BOARD MEETING DATE: March 6, 2009
AGENDA NO. 4

PROPOSAL:

Approve AQMD Annual Investment Policy and Delegation of Authority to Appointed Treasurer to Invest AQMD Funds

SYNOPSIS:

State law requires a local government entity annually to provide a statement of investment policy for consideration at a public meeting and to renew its delegation of authority to its treasurer to invest or to reinvest funds of the local agency.

COMMITTEE:

Investment Oversight, February 20, 2009, Recommended for Approval

RECOMMENDED ACTIONS:

1. Approve the attached Annual Investment Policy.
    
2. Approve the attached resolution to renew delegation of authority to the Los Angeles County Treasurer to invest and reinvest AQMD funds.
    

Barry R. Wallerstein, D.Env.
Executive Officer

Background

Changes to the Government Code, which took effect in 1996, require that a statement of investment policy be transmitted annually to the Oversight Committee and legislative body of a local agency for consideration at a public meeting. In addition, state law (Gov’t. Code Section 53607) requires that a local agency’s legislative body annually renew its delegation of authority to its Treasurer to invest or to reinvest funds of the local agency.

Board action on April 12, 1996 approved a recommendation to minimize AQMD investments in the Los Angeles County Pooled Surplus Investment Portfolio (PSIP), by directing staff to work with the Los Angeles County Treasurer (AQMD’s Treasurer) to make specific investments on behalf of the AQMD. This change required the development of an annual statement of investment policy specific for the AQMD. Sperry Capital, AQMD’s investment consultant, working with staff of the AQMD and the Los Angeles County Treasurer’s office, developed the attached statement of investment policy. This policy, which is reviewed annually for possible changes, sets forth the investment guidelines for the AQMD with the objective of ensuring that funds are prudently invested to preserve principal and provide necessary liquidity while earning a market average rate of return.

For 2009, no legal changes are required to the policy. Last year, due to the volatility in the mortgage-backed securities market, the Board approved a change to Section V.F. Permitted Investments – Mortgage Securities or Asset-backed Securities, further strengthening the credit requirements for any mortgage pass-through bond, equipment lease-backed certificate, or consumer receivable-backed bond from “AA” to “AAA”, and increased the issuer rating requirement from “A” to “AA” for its long-term debt.

For the past 32 years, the County of Los Angeles has provided treasury management services to the AQMD. These services are limited to the processing of payroll and accounts payable warrants and the investment of the AQMD’s cash balances. In
April 1996 and again in June 2000, the Board reviewed the treasury management options available to the AQMD and elected to continue with the services provided by Los Angeles County.
 

Resource Impacts

The cost associated with AQMD treasury management operations is included in the
FY 2008-09 Budget.
 

Attachments (DOC, 83k)

1. AQMD Annual Investment Policy
2. Delegation of Authority Resolution