notes -maximum of 5 years maturity
Staff is not recommending any changes to the District's policy although the possibility that a change
was needed was discussed during last years audit report presentation. You may recall the auditors
reported that our CBB loan proceed accounts included a higher percentage in Money Market funds
than permitted by our policy. Staff's contention was that these accounts holding our construction funds
had to be more liquid than regular reserves and that they would research alternative language for the
policy to specifically address construction funds.
After researching the policies of other agencies and finding none that have sections specifically for
construction funds, and after discussing the prospect of purchasing only very short-term investments
with the; CBB investment manager, staff is confident that the construction fund investments can be
structured within the framework of the investment policy as it currently exists while providing the
necessary liquidity.
Staff recommends approval of Resolution 2006.35, which will adopt the attached Investment Policy for
the 2006-07 fiscal year.
Fiscal Impact:
None.
EAST VALLEY WATER DISTRICT
INVESTMENT POLICY
1.0 POLICY
WHEREAS; The Legislature of the State of California has declared that the deposit and
investment of public funds by local officials and local agencies is an issue of statewide concern
California Government Code Sections 53600.6 (CGC §53600.6) and 53630.1); and
WHEREAS; the legislative body of a local agency may invest surplus monies not required for the
immediate necessities of the local agency in accordance with the provisions of California
Government Code Sections 5921 and 53601 et seq.; and
WHEREAS; the General Manager and/or Financial Officer of the East Valley Water District shall
annually prepaze and submit a statement of investment policy and such policy, and any changes
thereto, shall be considered by the Boazd of Directors at a public meeting; (CGC §53646(a)); now
THEREFORE; it shall be the policy of the East Valley Water District to invest funds in a manner
which will provide the highest investment return with the maximum security while meeting the
daily cash flow demands of the entity and confomring to all statutes governing the investment of
East Valley Water District funds.
2.0 SCOPE
This investment policy applies to all financial assets of the East Valley Water District. These
funds are accounted for in the annual district audit and include:
The Enterprise Fund of the General District.
There are no Funds excluded from this policy.
3.0 PRUDENCE
Investments shall be made with judgment and caze, under circumstances then prevailing, which
persons of prudence, discretion and intelligence exercise in the management of their own affairs;
not for speculation, but for investment, considering the probable safety of their capital as well as
the probable income to be derived. The standard of prudence to be used by investment officials
shall be the "prudent investor" standazd (CGC §53600.3) and shall be applied in the context of
managing an overall portfolio. Investment officers acting in accordance with written procedures
and the investment policy and exercising due diligence shall be relieved of personal responsibility
for an individual security's credit risk or market price changes, provided deviations from
expectations aze reported in a timely fashion and appropriate action is taken to control adverse
developments.
4.0 OBJECTIVES:
As specified in CGC §53600.5, when investing, reinvesting, purchasing, acquiring, exchanging,
selling and managing public funds, the primary objectives, in priority order, of the investment
activities shall be:
1. Safety: Safety of principal is the foremost objective of the investment program. Investments of
the East Valley Water District shall be undertaken in a manner that seeks to ensure the