RESOLUTION NO. 1930-17 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF WESTLAKE VILLAGE ESTABLISHING ANNUAL FINANCIAL AUTHORIZATIONS AND POLICIES THE CITY COUNCIL OF THE CITY OF WESTLAKE VILLAGE FINDS, RESOLVES, AND ORDERS AS FOLLOWS: Section 1. The 2017-18 Mayor and Mayor Pro Tem, and the City Manager and City Treasurer, are authorized to maintain the City's checking account with Pacific Western Bank and are authorized to execute warrants on behalf of the City of Westlake Village subject to the provisions of Sections 2 and 3: Group A -- City Council 2017-18 Mayor: 2017-18 Mayor Pro Tem: Group B -- City Staff City Manager: Raymond B. Taylor City Treasurer: Robert S. Biery Section 2. Warrants and written instructions for disbursements of funds from the City account shall only be authorized upon the signature of one authorized official from Group A: City Council and one authorized official from "Group B: City Staff" acting together as set forth in Section 1. Section 3. The financial institution shall be instructed to honor no individual warrant in excess of $400,000 without an accompanying resolution of approval adopted by the City Council. Section 4. The City Manager is hereby directed to notify the financial institution of this resolution and provide for the execution of the necessary signature cards required by the institution. Section 5. The 2017-18 Statement of Investment Policy attached as Exhibit A is consistent with State law and is hereby adopted by the City Council. PASSED, APPROVED AND ADOPTED this 6 th day of December, 2017. ATTEST: Brad Halpern, Mayor Beth A. Schott, City Clerk Consent Calendar 1 - Attachment 1
CITY OF WESTLAKE VILLAGE STATEMENT OF INVESTMENT POLICY PURPOSE The purpose of the City s Investment Policy is to provide guidelines and standards for the responsible management of the City s funds that are available for investment. It is intended to be sufficiently specific to be meaningful, yet adequately flexible to be practical. The policy is set forth for the following purposes: SCOPE (1) to establish a clear understanding of the objectives and guidelines for the investment of the City s idle and reserve funds for the City Council and City management staff; (2) to offer guidance to investment staff and any outside advisers retained by the City on the investment of City funds; and (3) to establish a basis for evaluating investment results. This Investment Policy applies to all financial assets of the City, including the following funds: General Fund; Special Revenue Funds; Capital Improvement Fund; Building Maintenance and Replacement Fund; Debt Service Funds; and Any new fund created by the City Council. POLICY It is the policy of the City of Westlake Village to invest public funds in a manner which will provide the maximum security of principal consistent with a market rate of return while meeting the cash flow needs of the City and conforming to all applicable State and City statutes governing investment of public funds. Every effort will be made to match investment maturities to cash flow needs. OBJECTIVES The City s financial management system is designed to accurately monitor and forecast expenditures and revenues, thus ensuring the investment of monies to the fullest extent possible. The City strives to maintain the level of investment of idle funds as near to 100% as possible. Consistent with this goal, all City investments are made under the terms and conditions of Sections 53600-53683 of the California Government Code. 1930-17 2 Consent Calendar 1 - Attachment 1 Page 2 of 6
The primary objectives, in priority order, of the City s investment activities shall be: Safety. Safety of principal is the foremost objective of the City. Investments of the City shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. PRUDENCE Liquidity. The City s investment portfolio shall remain sufficiently liquid to enable the City to meet all operating requirements which might be reasonably anticipated. Return on Investment. The City s investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into account the City s investment risk constraints and the cash flow characteristics of the portfolio. The average return on the State Treasurer s Local Agency Investment Fund shall be considered the City s benchmark for conservative investment transactions, and shall constitute the performance standard for the City portfolio s rate of return. The standard of prudence to be used in the investment function shall be the prudent person rule which states: Investments shall be made with judgment and care, under circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation, but for investments, considering the probable safety of their capital as well as income to be derived. STRUCTURE, RESPONSIBILITIES, AND DELEGATION OF AUTHORITY This section defines the overall structure of the City s investment program, including the roles and responsibilities for both oversight and management of the investment of City funds. General Authority. The authority to manage the City s investment program is derived from the California Government Code, Section 53600 et seq., and the City s Municipal Code. Responsibilities of the City Council. The City Council shall consider and adopt a written investment policy. As provided in this policy, the City Council shall receive and review monthly investment reports. Responsibilities of the City Council s Administrative Committee. The Administrative Committee shall meet on as-needed basis to discuss and review the City s investment strategies, investment and banking procedures, and any significant investment-related activities being undertaken. The Administrative Committee shall also be charged with the responsibility of reviewing the City s investment policy annually for purposes of recommending any desired changes to the City Council. Responsibilities of the City Manager. The City Manager is responsible for directing and supervising the Finance Officer/City Treasurer. The City Manager is also responsible to keep the City Council fully advised as to the overall financial condition of the City. 1930-17 3 Consent Calendar 1 - Attachment 1 Page 3 of 6
Responsibilities of the Finance Officer/City Treasurer. The Finance Officer/City Treasurer is charged with responsibility for the conduct of all treasury functions, including the custody and investment of City funds and the development of procedures required to implement this investment policy. Under general direction of the City Manager, the Finance Officer/City Treasurer shall be responsible to carry out all investment transactions. AUTHORIZED INVESTMENTS AND LIMITATIONS The investment or deposit of City funds shall be governed by California Government Code Sections 53600 and 53630 et. seq., and shall be further limited to the following authorized investments and instruments. Except as stated below, the maximum maturity on any security is limited to two years. Any investment for a term longer than two years, and up to five years, shall require City Council approval on a case-by-case basis. (1) United States Treasury Bills, Notes, and Bonds; (2) U.S. Agencies: U.S. Government Sponsored Enterprises; (3) Bankers Acceptances: Maturity limited to 180 days; portfolio limit on one commercial bank is 30%; rated at least A1/PS ; (4) Commercial Paper: Maturity limited to 270 days; (5) Negotiable Certificate of Deposit: Issued by a nationally or state charter bank or a state or federal association or by a state licensed branch of a foreign bank; rated at least Aa3/AA- ; (6) Certificate of Deposit: Amounts invested up to $100,000 are insured by an Agency of the U.S. Government. Amounts over $100,000 must be placed with financial institutions that participate in the State of California Local Agency Security Program which provide for the collateralization of public funds deposits. Eligible financial institutions must have an A rating from the Findley Bank Rating Service and maintain a satisfactory rating under the Community Reinvestment Act; (7) Repurchase Agreements: Subject to a Master Repurchase Agreement with a Primary Dealer; maturity is limited to 30 days. Prior to the Finance Officer/City Treasurer entering into a repurchase agreement, the City Council must approve a Master Repurchase agreement with the financial institution or primary dealer; (8) Medium Term Notes: Securities issued by domestic corporation rated A ; (9) Mutual Funds: Diversified Management Companies complying with California Government Code Sections 53600, 53630, and 53601(k); and (10) Local Agency Investment Fund (LAIF): LAIF was established by the State Treasurer for the benefit of local agencies. The City may invest the maximum as permitted by LAIF. PORTFOLIO DIVERSIFICATION It is the policy of the City to diversify its investment portfolio. Invested funds shall be diversified to minimize the risk of loss resulting from over concentration of assets in a specific maturity, specific issuer, specific financial institution, or specific class of securities. 1930-17 4 Consent Calendar 1 - Attachment 1 Page 4 of 6
MITIGATION OF MARKET RISK In order to minimize market risk and eliminate reliance on interest rate forecasting, it is the policy of the City to structure its investment portfolio as a maturity ladder. The City shall use the State LAIF and other short-term investments, with a maturity of one year or less, to maintain sufficient liquidity to meet the City s short-term operating, capital and contingency requirements. The balance of the portfolio shall be invested in, and evenly distributed between, instruments with maturities of one to five years. AUTHORIZED SECURITIES BROKER/DEALERS The City shall maintain a listing of financial institutions which have been approved by the City Council for investment purposes. All approved securities broker/dealers shall be primary dealers designated by the Federal Reserve Bank of New York. Before engaging in investment transactions with an approved broker/dealer, the City shall have received from said firm a signed certificate form. The document will certify that the firm has reviewed the City s investment policy and agrees to disclose potential conflicts or risks to public funds that might arise out of business transactions between the firm and the City. All financial institutions shall agree to undertake reasonable efforts to preclude imprudent transactions involving the City s funds. USE OF PROFESSIONAL INVESTMENT MANAGERS The City Council may employ the services of professional investment managers to assist in the management of the City s investment portfolio. Such managers may be granted the discretion to purchase and sell investment securities in accordance with the Investment Policy. Such managers shall have: (1) an established professional reputation for asset or investment management; (2) knowledge and working familiarity with state and federal laws governing and restricting the investment of public funds; (3) substantial experience providing investment management services to local public agencies whose investment policies and portfolio size are similar to those of the City; and (4) professional liability (errors and omissions) insurance and fidelity bonding in such amounts as are required by the City. Such managers shall be registered under the Investment Advisers Act of 1940. Such managers shall only be retained by written agreement with the City, and approved by the City Council. Professional service proposals shall be solicited from at least three (3) qualified persons or firms in accordance with the City s purchasing policies and procedures. USE OF INDEPENDENT INVESTMENT ADVISORS The City Council may retain the services of an independent investment advisor to review the investment program from time to time. The adviser will review compliance with policies and procedures, independently calculate the market value of the City s holdings, report on overall portfolio risk exposure and investment results, and make recommendations, if needed, regarding investment strategy or any aspect of the investment program. 1930-17 5 Consent Calendar 1 - Attachment 1 Page 5 of 6
COMPETITIVE BIDS A minimum of two offers or quotations will be obtained prior to the completion of investment transactions with authorized financial institutions. This does not apply to authorized investment pools. SAFEKEEPING AND CUSTODY Any investment securities purchased by the City, or by a professional investment manager for the City, shall be held in third-party safekeeping by a custodial financial institution authorized by the City. Securities held will be evidenced by safekeeping receipts. All security transactions shall be conducted on a delivery-versus-payment (DVP) basis. INTERNAL CONTROLS The City shall establish a system of internal control policies and procedures, which shall be reviewed annually by the City s independent auditor. The controls shall be designed to prevent loss of public funds due to fraud, error, misrepresentation, unanticipated market changes or imprudent actions. REPORTING Within thirty (30) days of the end of each month, the Finance Officer/City Treasurer will submit a monthly investment report to the City Manager and City Council. The report shall contain a summary of investment transactions including: investment type, issuing institution, dates of maturity, amount of deposit, current market value for all securities with a maturity of more than twelve months, rate of interest and such other data as required by law. INVESTMENT POLICY REVIEW The City s Investment Policy shall be reviewed and adopted by the City Council on an annual basis. Prior to City Council review and adoption, the policy shall be reviewed by the Administrative Committee which shall recommend any modifications that it deems appropriate. 1930-17 6 Consent Calendar 1 - Attachment 1 Page 6 of 6