HomeMy WebLinkAboutItem 2c: Resolution 6771 - Investment of General Obligation Bonds Series 2011 Bond Proceeds in Local Agency Investment Fund ‘
66 ro. 16
� *': STAFF REPORT
Administrative Services Department
DATE: May 3, 2011
TO: Mayor and City Council
FROM: Hue Quach, Administrative Services Director
Shannon Huang, Financial Services Manager/Treasurer
SUBJECT: RESOLUTION NO. 6771 AUTHORIZING THE INVESTMENT OF
GENERAL OBLIGATION BONDS SERIES 2011 PROCEEDS IN
THE LOCAL AGENCY INVESTMENT FUND
Recommendation: Approve
SUMMARY
At the April 19 council meeting, the City Council approved the issuance of $8.0
million in General Obligation Bonds to finance the costs of constructing a grade
separation at the intersection of Santa Anita Avenue and the proposed
Metropolitan Transit Authority Gold Line Foothill Extension right of way. The date
of the sale is set for May 20, 2011 and the city is expected to receive the bond
proceeds on the closing date of May 24, 2011. Staff recommends investing the
bond proceeds with the Local Agency Investment Fund (LAIF), and it is required
for the City Council to adopt a resolution authorizing the investment of the bond
proceeds in LAIF.
DISCUSSION
The Local Agency Investment Fund is a voluntary program created by statute,
which began in 1977 as an investment alternative for California local
governments and special districts. This program offers participating agencies the
opportunity to participate in a major portfolio, which invests hundreds of millions
of dollars daily, using the investment expertise of the Treasurer's Office
Investment staff at no additional cost to the City.
The LAIF is part of the Pooled Money Investment Account (PMIA) that began in
1953 and has oversight provided by the Pooled Money Investment Board (PMIB)
and an in -house Investment Committee. The PMIB consists of the State
Treasurer, Director of Finance, and State Controller.
All securities are purchased under the authority of the Government Code Section
16430 and 16480.4. The PMIA also has policies, goals, and objectives for the
portfolio to make certain that our goals of safety, liquidity and yield are not
jeopardized, and that prudent management prevails.
In addition, the State Treasurer's Office is audited by the Bureau of State Audits
on an annual basis. The Bureau of State Audits also has a continuing audit
process throughout the year. The State Controller's Office, as well as an in-
house audit process involving three separate divisions, audit all investment and
LAIF claims on a daily basis.
The LAIF fund is protected by Government Code Section 16429.3 from
impoundment or seizure by any State official or State agency. The Section
states in effect that "the right of a city, county, city and county, special district,
nonprofit corporation, or qualified quasi - governmental agency, to withdraw its
deposited money from the LAIF upon demand may not be altered, impaired, or
denied in any way by any state official or state agency based upon the States
failure to adopt a State Budget by July 1 of each new fiscal year."
The bond proceeds are designated to be used for the construction of a grade
separation for the Gold line Foothill Extension. Therefore, it can only be invested
with liquid funds as it will be used to meet payment obligations when they occur.
At LAIF, bond proceeds are limited to one withdrawal per 30 -day period, and the
withdrawal limitation has been deemed workable by staff. Staff recommends the
City Council adopt Resolution No. 6771 and authorize the investment of 2011
General Obligation bonds proceeds with LAIF.
FISCAL IMPACT
All investment return will be credited to the proceeds account and can be used
for the project or debt service payments as stipulated by the bond documents.
Staff is not able to estimate the total earnings for the project fund as it depends
on the daily rates and the duration of the deposit. LAIF earnings are currently at
approximately 0.45% annually and the investment rate changes daily.
RECOMMENDATION
Adopt Resolution No. 6771 authorizing the Investment of
General Obligation Bonds Series 2011 Proceeds in the Local
Agency Investment Fund.
APPROVED: �..r
Donald Penman, City Manager
RESOLUTION NO. 6771
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
ARCADIA, CALIFORNIA, AUTHORIZING INVESTMENT OF
GENERAL OBLIGATION BONDS SERIES 2011 BOND
PROCEEDS IN THE LOCAL AGENCY INVESTMENT
FUND
WHEREAS, pursuant to Chapter 730 of the statutes of 1976, Section 16429.1
was added to the California Government Code to create a Local Agency Investment
Fund in the State Treasury for the deposit of money of a local agency for purposes of
investment by the State Treasurer; and
WHEREAS, the City Council does hereby find that the deposit and withdrawal of
proceeds from bonds, notes, certificates of participation, or other forms of indebtedness
(proceeds) in the Local Agency Investment Fund in accordance with the provisions of
Government Code Section 16429.1 is in the best interest of the City of Arcadia and the
holders of the City of Arcadia's indebtedness.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF ARCADIA,
CALIFORNIA, DOES HEREBY FIND, DETERMINE AND RESOLVE AS FOLLOWS:
SECTION 1. The City Council does hereby authorize the deposit and withdrawal
of General Obligation bond series 2011 proceeds in the Local Agency Investment Fund
in the State Treasury in accordance with the provisions of Government Code Section
16429.1 for the purpose of investment as stated therein, and verification by the State
Treasurer's Office of all banking information provided in that regard.
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SECTION 2. Any one or more of the following City of Arcadia officers or their
successors in office shall be authorized to order the deposit or withdrawal of monies in
the Local Agency Investment Fund:
Donald Penman, City Manager
Hue C. Quach, Administrative Services Director
P. Shannon Huang, Financial Services Manager/Treasurer
until the City of Arcadia notifies the Local Agency Investment Fund in writing of any
change with respect to the foregoing.
SECTION 3. The City Clerk shall certify as to the adoption of this Resolution.
Passed, approved and adopted on this day of , 2011
Mayor of the City of Arcadia
ATTEST:
City Clerk
APPROVED AS TO FORM:
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S ephen P. Deitsch
City Attorney
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