HomeMy WebLinkAbout03.e. Adopt Resolution updating names of individuals authorized to participate in LAIFCentral Contra Costa Sanitary District BOARD OF DIRECTORS 3.e • POSITION PAPER Board Meeting Date: December 6, 2012 subject: ADOPT A RESOLUTION AUTHORIZING PARTICIPATION IN THE STATE OF CALIFORNIA LOCAL AGENCY INVESTMENT FUND (LAIF) Submitted By Initiating Dept. /Div.: Thea Vassallo, CPA Administrative / Finance & Accounting Finance Manaaer R9VIEWEQ AN E OMMENDED FOR BOARD ACTION: 'Thte, Vassallo K. Alm Ann Farrell Finance Manager General Manager ISSUE: The Contra Costa County has asked the District for an updated resolution authorizing participation by the District in the State of California Local Agency Investment Fund (LAIF). The District adopted similar resolutions in 1977 and 1986. RECOMMENDATION: Adopt a new resolution authorizing participation by the District in the Local Agency Investment Fund operated by the State Treasurer, and rescind the prior resolutions adopted in 1977 and 1986. FINANCIAL IMPACTS: None. ALTERNATIVES /CONSIDERATIONS: None. BACKGROUND: The LAIF was created by law and is administered by the State Treasurer and an advisory board. The law permits local governments to deposit funds, which are not immediately required, with the State Treasurer for the purpose of investment. Before any deposits will be accepted, the local government will be required to file a resolution with the State Treasurer which authorizes participation in the LAW and designates individuals who are authorized to order the deposit or withdrawal of funds in the LAIF. A description of the LAIF is provided in Attachment I. There are no limitations on the amount that may be invested in the LAIF by a single entity. The current yield for the LAIF is in the 0.34 %, while the District's investment in certificates of deposits and commercial paper is presently yielding approximately 0.15% to 0.24% depending on the maturity. The named Contra Costa County Treasurer's Office officials would be authorized to execute the District's instructions for investments in the LAIF, as they presently are for the District's other investments in general. The District's Statement of Investment Policy (recently updated by the Board on September 6, 2012) is provided in Attachment II. C:\ Users \dandersonWpp Data \Local \Microsoft \Windows \Temporary Internet Files \Content.Outlook \DVCG8C5G \Rev PP Adopt resolution to participate in LAIF 12 -6 -12 (2).doc POSITION PAPER Board Meeting Date: December 6, 2012 subject. ADOPT A RESOLUTION AUTHORIZING PARTICIPATION IN THE STATE OF CALIFORNIA LOCAL AGENCY INVESTMENT FUND (LAIF) This matter will be reviewed by the Budget and Finance Committee at the December 3, 2012 meeting. RECOMMENDED BOARD ACTION: Adopt a resolution authorizing participation by the District in the Local Agency Investment Fund operated by the State Treasurer, and rescind prior resolutions 77 -55 adopted March 3, 1977 and 86 -079 adopted July 17, 1986. C:\ Users \danderson\AppData \Local \Microsoft \Windows \Temporary Internet Files \Content.Outlook \DVCG8C5G \Rev PP Adopt resolution to participate in LAW 12 -6 -12 (2).doc ATTACHMENT I CENTRAL CONTRA COST SANITARY DISTRICT LOCAL AGENCY INVESTMENT FUND Nature and Objective of Fund The Local Agency Investment Fund (LAIF) is a voluntary program created by law. Local governments and special districts may invest funds, which are not immediately needed, in the LAIF. The program offers local agencies the opportunity to participate in a major portfolio using the investment expertise of the State Treasurer's Office investment staff at no additional cost to the taxpayer. The Objective of the LAIF is to realize the maximum return consistent with safe and prudent treasury management. Fund Administration The State Treasurer will invest the LAIF funds with State funds through a Pooled Money Investment Account (PMIA). The State Treasurer is responsible for the control and safekeeping of all investments of the LAIF. A five member Local Investment Advisory Board assists the State Treasurer in formulating the policies which govern the operation of the LAIF. Fund Operation The following summarizes the operation of the LAIF: 1. A resolution by the local government's governing body authorizing participation will be required. 2. Maximum 15 transactions (combination of deposits and withdrawals) per month. 3. Deposits or withdrawals must be in multiples of $1,000 and the minimum transaction amount is $5,000. 4. Deposits are made at a local bank and wire transferred to the State Treasurer's depository bank. 5. Withdrawals will be transferred to the local government's local bank the same day. 6. The State Treasurer will provide a monthly statement to verify receipt of deposits. 7. After the end of each calendar quarter, interest income derived from investments will be distributed by the State Controller to the participating entities directly proportionate to the respective amounts and durations of the funds invested in CADocuments and Settings \tvassallo \Local Settings \Temporary Internet Files \Content.Outlook \6NJE6KLU\Adopt resolution to participate in LAIF.doc the LAIF. The State Controller's payment for these earnings will be mailed directly to the local government. Prior to the distribution an amount equal to the reasonable cost of making the investments, not to exceed one - quarter of 1 percent of the earnings of the Fund, shall be deducted. Advantages of the LAIF Higher Interest Rates: The pooling of surplus cash balances of the State with the LAIF creates a multi - billion dollar pool which enables investing in diversified instruments at high denominations. 2. Liquidity: Deposits in the LAIF can be converted to cash in twenty -four hours or less. No interest is lost if a withdrawal is made sooner than originally contemplated. There is no minimum investment period. 3. Lower Cost: Large denomination purchases avoid charges generally assessed on small lot purchases. 4. Investment Expertise: The State Treasurer's Office is in constant contact with investment markets and handles investment transactions in the hundreds of millions of dollars. CADocuments and Settings \tvassallo \Local Settings \Temporary Internet Files \Content. Outlook \6NJE6KLUWdopt resolution to participate in IAIF.doc Number: BP 005 Authority: Board of Directors Effective: September 1, 2011 Revised: September 6, 2012 Reviewed: Initiating Dept. /Div.: Finance PURPOSE • r r r r r ATTACHMENT 11 BOARD POLICY STATEMENT OF INVESTMENT POLICY The investment policy of the Central Contra Costa Sanitary District governs the District's temporary investments. A separate investment policy governs the District's GASB 45 Trust. This investment policy is embodied in the following eleven sections: POLICY Statement of Objectives The temporary investment portfolio of the District will be managed to ensure that normal cash needs, as well as scheduled extraordinary cash needs can be met. Therefore, adequate liquidity will be the first priority. Second priority will be the safety of the portfolio ensuring that the investments could be readily converted to cash if needed without causing a material change in the value of the portfolio. Lastly, the portfolio will be invested to attain a market average rate of return, after meeting the first two previously stated objectives. H. Permissible Investments Within the constraints prescribed by the Government Code of the State of California for permissible investments, the District's investment portfolio will only be invested in the following instruments: • United States Treasury Bills and Notes, and obligations of government agencies for which the full faith and credit of the United States are pledged. • Bankers Acceptances, drawn on and accepted by a commercial bank, which are eligible for purchase by the Federal Reserve System. BP 005 Page 2 of 4 • Collateralized Certificates of Deposit issued by a Federal or State chartered bank or a Federal or State chartered savings and loan association. • Negotiable Certificates of Deposit issued by a Federal or State chartered bank or a Federal or State chartered savings and loan association. • Commercial Paper of prime quality limited to corporations with assets over $500,000,000. • Medium Term Notes of a maximum of five years maturity issued by U. S. corporations or any Federal or State depository institution. • Local Agency Investment Fund of the State of California. III. Bank and Dealers The District will use the services of the Treasurer's Office of the County of Contra Costa which will transact the District's investment decisions in compliance with the requirements described in this investment policy. The County Treasurer's Office will execute the District's investments through such brokers, dealers and financial institutions as are approved by the County Treasurer, and through the State Treasurer's Office for investment in the Local Agency Investment Fund. IV, Maturities The maximum maturity for investments of the District is one year. Prior approval of the Board of Directors must be obtained to acquire investments with maturities beyond one year. However, investments in Treasury Notes and the Local Agency Investment Fund would not be subject to the one -year maximum maturity. V. Diversification To minimize the risk of loss through default, the total amount invested in a single issuer will not be greater than 10 percent of the District's investment portfolio value, except that the 10 percent limitation will not apply to United States Treasury Bills and Notes and investment in the Local Agency Investment Fund. BP 005 Page 3 of 4 VI. Risk Credit and market risks will be minimized through adherence to the list of permissible investments, a limit on maximum maturities, and the limitation on the total investment in a single issuer. VII. Delegation and Authority The District Finance Manager will be responsible for investment transactions which should be made in accordance with this investment policy and within the internal controls described in Section IX. VIII. Prudence Prudent judgment must be exercised by the District Finance Manager responsible for investment transactions undertaken in accordance with this investment policy. IX. Controls The District Finance Manager will establish subsidiary accounting records of each investment which will enable the determination of income earned monthly and through maturity, and the balancing of the principal amounts to a control account in the general ledger. Internal control procedures require the Finance Manager to sign all transactions, which are then countersigned by the General Manager. Such internal controls are to be reviewed by the District's independent auditors annually. X. Reporting The District Finance Manager will annually render a statement of investment policy to the Board of Directors. Also, annually, the GASB 45 Trust Investment Policy will be brought before the Board. The Finance Manager will submit a monthly report to the District's General Manager and Board of Directors showing the type of investment, issuer, date of maturity, par (or face), dollar amount invested, current market value of all securities, and the source of this same valuation, and a statement of compliance of the portfolio with the investment policy. XI. Performance Evaluation A performance evaluation will be completed by the District's independent auditors every year, commencing with the 2004 -2005 fiscal year, to determine whether the investment objective of achieving a market - average rate of return is being realized. In determining the market - average rate of return, the average return, of three -month U.S. Treasury Bills will be used as a BP 005 Page 4 of 4 comparison. The weighted average of the portfolio will be calculated each month and compiled to determine the annual yield. Results of the comparison between the District's portfolio and the three -month Treasury-Bill benchmark will be reported to the Board annually. RESOLUTION NO. 2012 -094 A RESOLUTION OF THE CENTRAL CONTRA COSTA SANITARY DISTRICT AUTHORIZING INVESTMENT OF MONIES IN THE LOCAL AGENCY INVESTMENT FUND AND RESCINDING RESOLUTIONS 77 -55 AND 86 -079 WHEREAS, pursuant to Chapter 730 of the statues of 1976, Section 16429.1 was added to the California Government Code to create a Local Agency Investment Fund (LAIF) in the State Treasury for the deposit of money of a local agency for purposes of investment by the State Treasurer; and WHEREAS, the Central Contra Costa Sanitary District Board of Directors does hereby find that the deposit and withdrawal of money in the LAIF in accordance with the provisions of California Government Code Section 16429.1 for the purpose of investment as stated therein as in the best interests of the District. NOW, THEREFORE, BE IT RESOLVED BY THE Board of Directors of the Central Contra Costa Sanitary District ( "District ") as follows: (1) That, the Board of Directors of the District does hereby authorize the deposit and withdrawal of District monies in the LAIF 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; and (2) That, the following District officers or their successors in office shall be authorized to order the deposit or withdrawal of monies in the LAIF: Name Ann Farrell (or successor) Thea Vassallo (or successor) Title General Manager Finance Manager Signature (3) That Resolution 77 -55 and Resolution 86 -079 are hereby rescinded. PASSED AND ADOPTED this 6th day of December 2012, by the Board of Directors of the District by the following vote: Resolution No. 2012 -094 Page 2 AYES: Members: NOES: Members: ABSENT: Members: James A. Nejedly President of the Board of Directors Central Contra Costa Sanitary District County of Contra Costa, State of California COUNTERSIGNED: Elaine R. Boehme, CIVIC Secretary of the District Central Contra Costa Sanitary District County of Contra Costa, State of California Approved as to form: Kenton L. Alm, Esq. Counsel for the District DELEGATION OF AUTHORITY CENTRAL CONTRA COSTA SANITARY DISTRICT Local Agency Investment Fund P.O. Box 942809 Sacramento, CA 94209 -0001 To Whom It May Concern: LAIF Account No. 70 -07 -001 and 11 -07 -036 Pursuant to the resolution of the CENTRAL CONTRA COSTA SANITARY DISTRICT for AUTHORIZING INVESTMENT OF MONIES IN THE LOCAL AGENCY INVESTMENT FUND, this letter shall serve as delegation of authority to the following persons or their successors from the Contra Costa County Treasurer's Office to execute the deposit and withdrawal of monies on behalf of the CENTRAL CONTRA COSTA SANITARY DISTRICT. The deposit or withdrawal of monies shall only be permitted with prior written instructions from the CENTRAL CONTRA COSTA SANITARY DISTRICT to the County Treasurer. In addition, these persons or their successors 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 CENTRAL CONTRA COSTA SANITARY DISTRICT. Russell V. Watts Treasurer -Tax Collector Ammy Pluth Treasurer's Investment Officer Sincerely, Ann air - e r l Manager (NAME) be ori resolution (SIGNATURE) (DATE) Brice Bins Belinda Zhu Chief Deputy Assistant County Treasurer Treasurer -Tax Collector Esther Garibay Treasurer's Investment Operations Analyst Thea Vassallo — Finance Manager (NA E) Must/ be on reso tion v ( SIGNATURE) 1/ /-,/ /I, (DATE)