HomeMy WebLinkAbout05 INVESTMENT OPTIONS 03-18-02AGENDA REPORT
NO. 5
03-18-02
400-70 ~
MEETING DATE: March 18, 2002 ~
TO:
FROM:
SUBJECT:
William A. Huston, City Manager
G. W. Jeffries, City Treasurer
INVESTMENT OPTIONS
SUMMARY:
Approval of this recommendation would confirm Council's permission for the City Treasurer
to deposit a maximum of $5MM in the Orange County Treasurer's Investment Pool (OCIP).
RECOMMENDATION:
Authorize the Mayor and the City Treasurer to sign the Deposit and Investment Agreement
to begin deposit process subject to approval by Board of Supervisors.
FISCAL IMPACT:
Cost effective operationally and competitive return.
DISCUSSION:
Several of you may recall my May 7, 1997 letter concerning Investment Options. In
response to the Mayor's inquiry, I suggested that the Orange County Investment Pool
(OCIP) offered a safe, high quality, competitive return option for modest deposits of Tustin
City funds.
The pool is of the highest rating by Fitch Investor Service. Your Audit Committee has
reviewed and concurred in the recommendation. OCIP, thoroughly restructured and
well-run, is wholly different post-bankruptcy, as both the Mayor and I (through our service on
the Orange County Treasurer's Advisory Committee) can attest.
G. W. Jeffr~s
City Trea,,S"u rer
GWJ:ts
Attachments
GWJ:lnvestmentOptJonsStaff~eport2002 doc
DATE:
March 18, 2002
Inter-Corn
TO:
FROM:
SUBJECT:
William A. Huston, City Manager
G. W. Jeffries, City Treasurer
Investment Options - Orange County Treasurer's Investment Pool
During the April 7, 1997 meeting, then Mayor Pro Tem Thomas raised the question of the
Orange County Treasurer's Investment Pool (OCIP) as a possible investment vehicle.
My response then was that on a business basis, it offered an appropriate highly rated
depository and provided a good money market return. I certainly would recommend its
use, subject to certain operational and policy considerations both here and at the County.
As members of the Treasurers' Advisory Committee, Mayor Thomas and I both know that
OCIP bears no relation to its former self; it is now structured as a high quality money
market fund.
In order to give you a comparative flavor, I have included for your review a chart of
questions typically raised concerning this kind of investment, listing characteristics of four
well-known funds.
(See Attached Chart)
Assume numbers are relatively comparable. Count one point for each "yes" response and
sums are as follow:
A=6, B=4, C=3, D=5
A, which is OCIP, is at least competitive with, if not the best of, the others. Why not OCIP?
The others, respectively, are L. A. County, Califomia Pooled Money Fund, and Institutional
Liquid Asset Fund, managed by Goldman Sachs. I know all three of them, having run one,
advised another, and sold the third.
If you have questions or comments, please let me know.
COMPARATIVE ITEMS
A
B
C
D
Total Assets ($BIL)
Treasurer's Protection
Diversification
Securities all legal
Management Longevity (yrs)
History of Operation (yrs)
Voluntary Members
Weighted Average Maturity
0NAM/days)
Rating
Outside Credit Bkgd
Mark-to-Market (NAV)
Expense Ratio (BP)
Competitive Return
3
yes
yes
yes
20+
30+
<5%
60-90
yes
no
yes
10
yes
13
yes
yes
yes
20+
30+
10%
180
no
no
no
15
yes
30
yes
yes
20+
20+
100%
200
no
no
no
5
yes
1-50
no
yes
no
5 est
25
100%
45-60
no
yes
yes
15-40
yes
GWJ:OClP20021nvestmentOpt~on.doc
FITCH IBCA. DUFF & PHELPS
John M.W. Moorlach, CPA, CFP
Treasurer- Tax Collector of Orange County
12 Civic Center Plaza, Room G-?6
P.O. Box 4515
Santa ,aaa, CA 92702
Re;
Orange County Treasurer's Money Market County Investment Pool
Orange County Treasurer's Money Market Educational Investment Pool
Dear Mr. Moodach:
At your request, Fitch, Inc. ('Fitch ') affirms the local government investment pool ratings of 'AAA/V1+' on
the above referenced pools.
Ratings assigned by Fitch are based on the documents and information provided to us by the Issuer and its
experts and agents. Fitch does not audit or verify the truth or accuracy of such information.
Ratings are not a recommendation to buy, sell or hold any u~curity. F~ling~ do not comment on the
adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or
taxability of payments made in respect of any security.
The assignment of a rating by Fitch shall not constitute a consent by Fitch to lhe use of its name as an
expert in connection with any registration statement filed under Federal Securities laws or under the
Financial Services Act of 1986.
Ratings may be changed, withdrawn, suspended, or placed on Rating Watch due to changes in, additions
to, or the inadequacy Of information.
We are pleased to have had the opportunity to be of service to you. If we can be of further assistance,
please contact me at (212) 908-0619 or by facsimile at (212) 514-6501.
Sincerely,
John L. Schiavetta, CFA
Managing Director
ce,: Paul Gorman-County of Orange
Figure 5