2017-049 - City's Statement of Investment Policy

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general economic conditions and the anticipated needs of the agency, 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 of an overall strategy, investments may be acquired as authorized by law. The City is governed by the California Government Code, Sections 16429.1 and Title 5, Division 2, Part 1, Chapter 4, entitled Financial Affairs, commencing with section 53630. Each investment transaction and the entire portfolio must comply with California Government Code, Sections 53600 and 53635 et seq. and this policy. City investment officials/officers shall establish written investment procedures consistent with this investment policy for the operation of the investment program. Procedures should include but not be limited to: authorized personnel, segregation of duties, internal controls, wire transfer agreements, daily cash flow review, basis for awarding bids, portfolio inventory, and reporting. The procedures document is intended to provide guidance for staff and provide continuity in the event of an interruption of services of investment officials/officers. ALLOWABLE INVESTMENT INSTRUMENTS — STATE LAW: California Government Code Section 53601 establishes allowable investment instruments applicable to all local agencies along with maximum maturities, maximum specified percentages of total portfolio, and minimum quality requirements. Section 53601.1 authorizes local agencies to invest in financial futures or financial option contracts in any of the allowable investment categories enumerated in section 53601. INELIGIBLE INVESTMENTS -STATE LAW: Certain investments, however, are prohibited by California Government Code Section 53601.6. Accordingly, the City shall not invest in any inverse floaters, range notes, or mortgage derived, interest -only strips. In addition, the City shall not invest any funds in any security that could result in zero interest accrual if held to maturity. However, prohibited securities that are in the City's portfolio, as of the date of this policy adoption, may be held until their maturity dates. DISALLOWED INVESTMENTS - HIGHER PERCEIVED RISK: Besides investments prohibited by statute, this policy disallows investments in the following due to a higher perceived risk: