City of Piedmont

COUNCIL AGENDA REPORT

 

 

DATE: May 16, 2005

FROM: Mark Bichsel, Finance Director

SUBJECT: Investment Report: 3rd. Quarter Local Agency Investment Fund (LAIF) Statement

RECOMMENDATION

Accept the April, 2005 Local Agency Investment Fund (LAIF) statement.

BACKGROUND

A law regarding investment reporting became effective January 1, 1996. At the end of every quarter, the City of Piedmont must submit to the City Council the most recent Local Agency Investment Fund (LAIF) statement. In addition, the City must also submit a statement saying that the City is in compliance with the City's investment policy and that the LAIF investment can meet the expenditure requirements of the City for the next six months or provide an explanation why this requirement cannot be met.

The City of Piedmont is in compliance with the City's investment policy (see pages 2 and 3).

Attached to this report is the April, 2005 LAIF statement which shows $13,728,549.19 in investment funds. This amount, coupled with projected revenue, is adequate to meet our operating expenditure requirements for the next six months.

 

 

CITY OF PIEDMONT

STATEMENT OF INVESTMENT POLICY

 

Purpose

This statement is intended to provide guidelines for the prudent investment of the City's temporary idle cash and outline the policies for maximizing the efficiency of the City's cash management system. The ultimate goal is to enhance the economic status of the City while protecting its pooled cash.

 

Objective

The City's cash management system monitors and forecasts expenditures and revenues, thus enabling the City to invest funds to the fullest extent possible. The City attempts to obtain the highest yield obtainable as long as investments meet the criteria established for safety and liquidity.

 

Policy

The City of Piedmont operates its temporary pooled idle cash investments under the prudent person rule (Probate Code Section 16040 et seq.)*. This affords the City a broad spectrum of investment opportunities as long as the investment is deemed prudent and is allowable under current legislation of the State of California (Government Code Section 53600 et seq.).

Investments may be made in the following media:

Bankers Acceptance

Certificates of Deposit (or time deposits) placed with commercial banks and/or Savings and Loan Companies

Local Agency Investment Fund Demand Deposits (State Pool)

Passbook Savings Account Demand Deposits

Repurchase Agreements

Securities of the U.S. Government or its agencies

* the prudent person rule states, in essence, that "in investing ...property for the benefit of another, a trustee shall administer the trust with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with such matters would use..."

 

 

CITY OF PIEDMONT

STATEMENT OF INVESTMENT POLICY

 

Criteria for selecting investments and the order of priority are:

1. Safety. The safety and risk associated with an investment refers to the potential loss of principal, interest or a combination of these amounts. The City only operates in those investments that are considered very safe.

2. Liquidity. This refers to the ability to "cash in" at any moment in time with a minimal chance of losing some portion of principal or interest. Liquidity is an important investment quality especially when the need for unexpected funds occurs occasionally.

3. Yield. Yield is the potential dollar earnings an investment can provide. Sometimes it is referred to as the rate of return.

Safekeeping. Securities purchased from brokers/dealers shall be held in third party safekeeping by the trust department of the local agency's bank or other designated third party trust, in local agency's name and control, whenever possible.

Investment Objective. The cash management system of the City of Piedmont monitors and forecasts expenditures and revenues. Our system seeks to invest monies to the fullest extent possible. Our system attempts to obtain the highest yields possible as long as safety and liquidity requirements are met.

City Constraints. The City of Piedmont operates its pooled idle cash investments under the Prudent Person Rule. This affords a broad spectrum of investment opportunities as long as the investment is deemed prudent and is permissible under currently effective legislation of the State of California and other imposed legal restrictions.

The basic premise underlying the City's investment philosophy is, and will always continue to be, to insure that money is safe and available when needed.