Resolution Number SACRA 12-08-07-04RESOLUTION NO. SACRA 12-08-07-04
A RESOLUTION OF THE SUCCESSOR AGENCY TO THE SAN JUAN
CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, APPROVING
THE INVESTMENT POLICY
WHEREAS, the San Juan Capistrano Community Redevelopment Agency
("Agency") was established as a community redevelopment agency duly organized and
existing under the California Community Redevelopment Law, Health and Safety Code
Section 33000, et seq. ("CRL"), and has been authorized to transact business and
exercise the power of a redevelopment agency pursuant to action of the City Council
("City Council") of the City of San Juan Capistrano ("City"); and
WHEREAS, Assembly Bill x1 26 added Parts 1.8 and 1.85 to Division 24 of the
California Health and Safety Code, which laws caused the dissolution of the Agency on
January 31, 2012, and wind down of all redevelopment agencies (the "Dissolution Act");
and
WHEREAS, by Resolution No. 12-01-10-01 approved by the City Council at an
open meeting on January 10, 2012, the City chose to become and serve as the
successor agency to the dissolved Agency under the Dissolution Act; and
WHEREAS, as of and on and after February 1, 2012, the City began serving as
the "Successor Agency" performing its functions as the successor agency to the
Community Redevelopment Agency under the Dissolution Act, including the investment
of idle funds pursuant to the City's Investment Policy; and
WHEREAS, on June 27, 2012, the California State Legislature passed Assembly
Bill 1484 providing amendments to AB x1 26, including the provision that the Successor
Agency is a separate public entity from the public entity that provides its governance;
and
WHEREAS, it is appropriate for the Successor Agency, as a separate public
entity, to adopt a separate investment policy from the City of San Juan Capistrano and
no longer be subject to the City of San Juan Capistrano Investment Policy.
NOW THEREFORE, BE IT RESOLVED, that the Successor Agency to the San
Juan Capistrano Community Redevelopment Agency hereby adopts the Successor
Agency Investment Policy that is attached hereto as Exhibit A.
8/7/2012
PASSED, APPROVED and ADOPTED this 7th day of August 2012.
i
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss.
CITY OF SAN JUAN CAPISTRANO )
I, MARIA MORRIS, appointed Agency Secretary of the Board of Directors of the
Successor Agency to the San Juan Capistrano Community Redevelopment Agency, do
hereby certify that the foregoing Resolution No. SACRA 12-08-07-04 was duly
adopted by the CiiV Council of the City of San Juan Capistrano at a Regular meeting
thereof,/Geld the 7 day of August 2012, by the following vote:
AYES: OUNCIL MEMBERS:
Reeve, Allevato, Taylor, and Vice -Chair Freese
NOES: OUNCIL MEMBER:
None
ABSEN
OUNCIL MEMBER:
Chair Kramer
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8/7/2012
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SUCCESSOR AGENCY TO THE
SAN JUAN CAPISTRANO
COMMUNITY REDEVELOPMENT AGENCY
INVESTMENT POLICY
FIRST ADOPTED: AUGUST 7, 2012
I. POLICY STATEMENT
It is the policy of the SUCCESSOR AGENCY TO THE SAN JUAN CAPISTRANO
COMMUNITY REDEVELOPMENT AGENCY (the "Successor Agency") to invest public
funds in a manner which will provide the security of principal invested with secondary
emphasis on providing the highest yield while meeting the daily cash flow needs of the
and conforming to all applicable State and local statutes governing the investment of
public funds.
II. SCOPE
This investment policy applies to all financial assets and funds held by the Successor
Agency.
III. OBJECTIVES
The primary objectives, in priority order, of the Successor Agency's investment
activities shall be:
A. SAFETY OF PRINCIPAL - Safety of principal is the foremost objective of the
Successor Agency. Investments of the Successor Agency shall be undertaken in a
manner that seeks to insure the preservation of capital in the overall portfolio. One
of the methods to obtain this goal is diversification which is required in the
portfolio's composition.
B. LIQUIDITY - The Successor Agency's investment portfolio will remain sufficiently
liquid to enable it to meet all operating requirements which might be reasonably
anticipated. "Liquidity" refers to the ability to sell at any given moment with a
minimal chance of losing some portion of principal or interest.
C. YIELD - The Successor Agency's investment portfolio shall be designed with the
objective of attaining a market average rate of return throughout budgetary and
economic cycles, taking into account the Successor Agency's risk constraints and
the cash flow of the portfolio.
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The Successor Agency shall not engage in any activity that is designed to raise
funds specifically for the purpose of investing (i.e. borrowing funds to invest, or
leveraging). The Successor Agency is not restricted from investing proceeds from
a bonafide debt issuance in accordance with this investment policy until such time
as funds are needed for the purpose intended.
IV. DELEGATION OF AUTHORITY
A. The authority of the Successor Agency Board of Directors to invest or reinvest
funds of the Successor Agency is delegated for a one-year period to the
Successor Agency Finance Officer, who shall thereafter assume full
responsibility for those transactions until the delegation of authority is revoked
or expires. Subject to review, the Board of Directors may renew the
delegation of authority each year.
B. The Finance Officer shall develop and maintain written administrative
procedures for the operation of the investment program which are consistent
with this investment policy. Procedures will include reference to safekeeping,
Master Repurchase Agreements, wire transfer agreements, collateral and
deposit agreements, banking service contracts, and other investment related
activities.
C. The Executive Director is designated as a liaison/deputy in the event
circumstances require timely action and the Finance Officer is not present.
D. No officer or designee may engage in an investment transaction except as
provided under terms of this investment policy and the procedures
established by the Finance Officer and approved by the Executive Director.
E. The Finance Officer shall be responsible for all transactions undertaken and
shall establish a system of controls to regulate the activities of subordinate
officials.
F. The Finance Officer and other personnel involved in the investment process
shall refrain from personal business activities that could conflict with proper
execution of the investment program, or which could impair their ability to
make impartial investment decisions.
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V. PRUDENCE
A. The standard of prudence to be used in the investment function shall be the
"prudent investor" standard and shall be applied in the context of managing
the overall portfolio. This standard states " When investing, reinvesting,
purchasing, acquiring, exchanging, selling, or managing public funds, a
trustee shall act with care, skill, prudence, and diligence under the
circumstances then prevailing, including, but not limited to, the general
economic conditions and the anticipated needs of the agency, that a prudent
person acting in a like capacity and familiarity with those matters would use in
the conduct of funds of a like character and with like aims, to safeguard the
principal and maintain the liquidity needs of the agency."
B. The Finance Officer, acting in accordance with written procedures and this
investment policy, shall not be held personally accountable for a specific
security's credit risk or market price change, provided that any unexpected
deviations are reported in a timely manner and that appropriate action is
taken to control adverse development.
C. The Successor Agency may invest debt issuance proceeds to match or meet
the anticipated timing of the expenditures. The Successor Agency may not
incur debt with the specific and sole purpose of arbitrage investment.
VI. INTERNAL CONTROLS
The Finance Officer shall establish a system of written internal controls which will
be reviewed annually with the independent auditor. The controls shall be
designed to prevent loss of public funds due to fraud, employee error,
misrepresentation by third parties, unanticipated market changes or imprudent
actions by employees of the Successor Agency.
VII. AUTHORIZED INVESTMENTS
A. Obligations of the United States Government, its agencies and
instrumentalities and government sponsored enterprises;
B. Fully insured or collateralized certificates of deposit and other evidence of
deposit at banks and savings and loan associations located in California;
C. Repurchase agreements, up to a one year term, whose underlying collateral
consists of obligations of the United States Government, its agencies and
instrumentalities and government sponsored enterprises, fully insured or
collateralized certificates of deposit and other evidence of deposit at banks
and savings and loan associations, provided a signed Master Repurchase
Agreement is on file with the counterparty bank or broker/dealer.
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D. Money Market Funds whose portfolio consists of the foregoing;
E. The Local Agency Investment Fund (State Pool) provided that the pool has
provided the Successor Agency with a copy of its current investment policy
and portfolio.
F. Orange County Investment Pool, as authorized by the Government Code
Section 53684, provided that the pool has provided the Successor Agency
with a copy of its current investment policy and portfolio.
G. Local government investment pools, as authorized by the Government Code
Section 53601(p), provided that the pool has provided the Successor Agency
with a copy of its current investment policy and portfolio.
H. Passbook Savings Account Demand Deposits in California financial
institutions;
I. Taxable or Tax -Exempt warrants, notes, bonds or similar evidences of
indebtedness issued by the State of California or any local agency within the
State of California having received a rating of "A" or better by at least two
nationally recognized rating agencies upon approval of the Successor Agency
Council.
If additional types of securities are approved for investment of public funds by
State Statute, they will not be eligible for investment by the Successor Agency
until this investment policy is amended and the amendment passed by the Board
of Directors.
Vlll. AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS
For any investment transaction not conducted directly with the issuer, the
Successor Agency shall maintain a list of financial institutions which are
authorized to provide investment services. Banks and Savings and Loans shall
provide their most recent "Consolidated Report of Condition" (call report) at the
request of the Successor Agency. At a minimum, the Successor Agency shall
conduct an annual evaluation of each bank's creditworthiness to determine
whether it should be on the "Qualified Institution" listing.
Securities dealers not affiliated with a bank shall be required to be classified as
reporting dealers affiliated with the New York Federal Reserve Bank as Primary
Dealers, or meet certain other criteria as determined by the Finance Officer and
approved by the Executive Director.
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IX. DIVERSIFICATION AND MATURITY
A. It is the policy of the Successor Agency 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, or specific
class of securities. Diversification strategies shall be established and
periodically reviewed by the Finance Officer and Executive Director. The
minimum diversification standards by security type and issuer shall be:
U.S. Treasuries and securities having principal and interest guaranteed by the
U.S. Government...........................................................................................100%
U.S. Government agencies, instrumentalities and government
sponsored enterprises............................................................... no more than 50%
Fully insured or fully collateralized CD's .................................... no more than 50%
Money Market Funds................................................................ no more than 20%
Local Agency Investment Fund (LAIF)...................................... no more than 75%
Orange County or Other Local Government Investment Pools. no more than 75%
Passbook Savings Account Demand Deposit ........................... no more than 5%
Securities issued by the State of California or
local agencies within the State of California .............................. no more than 25%
B. The Finance Officer shall be required to diversify maturities. The Finance
Officer, to the extent possible, will attempt to match investments with
anticipated cash flow requirements. Matching maturities with cash flow dates
will reduce the need to sell securities prior to maturity, thus reducing market
risk. Unless matched to a specific requirement, the Finance Officer may not
invest more than 25% of the portfolio for a period greater than three years.
When matched to a specific requirement and with approval by the Council,
the Finance Officer may invest any portion of the portfolio for a period greater
than three years.
X. SAFEKEEPING AND COLLATERALIZATION
A. All security transactions, including collateral for repurchase agreements,
entered into by the Successor Agency shall be conducted on a delivery
versus payment (DVP) basis.
B. Where applicable, all securities shall be held by a third party custodian
designated by the Finance Officer. The third party custodian shall be required
to issue a safekeeping receipt to the Successor Agency listing the specific
instrument, rate, maturity and other pertinent information. The only exception
to the foregoing shall be depository accounts and securities purchases made
with: (i) LAIF and local government investment pools; (ii) placement
certificates of deposit, and, (iii) money market mutual funds, since the
purchased securities are not deliverable. Evidence of each these
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investments will be held by the Successor Agency Treasurer.
C. Collateralization shall be required on two types of investments:
1. Bank Deposits (including Certificates of Deposit and Passbook
Savings Account Demand Deposit) - In accordance with state law.
2. Repurchase agreements - In order to anticipate market changes and
provide a level of additional security for all funds, the collateralization
level will be 102% of market value of principal and accrued interest.
XI. PERFORMANCE EVALUATION
A. The Finance Officer shall make a quarterly report of investment transactions
to the Board of Directors.
B. The Finance Officer shall submit quarterly and annual reports to the
Executive Director and Board of Directors containing sufficient information to
permit an informed outside reader to evaluate the performance of the
investment program.
XII. AFFILIATED AGENCIES AND JOINT POWERS AGREEMENT
The Successor Agency representative to any affiliated agency or joint powers
agreement such as California JPIA or SOCWA, will encourage adoption of an
investment policy similar to this investment policy and in conformance with State
guidelines. On an annual basis a report will be made to the Board of Directors by
the Finance Officer disclosing any significant differences in policies and
investment holdings.
XIII. INVESTMENT POLICY ADOPTION
The Successor Agency's investment policy shall be adopted by the Board of
Directors. The investment policy shall be reviewed on an annual basis by the
Executive Director and the Board of Directors and any significant modifications
recommended thereto must be approved by the Board of Directors.
X. GLOSSARY
A glossary of financial terms referenced herein is appended. See Appendix A.
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