Loading...
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. 1 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: 4 2ZC1 S ephen P. Deitsch City Attorney 2