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HomeMy WebLinkAbout09/16/1996 BAKERSFIELD Patricia J. DeMond, Chair Irma Carson Kevin McDermott Staff: Dolores Teubner AGENDA BUDGET AND FINANCE COMMITTEE Monday, September 16, 1996 12:15 p.m. City Manager's Conference Room Second Floor - City Hall, Suite 201 1501 Truxtun Avenue Bakersfield, CA 1. ROLL CALL 2. APPROVAL OF AUGUST 12, 1996 MINUTES 3. PRESENTATIONS 4. PUBLIC STATEMENTS 5. DEFERRED BUSINESS A. LOCAL PREFERENCE BID POLICY - Klimko 6. NEW BUSINESS A. CITY INVESTMENT POLICY - Descary B. LEASE AGREEMENT/PURCHASE OPTION FOR BAKERSFIELD ART FOUNDATION - Slater 7. ADJOURNMENT DBT:jp FILE COPY ]~'TA K E R S F I E L D .F?~dy,,,. j~'~r Patricia J. DeMond, Chair Alan C' Irma Carson Staff: Dolores Teub!er Kevin McDermott AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE Monday, August 12, 1996 12:15 p.m. City Manager's Conference Room 1. ROLL CALL Call to Order at 12:27 p.m. Present: Councilmembers: Patricia J. DeMond, Chair; and Kevin McDermott Absent: Councilmember Irma Carson 2. APPROVAL OF THE JULY 15, 1996 MINUTES Approved as submitted. 3, PRESENTATIONS. None 4. PUBLIC STATEMENTS None 5. DEFERRED BUSINESS A. ESTABLISHMENT OF CITY LEA Staff reported that at this time, no new information is available. AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE Monday, August 12, 1996 Page -2- 6. NEW BUSINESS A. AMENDMENT TO CDBG ANNUAL PLAN Staff presented information on CDBG funds from FY 92./93, FY 94/95 and FY 95/96. The reprogrammed funds were kept within the Council Ward for which it was originally allocated. The Single Unit Residential Connection Fee Loan Program was proposed as part of the amendment. As the City installs sewer services in Iow-income areas, there is an increasing need to assist residents in paying for the cost of the connection. The program will provide a zero interest loan to qualifying residents to.pay the sewer connection fee. The Committee was in favor of this neTM program. Councilmember McDermott asked staff to look into establishing a similar program for all City residents regardless of income, which could be an incentive for residents considering annexation. The CDBG amendments are scheduled for Council adoption at the September 11 Council meeting. 7. ADJOURNMENT The meeting was adjourned at 12:50 p.m. cc: Honorable Mayor and City Council ~ MEMORANDUM GREGORY J. KLIMKO, FINANCE DIRECTOR FROM: BILL DESCARY, TREASURER ~ r DATE: SEPTEMBER 10, 1996 SUBJECT: INVESTMENT POLICY As background, the following information is provided. In 1985, an amendment to California Government Code Section 53646 required the Treasurer or Chief Fiscal Officer to render annually a statement of Investment Policy to the legislative body of the local agency. During 1985, working with guidelines from the California Municipal Treasurers Association, staff wrote the City's first Investment Policy which the City Council adopted by resolution. Annually thereafter staff reviewed and the Council adopted an Investment Policy. The code amendment contained a sunset clause that the annual review and submission to the legislative body would not be required after 1990. However, staff continued the annual review and submission to Council as part of a prudent investment program. Staff was in the process of the annual policy review with the Budget and Finance Committee in 1994 when the financial debacle occurred in Orange County. It became immediately apparent that there would be changes to government code sections that dealt with local agency investments and the review was postponed until the changes in code were finalized. In late 1995 the governor signed legislation that again requires local agencies to have an investment policy and that it be submitted to the legislative body annually. In the meantime, we have continued to operate the City's investment program under the ~prudent person rule" and the last adopted Investment Policy. Investment priorities have always been safety of principal, liquidity as needed and to achieve the best possible return after the first two priorities have been satisfied. The attached Investment Policy is consistent with the new legislation and is ready for review by the Budget and Finance Committee. The City's policy has changed in the following areas: 1 ) Percentage limitations are placed on types of investments. 2) Maximum investment term is three years. 3) A "qualified institutions" section is added. 4) The **safekeeping' section has been modified. These changes to written policy further clarify the generally conservative manner in which the City's portfolio has been managed and will not cause changes in day-to-day operations to achieve code comPliance. Attachment ec MBD. 13 CITY OF BAKERSFIELD Page I of 3 Investment Policy SCOPE This investment policy applies to the investment activities of the City of Bakersfield and related entities. Idle cash in all funds is pooled for investment purposes except tax exempt bond proceeds, which are separated for arbitrage record keeping as required by federal tax law, and the Firemen's Disability and Retirement Fund which is administered separately under Municipal Code Section 2.92. PURPOSE This policy is intended to provide guidelines for the prudent investment of the City's temporary idle cash, and outline the policies tbr maximizing the efficiency of the City's cash management system. The ultimate goal is to enhance the economic status of the City while protecting the safety of its pooled cash. POLICY Investments shall be made in the context of the "prudent investor" rule: Investments shall be made with judgement and care, under circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived. The city is further governed by California Government Code, Section 53600 et. Seq. and other imposed legal restrictions. Within the context of these limitations, the following investments are authorized, as further limited herein: United States Treasury Bills, Notes and Bonds where the full faith and credit of the United States are pledged for payt,_ ent of principal and interest. Although there is no percentage limitation of the dollar amount that can be invested in this category, the "prudent investor" rule shall apply. Maturity is limited to three years from settlement date. Obligations issued by the United States Government Agencies such as the Federal Farm Credit Bank System (FFCB), the Federal Home Loan Bank (FHLB), the Federal Home Loan Mortgage Corporation (FHLMC) and the Federal National Mortgage Association (FNMA). At the time of purchase no more than 10% of the porttblio may be invested in any single agency name. Maturity is limited to three years from settlement date. Exhibit "A" Page 2 of 3 Bankers Acceptances may not exceed 270 days to maturity. No more than 10% of the porttblio may be invested in bankers acceptances issued by any one bank. No more than 40% of the portfolio may be invested in this category. Commercial Paper of"prime" quality ranked PI by Moody's Investor Service and AI by Standard and Poor's, and issued by a domestic corporation having assets in excess of $500 million and having an A or higher rating on its long term debt as provided by Moody's or Standard and Poor's. Purchases of eligible commercial paper may not exceed 180 days to maturity. No more than 10% of the porttblio may be invested in commercial paper issued by any one corporation. No more than 15% of the portfolio may be invested in this category.. Repurchase Agreements with banks and dealers with which the City has entered into a master repurchase contract which specifies terms and conditions of repurchase agreements. The maturity of repurchase agreements shall not exceed 30 days. No more than 30% of the portfolio may be invested in this category. Local Agency Investment Fund (LAIF) which is a State of California managed investment pool may be used up to the maximum permitted by State Law. Time Certificates of Deposit (TCD), non-negotiable and collateralized in accordance with Califbrnia Government Code, may be purchased through banks and savings and loan associations. At the time of purchase no more than 10% of the portfolio may be in the TCD's of any one institution. Maturity is limited to three years. No more than 30% of the portfolio may be invested in this category. Public Agency Savings Account - Demand Deposits may be utilized for up to 30% of the portfblio. Mutual Funds meeting criteria prescribed in Government Code 53601 and related legislation. The purchase price of shares shall not include any commission that these companies may charge. Investments in this category are limited to funds that maintain a net asset value of one (daily liquidity). No more than 15% of the portfolio may be invested in this category and no more than 10% of the portfolio may be invested in any one fund. Mutual Funds are used primarily for the investment of bond proceeds subject to arbitrage reporting. Should an investment percentage and porttblio limitation be exceeded due to the unexpected fluctuation in porttblio size, the affected securities may be held to avoid losses. When market values are such that no loss is indicated, the City Treasurer shall consider restructuring the portfolio basing the decision in part on the expected length of time the portfolio will be imbalanced Ineligible investments are those that are not described herein, including but not limited to, negotiable certificates of deposit, medium term corporate notes and reverse repurchase agreements. Page 3 of 3 Criteria for selecting investments and the order of priority are: I. Safety. The safety and risk associated with an investment refers to the potential loss of principal, interest or a combination of these amounts. The City only operates in those investments that are considered very safe. 2. Liquidity. This refers to the "ability to easily sell" at any moment in time with a minimal risk of losing some portion of principal and interest. Liquidity is an important investment quality especially when the need for unexpected funds occurs occasionally. 3. Yield. Yield is the potential dollar earnings an investment can provide, and sometimes is described as the rate of return. Oualified Institutions. The investment staff shall investigate institutions which desire to do business with the City to determine if they are adequately capitalized, make markets in securities appropriate to the City's needs, and are recommended by managers of portfolios similar to the City's. Whenever possible investments are' placed locally. Safekeeping. Securities shall be delivered to the City by book entry, physical delivery or by third party custodial agreement. Investment Objective. The Cash Management system of the City of Bakersfield is designed to accurately monitor and forecast expenditures and revenues, thus insuring the investment of monies to the fullest extent possible, including the estimated float for the Active Account and Payroll Account. The City attempts to obtain the highest interest yields possible as long as investments meet the criteria required for safety and liquidity and do not exceed a term of three years and are within portfolio percentage limitations. The City strives to maintain the level of investment of all funds as near 100% as possible through daily and projected cash flow determinations. Cash management and investment transactions are the responsibility of the City Treasurer. The City holds its Treasurer and his designees harmless for responsible investment transactions undertaken in accordance with the Investment Policy, provided deviations from expectations are reported in a timely manner. The basic premise underlying the City's investment philosophy is, and will continue to be, to insure that the money is always safe and available when needed. I)HD.I CITY OF BAKERSFIELD 1996.~ Tax Description Vondor Included Tremble City County Other Bear Cat Mfg. x $134,061 .OO Asphalt Distributor' Global International x $9,850.00 R L Morton Welding Co. x $108,839.00 $376,157.00 Granite Const. Co. x Granite Const. Co. x $1,148,011.00 New Techonologles x $254,660.OO Pe~onal Computers Kern County Const. Co. x $273,410.00 $182,229.00 WM Lyles x Griffith Company x $1,050,750.00 Bear Cat Mfg. Inc. x $25,623.00 Crack Sealing msch. $ A Camp Pump Co x $103,999.00 L N Curtis & Sons x $15,960.00 Pumper Equipment Gilllam & Sons x $222,850.00 Man' & Boese Eng. x $38,575.00 Wallace & Smith x ~74,695.00 CurEs D. Post Inc. x $57,361.00 Seba's x $105,315.00 Police Firearms Granite COnst. x $379,820.00 Griffffh Co x $673.000.00 Quinn Co x $64,055.OO Backhoe Loader GHfltth Co x ~)3,000.OO Burbank K,a~"8.~dd x . $63,475.00 Police Motorcycles DeNardi Equipment x $98,446.00 Motor Grader Granite COnst x $4,019,609.00 Merzt Painting x $128,000.00 Gametime x $34,462.00 Playground Equip. Gilllam & Sons x $434,529.00 Grifflth CO x $480,000.00 Jim Burke Ford x $650A83.00 Cam and Pickups American Const. x $1,568,000.00 $123,500.00 Natl. Plant Soryice x $70,982.0~l . Omega Const. x Granite Const. x $1,411,659.00 Graham Const. x $122,571.00 Jim Burke Ford x $1,157,194.00 Police Sedans Gunderson Chev. x $61,112.00 Cars Jim Burke Ford x $157,924.00 Cars Pacific Resources x $123,279.00 Gilllam & Sons x $340,334.00 Delta Engineering x $198,455.00 Tyning Brothers x $59,000.00 insituform x $198,314.00 B & R Mechanic x $67,339.00 Turm-n Cortstmction x $480,900.00 Granite Const. x $75,900.00 Pacific Resources x $183,511.00 Grtffith Co. x $968,629.00 Griffith Co. x $949,480.00 Grifltth Co. x $515,000.00 Brown & Fowler x $159,545.00 Sc, adex Corp. x $40,220.00 Ladoo Const. x $59,828.00 Henbe~ler Auto. x $53,169.00 Traffic Pra-emp0on Berchtold Equip. x $40,743.00 Tractor A-C Electric. x $76,130.00 Loop Electric x sg4,g02.00 A-C Electric x $58,593.00 A-C Electric x $97,000.00 Griffith Co. x $131,831.00 Loop Electric x $22,084.00 A-C Electric x $68,580.00 Jerry Fondl~ Assoc. x , $27,721.00 Traffic Controllers McCain Traffic x $3g,792.00 Traffic Controlle~ Delta Eng. x $86,756.00 Delta Eng. x $96,307.00 Jim Burke Ford - x $330,578.00 Street Dump Trucks Franksons, In(=. x ~ $542,685.00 Sewer/Drain Trucks Halprin Supply x $23,804.00 Fire Equipment Altec Inc. x $58,385.00 Street Light Truck Quinn Co. x $407,118.00 D-8 Catapillar James E Thompson x $190,g02.00 Jim Burke Ford x $97,399.00 ~ Street Water Truck Rain For Rent x $45,890.00 Trailer Mounted Pump Kaweah Const x $8,677,560.00 Grifflth Co x $359,750.00 Quinn Co. x $85,318.00 Standby Generator ANNUAL CONTRACT8 A-1 Batteq/ x $21,720.00 Batteries Ritz Camera x $82,821.00 Film Stock Sherman Oaks Camera x $26,525.00 Film Stock Abate A Weed x $41,910.00 Chemicals ~ Wilbur-Ellis Co x $45,156.00 Chemicals Target Specialties x $44,945.00 Chemicals Van Waters & Rogers x . $47,131.00 Chemicals Jim Allter Contractor x $428,682.00 Jim Alfter Contractor x $24,575.00 Pavement Recycling x $26,000.00 Gilllam & Sons x $220,640.00 American Fence Co x $126,300.00 Gilllam & Sons x $114,000.00 Valley Ind. Services x $88,000.00 ' Granite Const x $608,021.00 Street Materials Zumar Industries x $57,425.00 Street Signs McKee Electric x $65,730.00 Niagara Car Wash x $33,912.00 Badger Meter x $57,492.00 Water Meters Kent Meter x $50,315.00 Water Meters $10,831,793.00 $13,343,514.00 $8,530,434.00 BAKERSFIELD CITY MANAGER'S OFFICE MEMORANDUM September 16, 1996 TO: Budget & Finance Committee FROM: Alan Tandy, City Manager SUBJECT: Lease Agreement/Purchase Option with the Bakersfield Art Foundation In July 1991, the City entered into a long-term lease agreement with the Bakersfield Art Foundation to use the City's property at 1930 "R" Street as a municipal art gallery. Since that time the Bakersfield Museum of Art, as it is currently known, has attained accreditation and has held several outstanding exhibits. The Foundation has endeavored to build an expansion fund to be used at a future date. The Foundation had asked the City, and had received approval, for extensions on its long-term lease as it was investigating options for expansion and was unsure that Central Park was the area of choice. The Board has determined that expansion at the 19th and R site is the preferable option available to it. To this end, the Board would like to renew its lease with the City, with an option to purchase the Museum and that amount of property contiguous to the museum which is owned by the City and is mutually agreed between the City and Foundation to be necessary and appropriate for the Foundation to pursue for construction of the expansion. While current renditions for an expanded museum call for removing the current building and creating a new one fronting 19th and R, formal plans have not been accepted by the Foundation Board and may change considerably between now and the time that actual construction begins. The lease agreement grants the Foundation an "option to purchase" the museum. If the Foundation chooses to exercise the option, it will be able to purchase the agreed upon property for $5,000. The option ($5) and purchase ($5,000) must be made within the five year period of the lease agreement. If the Foundation purchases the property, it must be used as a public art museum, art gallery, and allied support functions. If the Foundation decides at a future date to no longer utilize the property for these functions, it will hold the property subject to the right of the City to reacquire it at $5,000. Upon the acquisition of the property by the Budget and Finance Committee Page 2 Lease Agreement/Purchase Option with Bakersfield Art Foundation September 16, 1996 Foundation, it will be the Foundation's responsibility to maintain, including water, electrical, refuse and other services. The City has had an on-going relationship with museum activities in Central Park for nearly 40 years. There has been gradual process made over the years to allow the museum to stand on its own. This step will facilitate that movement while preserving City efforts to assure a balance of cultural opportunities for Bakersfield citizens for the betterment of the community. The property under discussion includes the existing building and surrounding grounds, including the Camilla gardens. (M0916961)