(A) Government agency issues. As authorized in Cal. Gov’t Code §§ 53601(a) through (e), this category includes a wide variety of government securities. There are no portfolio limitations on the amount or maturity period for these investment vehicles, which include the following:
1. Local government bonds or other indebtedness;
2. State bonds or other indebtedness;
3. U.S. treasury notes or other indebtedness secured by the full faith and credit of the federal government; and
4. Other federal agency securities such as issued by the Government National Mortgage Association (GNMA), Federal National Mortgage Association (FNMA) and small business administration.
(B) Bankers’ acceptances.
1. As provided in Cal. Gov’t Code § 53601(g), 40% of the city’s portfolio may be invested in bankers’ acceptances that are eligible for purchase by the federal reserve system, although no more than 30% of the portfolio may be invested in bankers’ acceptances with any one commercial bank.
2. Additionally, the maturity period cannot exceed 270 days; however, bankers’ acceptances are seldom marketed with maturities in excess of 180 days.
(C) Commercial paper. As authorized in Cal. Gov’t Code § 53601(h), 15% of the city’s portfolio may be invested in “prime” commercial paper as rated by Moody’s or Standard and Poor’s with maturities not to exceed 180 days. This percentage may be increased to 30% if the dollar weighted average maturity does not exceed 31 days. There are a number of other qualifications regarding investments in commercial paper based on the financial strength of the corporation and the size of the investment.
(D) Negotiable certificates of deposit. As authorized in Cal. Gov’t Code § 53601(i), the city may invest 30% of its portfolio in negotiable certificates of deposit issued by commercial banks. There is no limitation on the maturity period for this investment vehicle.
(E) Repurchase and reverse repurchase agreements.
1. As authorized in Cal. Gov’t Code § 53601(j), these investment vehicles are agreements between the local agency and seller for the purchase of government securities to be resold at a specific date and for a specific amount.
2. Repurchase agreements are generally used for short term investments varying from one day to two weeks, although there is no legal limitation on the maturity period or the amount. As provided in Cal. Gov’t Code § 53635, reverse repurchase agreements require the prior approval of the city.
(F) Council financial futures and financial option contracts. As authorized in Cal. Gov’t Code §53601(i), local agencies may invest in financial futures or option contracts in any of the above investment categories subject to the same overall portfolio limitations.
(G) Time certificates of deposit.
1. As authorized in Cal. Gov’t Code § 53652, certificates of deposit are fixed term investments which are required to be collateralized 110% by eligible pooled securities.
2. The pool is administered by the state, and is composed of a wide variety of government securities, including those indicated above (except municipal bonds), as well as promissory notes secured by first mortgages on improved residential property located in the state. There are no portfolio limits on the amount or maturity for this investment vehicle.
(Ord. 342, passed 12-15-1987)