HomeMy WebLinkAbout12 INVESTMENT OPTIONS 04-15-02AGENDA REPORT
NO. 12
04-15-02
355-05 ~
MEETING DATE: April 15, 2002 ~
TO:
FROM:
SUBJECT:
Honorable Mayor and Members of the City Council
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:
1. Adopt Resolution No. 02-12 authorizing the deposit and investment of excess funds with the
Treasurer of Orange County.
2. Authorize the Mayor and the City Treasurer to sign the Deposit and Investment Agreement to
begin deposit process subject to approval by the Board of Supervisors.
FISCAL IMPACT:
Cost effective operationally and competitive retum.
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 retum option for modest deposits of Tustin City funds.
The pool is of the highest rating by Fitch Investor Service. The 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.
GWJ:ts
Attachments
GWJ'lnvesm'~ent O~onsStaffRepo~t2002.doc
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RESOLUTION NO. 02-12
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUSTIN,
CALIFORNIA, AUTHORIZING THE DEPOSIT AND INVESTMENT OF
EXCESS FUNDS WITH THE TREASURER OF ORANGE COUNTY
WHEREAS, Section 53684 of the California Government Code allows the City of Tustin to
deposit excess funds into the Orange County Treasury for purposes of investment by the
Orange County Treasurer-Tax Collector (the "County Treasurer"); and
WHEREAS, the City Council has determined or may determine from time to time that excess
funds of the City of Tustin exist which are not required for immediate use; and
WHEREAS, with the approval of the County Board of Supervisors and the consent of the
County Treasurer, the County Treasurer may accept for investment deposits of a local agency,
provided that the local agency is located within Orange County.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUSTIN, CALIFORNIA,
resolves as follows:
SECTION 1: The City Council hereby finds that it may, from time to time, be advantageous
to make deposits for purposes of investment with the Orange County Treasurer.
SECTION 2: The City Council has received and carefully reviewed the Orange County
Treasurer's (the "Treasurer") Investment Policy Statement (the "IPS"), and is familiar with its contents.
Having considered and weighed the risks of investing (including but not limited to the risks of loss of
interest and principal) the City Council finds and determines that it is appropriate and legal to invest
its moneys in the Orange County Treasury as permitted by the IPS.
SECTION 3: To the extent that City of Tustin moneys are invested with the County, in whole
or in part, in the Extended Fund (as defined in the IPS), the City Council acknowledges that it has
reviewed and understands Net Asset Value ("NAV") risk that is discussed in Section XV of the IPS
and hereby finds and determines that investment of any of its moneys in the Extended Fund is
appropriate investment of its moneys.
SECTION 4: The City Council authorizes the deposit of moneys of the City of Tustin into the
County Treasury for purposes of investment by the County Treasurer in accordance with the
provisions of Section 53684 of the California Government Code and the "Agreement for the Deposit
and Investment of Excess Funds into the County Treasury" (the "Agreement"), which has been
presented to this City Council and which is approved in the form presented. The Mayor of Tustin is
hereby authorized and directed, for and in the name of the City of Tustin, to execute the Agreement
on behalf of the City of Tustin.
PASSED AND ADOPTED at a regular meeting of the City Council of the City of Tustin on the
15th day of April, 2002.
ATTEST:
Jeffery M. Thomas
Mayor
Pamela Stoker
City Clerk
DATE:
March 18, 2002
Inter-Com
TO:
FROM:
SUBJECT:
William A. Huston, City Manager
G. W. Jeffries, City Treasurer
Investment Options - Orange County Treasurer's Investment Pool
Dudng the April 7, 1997 meeting, then Mayor Pro Tern 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 cer[ainly 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 '~jes" response and
sums are as follow:
A=6, B=4, C=3, D=5
A, which is OClP, 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
Total Assets ($BIL)
Treasurer's Protection
Diversification
Securities all legal
Management Longevity (yrs)
History of Operation (yrs)
Voluntary Members
Weighted Average Maturity
(WAM/days)
Rating
Outside Credit Bkgd
Mark-to-Market (NAY)
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
C
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
FiT I
FITCH IBCA. DUFF & PHELPS
John M.W. Moor~ch, CPA, CFP
Treasu~- Tax Collector of (~ County
12 Civic Center Plaza, Room G-76
P.O. Box 4515
Orange County Treasure~s Money Market County Inveslment Pool
Orange Coonty Treasurer's IVkxtey Mmt~ Educal]ma; inveslme~t
Dear Mr. Moorlach:
At your request, Fitch, Inc. ('Fitch ") afr~rns the local government Investment pool ratings of 'AAA/V1+' m
the abeve referenced pools.
RatJng. assigned by Fitch am based on the document~ and information provided to us by the Issue' and its
experts and agenls. F~=h does not au(Itt or va'fly the Imth or __-3co__~racy of such ef(xmalion.
Ralings are not a recommendation to buy, sell or hold my securily. Ra~ngs do not comment e~ the
ed~uacy of maker p~ce, the suitablity of any secarity ~ a pmticular investor, or the tax-exempt nalum or
taxab~ty of payme~s made in respect of any secudty.
The assignment of a rating by Fitch shall not consflute a consent by F~h Io t~e use of its name as an
expert in connection with any regislrati(~ statement filed under Federal Securities laws or under the
FJnancia] Services Act of 1986.
Ratings may be ohanged, wilhdrawn, suspended, or placed on Rating Watch due to change~ in, a:ldilJons
to, or ~e inadequacy of idorma~n.
We are peased to have had ~ opportunity Io be of service to you. If we can be of furltter assistance,
please conlact me at (212) 906.(1619 or by facsimile at (212) 514.6501,
Sincerely,
John L. Schiavetla, CFA
Managing Direclor
cc: Paul Go,man-County d Orange
Figure 5
AGREEMENT
FOR
THE DEPOSIT AND I'NVESTMENT OF EXCESS FUNDS
INTO THE COILN-rY TREASURY
THIS A(3REEMENrr is made and entered into as of the date fully executed by and
between .City of Tusitin; hereinafter referred to as "Local Agency," and the County of Orange,
California a political subdMsion of the State of California, herei~'~a*ter referred to as "County."
RECITALS
WHEREAS, Section 531584 of the California Government Code allows local agencies to
deposit excess funds into the County Treasury for proposes of investment by the County
Treasurer-Tax Collector (the "Treasurer"); and
~ ~n-IEREAS, Local Agency has found that it may, from time to time, be advantageous to
make such deposits for purposes ofinvesunent w/th the Treasurer; and
WHEREAS: the treasurer or other official responsible for the funds of the Local Agency
has deten'nined, and may determine from time to time, that excess feuds of the Local Agency
ex/st which are not required for immediate use; and
WFIEREAS, the governing body of Local Agency has author/zed the deposit of moneys
of Local Agency for purposes of investment with the County Treasury in accordance with the
provisions of Section 53684 of the California Government Code; and
WHEREAS, with the approval of the Count~, Board of Supervisors and the consent of the
Treasurer, the Treasurer may accept for investment deposits of Local Agency, provided that
Local Agency is located within Orange County;
NOW, THEREFORE, in cons:~de~ation of the mutual promise herein, the parties agree as
follows:
ARTICLES
1. ACKNOWLEDGMENT
The parties ac'knowledge that the Recitals are true and correct.
SCOPE OF AGREEMENT
This A~eement specifies the contracmaI terms and conditions by which County will
manage and invest Local Agency's excess funds which have been deposited for
investment with the Treasurer. Pursuant to various provisions of the Govemment Code
and Revenue and Taxation Code, the Treasurer shall provide central depository and
investment services for Local Agency.
3. COMMINGLED INVESTMENT POOLfINVESTMENT POLICY STATEMENT
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3. COMMLNGLED INqrESTMENT POOLfI'NVESTM. ENT POLICY STATEMENT
Local Agency understands that the funds it deposits for investment will be held in the
Orange County Commingled Investment Poo: and shall be invested by the Treasurer in
accordance with the policies contained in the Orange Coumy Treasurer Investment Policy
Statement (the "[PS"), as now in effect and as ma), be revised from time to time.
LOCAL AGENCY ACIC~OWLEDGME.Nq'S
Local Agency acknowledges that it has received and carefi, flly reviewed the IPS, and, is
familiar with its contents. Having considered and weighed the risks of investing
(including, but not limited to, the risks of loss of interest and principal) the Local Agency
has determined that it is appropriate and legal to invest its moneys in the Orange County
Treasury as permitted by the IPS. The Local Agency has been advised by the Treasurer
and understands that the IPS may be mended by the Treasurer wSthom the review or
consent of Local Agency.
To the extent its moneys are invested with the County, in whole or in part, in the
Extended Fund (as defined in the [PS). Loca/Agency further acknowledges that it has
reviewed and understands Net Asset Value ('"NAV") risk that is discussed in Section XW
of the [PS. The Local Agency finds and determines that investment of any of its moneys
in the Extended Fund is an appropriate investment of its moneys.
TERM OF AGREEM3ENT
This Agreement shall become effective on the date fully executed and shall continue
indefinitely, unless this Agreement is terminated earlier by either party, in accordance with
Article 6.
DEDUCTION OF ADMINISTRATIYE FEES
Local Agency agrees that the Treasurer shall deduct administrative charges from its gross
interest income pursuant to California Government Code Sections 53684(b) and 27013.
A1VIEN'DMEh~f
Neither part>,, shall make any change to this Agreement without the other's written
consent. Such changes shall be incorporated into an Agreement Amendment, which shall
not become effective until signed by the parties. Amendments max, be made by the
Treasurer if the changes are min/sterial and are subject to approval by the County Board
of Supervisors ifa change in policy is involved.
8. TERMINATION
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10.
The provision of senSces under this Agreement may be terminated, in whole or in part,
by either party in accordance with this Article whenever either party shall det-,rmine that
such termination is its best interest. An)' such termination shall be effected by delivery
to the other party of a Notice of Termination specifying the extent to which services
under the Agreement are terminated, and the date upon which such termination will
become effective.
After receipt of a Notice of Termination, and except as otherwise agreed:
(a)
The County shall stop performing under this Agreement on the date specified and
to the extent specified in the Notice of Term/nation.
Local Agency shall request no further services requiring work to be performed
after the termination date as specified in the Notice of Termination.
Upon term/nation, Local Agency agrees to pay the County for all services performed prior
to termination.
DEPOSITS AND ~r[THDRAWALS
The officers or'employees listed on Attachment A, or their successors in office, shall be
authorized to deposit and request withdrawals of moneys of Local Agency in the County
TreasmD'. "When Local Agency requests withdraw of funds from the County Treasury,
Local Agency and County shall comply with all applicable v,.Sthdrawal provisions
pursuant to California law, as now in effect and as ma3' be subsequently added, including
but not limited to Government Code Section 27136.
NOTICES
Where required to be given under ~is Agreement, notice shall be in writing and shall be
deemed given when de!ivered personally or deposited in the United States mai!, postage
prepaid, certified, addressed as follows:
Local Agency:
Orange County Treasurer-Tax Collector
A~ention:
12 Civic Center Plaza, Room G76
Santa Aha, CA 92701
11. MERGE~O CONTIN~'I'NG WAIVER
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This Agreement contains flae entire and complete understanding of the parties and
supersedes any and ail other prior agreements, oral or a.~tten, and discussior~s of the
parties with respect to the provision of services under this Agreement. No waiver of any
term or condition of this Agreement shall be deemed a continuing waiver thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date(s) written below.
DATED
LOCAL AGENCY
By
By
DATED
COUNTY OF ORANGE, CALIFORNIA,
a political subdivision of the State of
California
APPROVED AS TO FORM:
By &~oo~
Counsel for c
DATED:
By
John M. W. Moorlach
Orange Count, Treasurer-Tax Collector
BENJAMEN P. de MAYO, COUNTY COUNSEL
By
john H. Abbott
Deputy, County Core, scl
DATED:
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