BOARD MEETING DATE: March 5, 2010
AGENDA NO. 10
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 19, 2010, 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 2010, the following changes are being recommended to Section V.F. Permitted Investments – Bankers Acceptances and Negotiable Certificates of Deposit, by AQMD’s investment consultant, Sperry Capital.
Strengthen the Fitch investment ratings of commercial banks that issue Bankers’ Acceptances and credit requirements for Negotiable Certificates of Deposit from “2-F1” to “F1/AAA” ;
Further clarify investment limits applicable to individual commercial banks to no more than 30 percent in any one commercial bank.
These changes can be found on page seven of the attached Investment Policy for 2010.
For the past 33 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. Staff is recommending that the AQMD continue with the services provided by Los Angeles County.
Resource Impacts
The cost associated with AQMD treasury management operations is included in the
FY 2009-10 Budget.
Attachments (DOC, 60k)
1. AQMD Annual Investment Policy
2. Delegation of Authority Resolution