HomeMy WebLinkAboutOC SAN 22-36 (Repealed)OC SAN 22-36-1
RESOLUTION NO. OC SAN 22-36
A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY SANITATION DISTRICT, AUTHORIZING THE ORANGE COUNTY SANITATION DISTRICT'S TREASURER TO INVEST AND/OR
REINVEST THE ORANGE COUNTY SANITATION DISTRICT'S FUNDS,
ADOPTING THE ORANGE COUNTY SANITATION DISTRICT'S INVESTMENT POLICY STATEMENT AND PERFORMANCE BENCHMARKS, AND REPEALING RESOLUTION NO. OC SAN 21-22
WHEREAS, on December 15, 2021, the Board of Directors adopted Resolution No. OC SAN 21-22, readopting the Orange County Sanitation District's Investment Policy
Statement, and establishing specific performance benchmarks and objectives, together
with a schedule of frequency of investment performance reports; and WHEREAS, pursuant to California Government Code Section 53607, the Board of Directors may delegate authority to invest and/or reinvest the Orange County Sanitation
District’s funds to the Treasurer for a one-year period; and
WHEREAS, pursuant to California Government Code Section 53646, the Orange County Sanitation District is required to review its Investment Policy annually and readopt its Policy at a public meeting, which Policy will establish specific performance benchmarks
and objectives, and specific monitoring and reports.
NOW, THEREFORE, the Board of Directors of the Orange County Sanitation District, DOES HEREBY RESOLVE, DETERMINE AND ORDER:
Section 1: That the authority of the Board of Directors to invest or reinvest
surplus funds, or to sell or exchange securities so purchased, or to deposit for safekeeping the funds and investments of the Orange County Sanitation District with depositories, as provided for in California Government Code Sections 53608 and 53630, is hereby delegated to the Orange County Sanitation District’s Treasurer for a one-year
period, January 1, 2023 through December 31, 2023, as authorized by California
Government Code Section 53607. Section 2: That the Board of Directors hereby adopts the Investment Policy Statement of the Orange County Sanitation District.
Section 3: That the Board of Directors hereby adopts the following specific performance benchmarks for their two investment funds in accordance with Section 16.0 of the Orange County Sanitation District’s Investment Policy:
LIQUID OPERATING MONIES: The Short-Term Operating Fund will be compared
to the three-month Bank of America Merrill Lynch T-Bill Index and the Callan Money Market Funds.
OC SAN 22-36-2
LONG-TERM OPERATING MONIES: The Long-Term Operating Fund will be compared to the Bank of America Merrill Lynch Corporate and Government One-
to-Five Year Maturity Index and to the Callan Short Term Fixed Income Group. Section 4: That the Board of Directors hereby adopts a performance monitoring and reporting schedule, as required by Section 17.0 of the Orange County Sanitation District’s Investment Policy.
Section 5: That Resolution No. OC SAN 21-22 is hereby repealed.
PASSED AND ADOPTED at regular meeting of the Board of Directors, Orange
County Sanitation District held December 15, 2022.
Chad P. Wanke Board Chairman
ATTEST:
Kelly A. Lore, MMC Clerk of the Board
Chad Wanke (Dec 16, 2022 11:21 PST)
Chad Wanke
Kelly Lore (Dec 16, 2022 12:45 PST)
Kelly Lore
OC SAN 22-36-3
STATE OF CALIFORNIA )
) ss
COUNTY OF ORANGE ) I, Kelly A. Lore, Clerk of the Board of Directors of the Orange County Sanitation
District, do hereby certify that the foregoing Resolution No. OC SAN 22-36 was passed and adopted at a regular meeting of said Board on the 15th day of December 2022, by the following vote, to wit:
AYES: Stephen Faessel, Ryan Gallagher, Marshall Goodman, Patrick
Harper, Christine Marick, Sandra Massa-Lavitt, Jordan Nefulda
(Alternate), Andrew Nguyen, David Shawver, Chad Wanke,
John Withers, Dan Kalmick (Alternate), Farrah Khan
(Alternate), Ted Lindsey (Alternate) and Connor Traut (Alternate) NOES: None ABSENT: Brad Avery, Rose Espinoza, Johnathan Ryan Hernandez, Steve Jones, Kim Nichols, Robert Ooten and Donald Wagner ABSTENTIONS: None
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of Orange County Sanitation District this 15th day of December 2022.
Kelly A. Lore, MMC Clerk of the Board of Directors Orange County Sanitation District
Kelly Lore (Dec 16, 2022 12:45 PST)
Kelly Lore
Page 1
ORANGE COUNTY SANITATION DISTRICT
INVESTMENT POLICY STATEMENT
1.0 Policy:
It is the policy of the Orange County Sanitation District (OC San) to invest public funds in
a manner which ensures the safety and preservation of capital while meeting reasonably
anticipated operating expenditure needs, achieving a reasonable rate of return and
conforming to all state and local statutes governing the investment of public funds.
1.1. This Investment Policy is set forth by OC San for the following purposes:
1.1.1. To establish a clear understanding for the Board of Directors,
OC San management, responsible employees and third parties of the
objectives, policies and guidelines for the investment of OC San’s idle and
surplus funds.
1.1.2. To offer guidance to investment staff and any external
investment advisors on the investment of OC San funds.
1.1.3. To establish a basis for evaluating investment results.
1.2. OC San establishes investment policies which meet its current investment
goals. OC San shall review this policy annually and may change its policies
as its investment objectives change.
2.0 Scope:
This Investment Policy applies to all financial assets of OC San; except for the proceeds
of OC San’s capital projects financing program, which are invested in accordance with
provisions of their specific bond indentures; and such other funds excluded by law or
other Board-approved covenant or agreement.
These funds are accounted for by OC San as Enterprise Funds as represented in OC
San’s Annual Comprehensive Financial Report.
3.0 Standard of Prudence:
The standard of prudence to be used by OC San internal staff, and any authorized
investment advisor(s), shall be as described in Section 53600.3 of the California
Government Code as follows: Except as provided in subdivision (a) of Section 27000.3,
all governing bodies of local agencies or persons authorized to make investment
decisions on behalf of those local agencies investing public funds pursuant to this chapter
are trustees and therefore fiduciaries subject to the prudent investor standard. When
investing, reinvesting, purchasing, acquiring, exchanging, selling, or managing public
funds, a trustee shall act with care, skill, prudence, and diligence under the circumstances
then prevailing, including, but not limited to, the general economic conditions and the
anticipated needs of the agency, that a prudent person acting in a like capacity and
OC SAN 22-36-4
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familiarity with those matters would use in the conduct of funds of a like character and
with like aims, to safeguard the principal and maintain the liquidity needs of the agency.
Within the limitations of this section and considering individual investments as part of an
overall strategy, investments may be acquired as authorized by law.
4.0 Investment Objectives:
The primary objectives of OC San’s investment activities, in priority order, and as
described in Section 53600.5 of the California Government Code, shall be:
4.1 Safety: The safety and preservation of principal is the foremost objective of
the investment program of OC San. Investments shall be selected in a
manner that seeks to ensure the preservation of capital in OC San’s overall
portfolio. This will be accomplished through a program of diversification,
more fully described in Section 13.0, and maturity limitations, more fully
described in Section 14.0, in order that potential losses on individual
securities do not exceed the income generated from the remainder of the
portfolio.
4.2 Liquidity: The investment program will be administered in a manner that
will ensure that sufficient funds are available for OC San to meet its
reasonably anticipated operating expenditure needs.
4.3 Return on Investments: The OC San investment portfolio will be
structured and managed with the objective of achieving a market rate of
return throughout budgetary and economic cycles, commensurate with
legal, safety and liquidity considerations.
5.0 Delegation of Authority:
5.1 Authority to manage OC San’s investment program is derived from the
California Government Code Sections 53600 et seq. and Sections 53635 et
seq. The Board of Directors hereby delegates management responsibility
for OC San’s investment program to its Assistant General Manager &
Director of Finance and Administrative Services/Treasurer, who shall
establish written procedures for the operation of the investment program,
consistent with this policy. The Controller/Assistant Treasurer shall be
responsible for day-to-day administration, monitoring and the development
of written administrative procedures for the operation of the investment
program, consistent with this policy. No person may engage in an
investment transaction except as provided under the terms of this policy and
the procedures established by the Treasurer. The Treasurer shall be
responsible for all transactions undertaken by OC San internal staff and
shall establish a system of controls to regulate the activities of internal staff
and external investment advisors engaged in accordance with Section 5.3.
5.2 The administrative procedures for the operation of OC San’s investment
program will provide for, but not be limited to, the following:
OC SAN 22-36-5
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5.2.1 Formats for monthly and quarterly reports to the Administration
Committee and the Board of Directors.
5.2.2 Compliance with generally accepted accounting principles of the
Government Accounting Standards Board.
5.2.3 Establishment of benchmarks for performance measurement.
5.2.4 Establishment of a system of written internal controls.
5.2.5 Establishment of written procedures for competitive bids and
offerings of securities that may be purchased or sold by internal OC San
staff.
5.2.6 Establishment of a Desk Procedures Manual for treasury
operations and management.
5.3 The Board of Directors may, in its discretion, engage the services of one or
more registered investment advisors to assist in the management of OC
San’s investment portfolio in a manner consistent with OC San’s objectives.
Such external investment advisors, which shall be selected through a
competitive process, shall be granted discretion to purchase and sell
investment securities in accordance with this Investment Policy. Such
advisors must be registered under the Investment Advisers Act of 1940 or
be exempt from such registration.
6.0 Ethics and Conflicts of Interest:
Officers and employees of OC San involved in the investment process shall refrain from
personal business activities that could conflict with proper execution of OC San’s
investment program, or which could impair their ability to make impartial investment
decisions. Employees and investment officials shall disclose to the General Manager any
material financial interests in financial institutions that conduct business within OC San’s
boundaries and they shall further disclose any large personal financial/investment
positions, the performance of which could be related to the performance of positions in
OC San’s portfolio.
7.0 Authorized Financial Dealers and Institutions:
7.1 For investment transactions conducted by OC San internal staff, the
Treasurer will maintain a list of financial institutions authorized to provide
investment services to OC San, including "primary" or regional dealers that
qualify under Securities and Exchange Commission Rule 15C3-1 (Uniform
Net Capital rule) and Federal or State of California chartered banks. No
public deposit shall be made except in a qualified public depository as
established by State law.
OC SAN 22-36-6
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All financial institutions which desire to become qualified bidders for
investment transactions with OC San must supply the following for
evaluation by the Treasurer:
7.1.1. Audited financial statements for the institution’s three most
recent fiscal years.
7.1.2. A statement, in the format prescribed by the Government
Finance Officers Association (GFOA), certifying that the institution has
reviewed OC San’s Investment Policy and that all securities offered to OC
San shall comply fully and in every instance with all provisions of the
California Government Code and with this Investment Policy. The current
statement is presented in Appendix "A."
7.1.3. A statement describing the regulatory status of the dealer and
the background and expertise of the dealer's representatives.
Selection of financial institutions, broker/dealers and banks authorized to
engage in transactions with OC San shall be made through a competitive
process. An annual review of the financial condition of qualified institutions
will be conducted by the Treasurer.
7.2 Selection of broker/dealers used by external investment advisors retained
by OC San, shall be in compliance with contract provisions between OC
San and any external investment advisors and shall be in substantially the
following form:
Use of Securities Brokers: Neither the Investment Advisor nor any parent,
subsidiary or related firm shall act as a securities broker with respect to any
purchases or sales of securities which may be made on behalf of OC San,
provided that this limitation shall not prevent the Investment Advisor from
utilizing the services of a securities broker which is a parent, subsidiary or
related firm, provided such broker effects transactions on a "cost only" or
"nonprofit" basis to itself and provides competitive execution. The
Investment Advisor shall provide OC San with a list of suitable independent
brokerage firms (including names and addresses) meeting the
requirements of Government Code Section 53601.5, and, unless otherwise
directed by OC San, the Investment Advisor may utilize the service of any
of such independent securities brokerage firms it deems appropriate to the
extent that such firms are competitive with respect to price of services and
execution.
8.0 Authorized and Suitable Investments:
All investments shall be made in accordance with the California Government Code
including Sections 16429.1 et seq., 53600 et seq. and 53684, and as described within
this Investment Policy. Permitted investments under this policy shall include:
OC SAN 22-36-7
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8.1 Securities, obligations, participations, or other instruments of, or
issued by, or fully guaranteed as to principal and interest by the US
Government, a federal agency, or a US Government-sponsored enterprise
pursuant to Section 53601 (f) of the California Government Code. US
Treasury securities must make up at least 10% of the portfolio.
8.2 Supranational Obligations issued or unconditionally guaranteed by the
International Bank for Reconstruction and Development, International
Finance Corporation, or Inter-American Development Bank. Securities must
be eligible for purchase in the United States and be U.S. dollar denominated
senior unsecured unsubordinated obligations, with a maximum maturity of
five years. Securities eligible for purchase under this section must be rated
“AA” or better by a Nationally Recognized Statistical Rating Organization
(NRSRO) and shall not exceed 30% of the total portfolio.
8.3 Mortgage pass-through security, collateralized mortgage obligation,
mortgage-backed or other pay-through bond, equipment lease-backed
certificate, consumer receivable pass-through certificate, or
consumer receivable-backed bond. Securities eligible for investment
under this subdivision shall be rated in a rating category of “AA” or its
equivalent or better by an NRSRO and have a maximum remaining maturity
of five years or less. Purchase of securities authorized by this subdivision
may not exceed 20% of the agency’s surplus moneys that may be invested
pursuant to this section. Purchase of mortgage derivatives, which include
interest-only payments (IOs) and principal-only payments (POs); inverse
floaters, and RE-REMICs (Real Estate Mortgage Investment Conduits), is
hereby prohibited.
8.4 Commercial paper of "prime" quality of the highest ranking or of the highest
letter and number rating as provided by an NRSRO and issued by a
domestic corporation organized and operating in the United States with
assets in excess of $500 million and having a rating of "A" or better on its
long-term debt as provided by an NRSRO. Purchases of eligible commercial
paper may not exceed 270 days to maturity from the date of purchase.
Purchases of commercial paper shall not exceed 40% of the market value
of the portfolio. No more than 5% of the market value of the portfolio, or
10% of the issuer's outstanding paper, may be invested in commercial
paper issued by any one eligible corporation.
8.5 Banker’s acceptances issued by institutions, the short-term obligations of
which are rated of the highest ranking or the highest letter and number
rating as provided by an NRSRO provided that: (a) the acceptance is
eligible for purchase by the Federal Reserve System; (b) the maturity does
not exceed 180 days; (c) no more than 40% of the total portfolio may be
invested in banker’s acceptances; and (d) no more than 5% of the total
portfolio may be invested in the banker's acceptances of any one
commercial bank.
OC SAN 22-36-8
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8.6 Medium term (or corporate) notes of a maximum of five years maturity
issued by corporations organized and operating within the United States, or
issued by depository institutions licensed by the United States, or any state,
and operating within the United States with assets in excess of $500 million,
and which is rated in a rating category of “A” or better on its long-term debt
as provided by an NRSRO. If, after purchase, the rating of an eligible note
falls below the minimum rating category stipulated above, the external
investment advisor shall notify OC San of the downgrade and shall present
an analysis and recommendations as to the disposition of the note
consistent with the investment objectives of this Investment Policy. No more
than 30% of the portfolio may be invested in medium term notes.
8.7 Notes, bonds, or other obligations that are at all times secured by a valid
first priority security interest in securities of the types listed by California
Government Code Section 53651 as eligible securities for the purpose of
securing local agency deposits having a market value at least equal to that
required by California Government Code Section 53652 for the purpose of
securing local agency deposits. The securities serving as collateral shall be
placed by delivery or book entry into the custody of a trust company or the
trust department of a bank that is not affiliated with the issuer of the secured
obligation, and the security interest shall be perfected in accordance with
the requirements of the Uniform Commercial Code or federal regulations
applicable to the types of securities in which the security interest is granted.
8.8 Shares of mutual funds investing in securities permitted under this policy
and under Section 53601 (l) of the California Government Code. Such funds
must either: (1) attain the highest ranking, or the highest letter and
numerical rating, provided by not less than two of the three largest nationally
recognized rating services; or (2) have an Investment Advisor registered
with the Securities and Exchange Commission with not less than five years
of experience investing in the securities and obligations authorized under
this policy and under California Government Code Section 53601 and with
assets under management in excess of $500 million. The purchase price of
shares of beneficial interest purchased pursuant to this policy and the
California Government Code may not include any commission that the
companies may charge and shall not exceed 20% of OC San’s surplus
money that may be invested pursuant to this section. No more than 10% of
OC San’s surplus funds may be invested in shares of beneficial interest of
any one mutual fund pursuant to this section. Money market mutual funds
are limited to 20% per issuer and are not subject to the 10% stipulation.
8.9 Certificates of deposit:
8.9.1 Secured (collateralized) time deposits issued by a nationally or
state-chartered bank or state or federal savings and loan association, as
defined by Section 5102 of the California Financial Code, and having a net
operating profit in the two most recently completed fiscal years. Collateral
must comply with Chapter 4, Bank Deposit Law, Section 16500 et seq., and
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Chapter 4.5, Savings and Loan Association and Credit Union Deposit Law,
Section 16600 et seq., of the California Government Code.
8.9.2 Negotiable certificates of deposit (NCDs) issued by a nationally
or state-chartered bank or state of federal savings and loan association, as
defined by Section 5102 of the California Financial Code; and which shall
have a rating of "A" or better on its long-term debt as provided by a NRSRO;
or which shall have the highest letter and number rating for deposits as
provided by a NRSRO; or as otherwise approved by the Board of Directors.
No more than 30% of the portfolio may be invested in securities pursuant to
this section.
8.9.3 To be eligible to receive local agency money, a bank, savings
association, federal association, or federally insured individual loan
company shall have received an overall rating of not less than “satisfactory”
in its most recent evaluation by the appropriate federal financial
supervisorial agency of its record of meeting the credit needs of California’s
communities, including low and moderate income neighborhoods, pursuant
to Section 2906 of Title 12 of the United States Code.
8.10 Taxable or tax-exempt municipal bonds issued by any of the 50 United
States. Such securities must be rated “A” or higher by a NRSRO; or as
otherwise approved by the Board of Directors.
8.11 The State of California Local Agency Investment Fund (LAIF). LAIF is
an investment alternative for California's local governments and special
districts managed by the State Treasurer's Office. LAIF is more fully
described in the Glossary (See Appendix "C"). OC San shall use LAIF as a
short-term cash management facility. Investment of OC San funds in LAIF
shall be subject to investigation and due diligence prior to investing, and on
a continual basis to a level of review pursuant to Section 3.0, Standard of
Prudence, of this policy.
8.12 The Orange County Treasurer's Money Market Commingled
Investment Pool (OCCIP). The OCCIP is a money market investment pool
managed by the Orange County Treasurer's Office. OCCIP is more fully
described in the Glossary (See Appendix "C"). OC San has no funds
invested in OCCIP at this time. Investment of OC San funds in OCCIP would
be subject to investigation and due diligence prior to investing, and on a
continual basis to a level of review pursuant to Section 3.0, Standard of
Prudence, of this policy.
8.13 Repurchase agreements provided that:
8.13.1 All repurchase agreements shall be collateralized with securities
eligible for purchase under this policy. In order to anticipate market changes
and to provide a level of security for all repurchase agreement transactions,
collateralization shall be maintained at a level of at least 102% of the market
OC SAN 22-36-10
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value of the repurchase agreements and shall be adjusted no less than
weekly.
8.13.2 All repurchase agreements must be the subject of a Master
Repurchase Agreement between OC San and the provider of the
repurchase agreement. The Master Repurchase Agreement shall be
substantially in the form developed by the Securities Industry and Financial
Markets Association.
8.14 Reverse repurchase agreements provided that:
8.14.1 No more than 5% of OC San’s portfolio shall be invested in
reverse repurchase agreements, and there shall be no long-term reverse
repurchase agreements unless otherwise authorized by the Board of
Directors.
8.14.2 The maximum maturity of reverse repurchase agreements shall
be 90 days.
8.14.3 Reverse repurchase agreements shall mature on the exact date
of a known cash flow which will be unconditionally available to repay the
maturing reverse repurchase agreement.
8.14.4 Proceeds of reverse repurchase agreements shall be used
solely to supplement portfolio income or to provide portfolio liquidity and
shall not be used to speculate on market movements.
8.14.5 All reverse repurchase agreements must be the subject of a
Master Repurchase Agreement between OC San and the provider of the
reverse repurchase agreement. The Master Repurchase Agreement shall
be substantially in the form developed by the Securities Industry and
Financial Markets Association.
8.15 Public Bank Obligations of a maximum of five years maturity which
includes commercial paper, debt securities, or other obligations of a public
bank, a public bank as defined in California Government Code Section
57600-57607.
8.16 Sales of OC San-owned securities in the secondary market may incur
losses in order to improve the risk or return characteristics of the portfolio,
to prevent anticipated further erosion of principal, or when trading for
securities that result in an expected net economic gain to OC San.
8.17 If securities owned by OC San are downgraded below the quality required
by this Investment Policy, it shall be OC San’s policy to review the credit
situation and make a determination as to whether to sell or retain such
securities in the portfolio. If a decision is made to retain the downgraded
securities in the portfolio, their presence in the portfolio will be monitored
OC SAN 22-36-11
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and reported quarterly to the OC San General Manager, the Administration
Committee and Board of Directors.
8.18 OC San is authorized to invest in securities issued by or backed by the
United States Government that could result in zero or negative interest
accrual if held to maturity.
9.0 Review of Investment Portfolio:
The securities held by OC San must be in compliance with Section 8.0 “Authorized and
Suitable Investments” at time of purchase. If at a later date, a security is no longer in
compliance with Section 8.0, the Treasurer shall report the non-compliant security to the
Administration Committee and the Board of Directors and shall include a disclosure in the
quarterly Treasurer’s Report if the security is held at the date the report is prepared.
10.0 Investment Pools/Mutual Funds:
A thorough investigation of the pool/fund is required prior to investing, and on a continual
basis. A questionnaire shall be developed that will provide the following information:
10.1 A description of eligible investment securities, and a written statement of
investment policy and objectives.
10.2 A description of interest calculations and how they are distributed, and how
gains and losses are treated.
10.3 A description of how the securities are safeguarded (including the
settlement processes) and how often the securities are priced and the
program audited.
10.4 A description of who may invest in the program, how often and what size
deposits and withdrawals are allowed.
10.5 A schedule for receiving statements and portfolio listings.
10.6 A description of the utilization and level of reserves, retained earnings or
other collateral and how they are used by the fund.
10.7 A fee schedule, and when and how is it assessed.
10.8 Whether the pool/fund is eligible for bond proceeds and/or whether it will
accept such proceeds.
11.0 Collateralization:
Generally, the value to secure deposits under this policy shall comply with Section 53652
of the California Government Code. Collateralization will be required for secured time
deposits, as more fully described in Section 8.9.1; and repurchase agreements, as more
fully described in Section 8.13.1. Collateral will always be held by an independent third-
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party, as more fully described in Section 12.0. The right of collateral substitution is
granted. Under provisions of the California Government Code, California banks and
savings and loans associations are required to secure OC San’s deposits by pledging
government securities with a value of 110% of principal and accrued interest. State law
also allows financial institutions to secure OC San’s deposits by pledging first trust deed
mortgage notes having a value of 150% of OC San’s total deposits.
12.0 Safekeeping and Custody:
All securities transactions, including collateral for repurchase agreements, entered into
by, or on behalf of OC San, shall be conducted on a delivery-versus-payment (DVP)
basis. Securities will be held by OC San's third-party custodian bank, which shall be
selected through a competitive process, or that agent's representative, or in the agent's
account at the Federal Reserve Bank, or within clearing corporations in the U.S. and
evidenced by book entry statements. Third-party safekeeping arrangements will be
approved by the Treasurer and will be corroborated by a written custodial agreement.
13.0 Diversification:
OC San will diversify its investments by security type, issuer and financial institution in
accordance with the following:
13.1 There is no limit on investment in securities issued by or guaranteed by the
full faith and credit of the U.S. government.
13.2 No more than 20% of the portfolio may be invested in securities of a single
agency of the U.S. government, which does not provide the full faith and
credit of the U.S. government.
13.3 No more than 5% of the portfolio may be invested in securities of any one
issuer, other than Supranationals, the U.S. government or its agencies.
Investment in mutual funds is not governed by this Section 13.3. See
Section 13.8 for conditions of purchase of mutual funds.
13.4 No individual holding shall constitute more than 5% of the total debt
outstanding of any issuer.
13.5 No more than 40% of the portfolio may be invested in banker’s acceptances.
13.6 No more than 40% of the portfolio may be invested in commercial paper.
13.7 No more than 30% of the portfolio may be invested in medium-term
(corporate) notes.
13.8 No more than 20% of the portfolio may be invested in mutual funds. No
more than 10% of OC San’s portfolio may be invested in shares of beneficial
interest of any one mutual fund. Money market mutual funds are limited to
20% per issuer and are not subject to the 10% stipulation.
OC SAN 22-36-13
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13.9 No more than 30% of the portfolio may be invested in negotiable certificates
of deposit.
13.10 No more than 10% of the portfolio may be invested in eligible municipal
bonds.
13.11 No more than 20% of the Long Term Operating Monies portfolio may be
invested in a combination of mortgage-backed securities, CMOs and asset-
backed securities.
13.12 No more than the statutory maximum may be invested in LAIF.
13.13 No more than 15% of the portfolio may be invested in the Orange County
Investment Pool.
13.14 No more than 20% of the portfolio may be invested in repurchase
agreements.
13.15 No more than 5% of the portfolio may be invested in reverse repurchase
agreements.
14.0 Maximum Maturities:
To the extent possible, OC San will attempt to match its investments with reasonably
anticipated cash flow requirements. The Treasurer shall develop a five-year cash flow
forecast, which shall be updated quarterly. Based on this forecast, the Treasurer shall
designate, from time-to-time, the amounts to be allocated to the investment portfolio. OC
San monies invested in accordance with this policy are divided into two categories:
14.1 Liquid Operating Monies. Funds needed for current operating and capital
expenditures are known as Liquid Operating Monies.
14.1.1 The maximum final stated maturity of individual securities in the
Liquid Operating Monies account portfolio shall be one year from the date
of settlement.
14.1.2 The average duration of the Liquid Operating Monies account
portfolio shall be recommended by the Treasurer based on OC San’s cash
flow requirements but may never exceed 180 days.
14.2 Long Term Operating Monies. Funds needed for longer term purposes
are known as the Long Term Operating Monies.
14.2.1 The maximum final stated maturity of individual securities in the
Long Term Operating Monies account portfolio shall be five years from the
date of settlement.
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14.2.2 The duration of the Long Term Operating Monies account
portfolio shall be recommended by the Treasurer based on OC San’s five-
year cash flow forecast but may never exceed 60 months.
14.2.3 The duration of the Long Term Operating Monies account
portfolio shall never exceed 120% of the duration as established in
accordance with Section 14.2.2.
14.2.4 The duration of the Long Term Operating Monies account
portfolio shall never be less than 80% of the duration as established in
accordance with Section 14.2.2.
15.0 Internal Control:
The Treasurer shall establish an annual process of independent review by an
external auditor. This review will provide internal control by assuring compliance
with policies and procedures.
16.0 Performance Objectives and Benchmarks:
16.1 Overall objective. The investment portfolio of OC San shall be designed
with the overall objective of obtaining a rate of return throughout budgetary
and economic cycles, commensurate with investment risk constraints and
reasonably anticipated cash flow needs.
16.2 The Liquid Operating Monies. The investment performance objective for
the Liquid Operating Monies shall be to earn a total rate of return over a
market cycle which exceeds the return on a market index approved by the
Administration Committee and by the Board of Directors, when the duration
of the portfolio is established. This market index is more fully described in
Board Resolution No. OC SAN 22-XX (see Appendix "B").
16.3 The Long Term Operating Monies. The investment performance objective
for the Long Term Operating Monies shall be to earn a total rate of return
over a market cycle which exceeds the return on a market index selected
by the Administration Committee and approved by the Board of Directors,
when the duration of the portfolio is established. This market index is more
fully described in Board Resolution No. OC SAN 22-XX (See Appendix "B").
17.0 Reporting:
17.1 Monthly transaction reports in accordance with California Government
Code Section 53607 shall be submitted by the Treasurer to the Board of
Directors.
17.2 Quarterly investment reports will be submitted by the Treasurer to the
Administration Committee which shall forward the reports to the Board of
Directors. The quarterly reports shall provide clear and concise status
information on OC San’s portfolios at the end of each reporting period,
OC SAN 22-36-15
Page 13
including performance measures using the benchmarks described in
Section 16.0 of this Investment Policy. These reports shall contain listings
of individual securities held at the end of each reporting period, and shall
disclose, at a minimum, the following information about the risk
characteristics of OC San’s portfolio:
17.2.1 Cost and accurate and complete market value of the portfolio.
17.2.2 Modified duration of the portfolio compared to Benchmark.
17.2.3 Dollar change in value of the portfolio for a 1% change in interest
rates.
17.2.4 Percent of portfolio invested in reverse repurchase agreements,
and a schedule which matches the maturity of such reverse repurchase
agreements with the cash flows which are available to repay them at
maturity.
17.2.5 For the Liquid Operating Monies account only, the percent of
portfolio maturing within 90 days.
17.2.6 Average portfolio credit quality.
17.2.7 Percent of portfolio with credit ratings below "A" by any rating
agency, and a description of such securities.
17.2.8 State that all investments are in compliance with this policy and
the California Government Code or provide a listing of any transactions or
holdings which do not comply with this policy or with the California
Government Code.
17.2.9 Time-weighted total rate of return for the portfolio for the prior
three months, six months, nine months, twelve months and since inception
compared to the Benchmark returns for the same periods.
17.2.10 State that sufficient funds are available for OC San to meet its
operating expenditure requirements for the next six months, or if not, state
the reasons for the shortfall.
17.3 OC San’s Treasurer shall meet quarterly with the Administration Committee
to review investment performance, proposed strategies and compliance
with this Investment Policy. External investment advisors may be required
to attend said meetings at the discretion of the Chairperson of the
Administration Committee.
18.0 Investment Policy Adoption and Revision:
18.1 The Investment Policy of OC San shall be adopted by resolution of the
Board of Directors. The Investment Policy shall be reviewed on an annual
OC SAN 22-36-16
Page 14
basis in accordance with California Government Code Section 53646, by
the Administration Committee, which shall recommend revisions, as
appropriate, to the Board of Directors. Any modifications made thereto shall
be approved by the Board of Directors.
18.2 The Administration Committee shall serve as the oversight committee for
OC San’s Investment program and shall adopt guidelines for the ongoing
review of duration, quality and liquidity of OC San’s portfolio.
OC SAN 22-36-17
Resolution No. OC SAN 22-36
Final Audit Report 2022-12-16
Created:2022-12-16
By:Kelly Lore (klore@ocsan.gov)
Status:Signed
Transaction ID:CBJCHBCAABAADGx4AY1PzFOQ0NAAVCqCTI1qkVxN43Hr
"Resolution No. OC SAN 22-36" History
Document created by Kelly Lore (klore@ocsan.gov)
2022-12-16 - 3:03:56 PM GMT- IP address: 47.176.92.30
Document emailed to chad@chadwanke.com for signature
2022-12-16 - 3:04:45 PM GMT
Email viewed by chad@chadwanke.com
2022-12-16 - 7:21:06 PM GMT- IP address: 138.199.6.218
Signer chad@chadwanke.com entered name at signing as Chad Wanke
2022-12-16 - 7:21:16 PM GMT- IP address: 138.199.6.218
Document e-signed by Chad Wanke (chad@chadwanke.com)
Signature Date: 2022-12-16 - 7:21:18 PM GMT - Time Source: server- IP address: 138.199.6.218
Document emailed to Kelly Lore (klore@ocsan.gov) for signature
2022-12-16 - 7:21:19 PM GMT
Email viewed by Kelly Lore (klore@ocsan.gov)
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Document e-signed by Kelly Lore (klore@ocsan.gov)
Signature Date: 2022-12-16 - 8:45:26 PM GMT - Time Source: server- IP address: 47.176.92.30
Agreement completed.
2022-12-16 - 8:45:26 PM GMT