BOARD MEETING DATE: March 5, 2010
AGENDA NO. 31

REPORT:

Investment Oversight Committee

SYNOPSIS:

The Investment Oversight Committee met Friday, February 19, 2010 and discussed various issues detailed in the Committee report. The next Investment Oversight Committee meeting is scheduled for Friday, May 21, 2010 at 12:00 noon in the Executive Conference Room.

RECOMMENDED ACTION:

Receive and file this report. 
 

Michael Antonovich, Chair
Investment Oversight Committee

Background

Attendance: Present at AQMD were Committee Members Joseph Lyou, David E. Ertel, and Paul Sundeen. Michael Antonovich, Michael A. Cacciotti, and Bill Campbell attended by teleconference. Absent was Committee Member Gary Burton.

Investment Committee Action Items:

Quarterly Report of Investments: Reviewed the quarterly investment report to the Governing Board. For the month of December 2009, the AQMD’s weighted average yield on total investments of $418,091,271 from all sources was 1.26%. The allocation by investment type was 91.8% in the Los Angeles County Pooled Surplus Investment Fund (PSI) and 8.2% in the State of California Local Agency Investment Fund (LAIF). The Committee approved the quarterly report.

Approval of Annual Investment Policy and Delegation of Authority to Appointed Treasurer to Invest AQMD Funds: The Committee reviewed the Annual Investment Policy for 2010, which included recommended changes to Section V.F. Permitted Investments – Bankers Acceptances to strengthen the Fitch investment ratings of commercial banks that issue Bankers’ Acceptances from “2-F1” to “F1/AAA” and to further clarify investment limits applicable to individual commercial banks to no more than 30 percent in any one commercial bank. Committee member Paul Sundeen noted that the rating change described above should also apply to Negotiable Certificates of Deposit. The Committee approved that change. The Committee also reviewed AQMD’s renewal of its delegation of authority to its treasurer. The AQMD Annual Investment Policy and the reauthorization of the Los Angeles County Treasurer to invest and reinvest AQMD funds, with the changes noted above, were recommended for approval at the March 5, 2010 meeting of the Governing Board.

Investment Committee Discussion Item:

Financial Market Update: Jim Martling provided the Committee with comments on current economic and investment market conditions. In summary, Mr. Martling commented that the capital markets’ lack of concern for inflation have resulted in an improvement in long term yields. New tax credit bonds, called Build America Bonds (BABs), which are part of the economic stimulus plan, have become an important financial tool for municipalities. Nearly $10 billion in BABs were introduced in April 2009 in a number of states, including California and New Jersey. Issuance is expected to grow to over $100 billion between now and the end of 2010, when the BAB program expires. Also, Mr. Martling stated that governments are experiencing a marked increase in competition for infrastructure projects, resulting in much lower construction bids. In some cases, bids are coming in 40% lower than engineering estimates. 

Other Business: None 

Public Comment: None

Attachment (DOC, 24k)

Errata Sheet