CITY OF CORONA ___________________________________________________________
INVESTMENT POLICY
Jim SteinerJacque Casillas, Mayor
Wes Speake Jacque Casillas, Vice Mayor
Tom Richins, Council Member
Jim Steiner Wes Speake, Council Member
Tony Daddario, Council Member
Chad Willardson, City Treasurer
Adopted by the City Council June 187, 20256
City of Corona Investment Policy
Adopted by City Council June 187, 20256
TABLE OF CONTENTS
I. PURPOSE ......................................................................................................................... 2 II. SCOPE .............................................................................................................................. 2 III. PRUDENCE ...................................................................................................................... 2 IV. ETHICS AND CONFLICT OF INTEREST ........................................................................ 3 V. INVESTMENT SELECTION CRITERIA............................................................................ 3 VI. TREASURY COMMITTEE ................................................................................................ 4 VII. INVESTMENT RESPONSIBILITY .................................................................................... 4 VIII. ALLOWABLE INVESTMENTS ......................................................................................... 5 IX. INVESTMENT POOLS / MUTUAL FUNDS ...................................................................... 6 X. SELECTION OF FINANCIAL INSTITUTIONS ................................................................. 6 XI. SAFEKEEPING AND CUSTODY ..................................................................................... 7 XII. COLLATERALIZATION ................................................................................................... 7 XIII. MATURITY ........................................................................................................................ 8 XIV. LIQUIDITY ........................................................................................................................ 8 XV. DIVERSIFICATION ........................................................................................................... 8 XVI. REPORTING ..................................................................................................................... 9 XVIII. PERFORMANCE STANDARDS .................................................................................... 10 XIX. INVESTMENT POLICY ADOPTION ............................................................................... 10 GLOSSARY OF TERMS ............................................................................................................ 12 Attachment A – Allowable Investments .................................................................................. 16 Attachment B – Sample Resolution Approving the Investment Policy ............................... 21 City of Corona Investment Policy
Adopted by City Council June 187, 20256
2 INVESTMENT POLICY
I. PURPOSE
This document is intended to provide guidelines for the prudent investment of the City's temporary inactive cash and outline the policies for maximizing the efficiency of the City's cash management system. The goal of the City's Investment Policy (the “Policy) is to meet the short and long-term cash flow demands in a manner which will provide for the safety of principal and sufficient liquidity, while providing a suitable investment return.
The Policy shall be adopted annually by resolution of the City Council. The Policy shall be reviewed annually by both the Treasury Committee and the City Council and any modifications made thereto must be approved.
The Policy is in conformance with the California Government Code Sections 53600 et seq. However, to meet the City's needs, the investment parameters set forth in the Policy are more conservative than those allowed by state law.
II. SCOPE
The Policy shall direct the investment of the City's temporarily inactive cash for all funds in the investment portfolio. These funds are accounted for in the City of Corona Annual Comprehensive Financial Report under the following fund types:
Governmental Funds
Proprietary Funds
Fiduciary Funds
The Policy shall also direct all investments related to the Corona Utility Authority, the Corona Housing Authority, and the Corona Public Financing Authority. The Policy will not direct the investment of funds held for employees in deferred compensation plans. Additionally, the Policy will not direct the investment of bond proceeds, which are specifically governed by the individual bond documents and trust indentures.
III. PRUDENCE
The standard of prudence to be used by the investment official shall be the “prudent investor standard” as set forth in California Government Code Section 53600.3 and shall be applied in the context of managing the overall portfolio.
The City Treasurer will be responsible for maintaining and updating investment policies and procedures. The intent of the procedures will be to ensure that the City of Corona Investment Policy
Adopted by City Council June 187, 20256
3 investment objectives and safeguards stated in this Policy are effectively communicated to all officials involved in the investment of public funds and that they properly reflect the intent of the “Prudent Investor” rule. The procedures will be maintained on file with the City Treasurer and the Finance Director.
IV. ETHICS AND CONFLICT OF INTEREST
Officers and employees involved in the investment process shall refrain from personal business activity that could conflict with the proper execution of the investment program, or which could impair their ability to make impartial investment decisions. Employees and investment officials shall comply with the disclosure and disqualification requirements required by state law and any applicable regulations, including those adopted by the Fair Political Practices Commission, or FPPC. In addition, the FPPC’s Statement of Economic Interests (Form 700) shall be completed annually and submitted to the City Clerk for all individuals involved in the investment of public funds.
V. INVESTMENT SELECTION CRITERIA
Criteria for selecting investments and the order of priority are:
1. Safety. The safety and risk associated with an investment refers to the potential loss of principal, interest or a combination of these amounts.
Safety of principal is the foremost objective of the investment program. City investments shall be undertaken in a manner that seeks to ensure the preservation of capital in the overall portfolio. The City shall select only those investments that are considered very safe. The City shall not engage in speculation. The City shall diversify its investments by investing funds among a variety of securities and financial institutions offering independent returns.
2. Liquidity. Liquidity is the ability to change an investment into its cash equivalent on short notice at its prevailing market value. The funds in the City’s portfolio shall remain sufficiently liquid to meet all operating requirements that may be reasonably anticipated. This is accomplished by structuring the portfolio so that securities mature concurrently with cash needs to meet anticipated demands. Furthermore, since all possible cash demands cannot be anticipated, the portfolio will maintain a liquidity buffer and invest primarily in securities with active secondary and resale markets.
3. Yield. Yield is the potential dollar earnings that an investment can provide; it is also referred to as the rate of return. The City’s portfolio shall be designed to attain a return on investments through economic cycles, taking into account investment risk constraints and liquidity needs. Return on City of Corona Investment Policy
Adopted by City Council June 187, 20256
4 investment is of least importance compared to the safety and liquidity objectives.
VI. TREASURY COMMITTEE
The Policy provides for the creation of a Treasury Committee (Committee). The Committee is composed of the City Treasurer, City Manager, Assistant City Manager and Finance Director.
The Committee shall be responsible for the following:
1. Review of financial institutions.
2. Review of investment strategy.
3. Review of investment operations guidelines and procedures.
4. Review of controls to assure compliance with the State law and the City's Policy.
5. Recommendation and approval of investment brokers, dealers, advisors and managers.
6. Review of investment reports and other related issues with the City Council on an as-needed basis.
7. Recommending modifications to the list of permitted investments.
VII. INVESTMENT RESPONSIBILITY
In accordance with the State of California Government Code section 53607, the City Council delegates investment authority to the City Treasurer for a period of one year and such investment authority must be renewed annually. Adoption of this Policy constitutes delegation of investment authority to the City Treasurer for the fiscal year unless revoked in writing.
Within the constraints set forth in the Policy, the City Treasurer has the authority to direct investment strategy and approve investment transactions for the City's investment portfolio.
The City Treasurer appoints the Finance Director as Deputy City Treasurer and authorizes the Finance Director to act on his/her behalf in performing the powers and duties of the office as needed, and to specifically take responsibility for the implementation and supervision of investment controls and operations.
The Finance Director, or his/her designee, is responsible for the following:
1. Approving daily investment transactions.
2. Developing projections of the City's cash requirements for operating needs.
3. Reviewing the liquidity position of the investment portfolio.
City of Corona Investment Policy
Adopted by City Council June 187, 20256
5 4. Ensuring that the City's cash position is consistent with operating requirements.
5. Preparing appropriate investment reports.
6. Developing, implementing and monitoring controls over investments.
7. Record keeping for investment transactions.
Delegation of Authority
The City may engage the services of one or more external investment management advisors to assist in the management of the City’s investment portfolio in a manner consistent with the City’s objectives. Such advisors may be granted discretion to purchase and sell investment securities in accordance with the Policy. Such managers must be registered under the Investment Advisers Act of 1940. All broker/dealers selected by an external advisor must comply with the requirements of California Government Code Section 53601.5.
VIII. ALLOWABLE INVESTMENTS
Allowable investments for the City are listed in the matrix provided herein as Attachment A. Percentage holding limits and minimum credit requirements listed in this section apply at the time the security is purchased based on total portfolio.
The list is intended to ensure that the investment portfolio is properly diversified so that no single category of investment is over weighted or poses a disproportionate credit risk to the City. It should be noted that any newly developed derivative of an allowable investment that is not specifically mentioned in the Policy must be recommended by the City Treasurer for inclusion in the Policy. Any amendments to the list of allowable investments must be submitted to the City Council, via the Treasury Committee, for review and approval.
Any prior investment currently held by the City that does not meet the guidelines of this policy shall be exempt from the requirements of the Policy. At maturity or liquidation, such funds shall be reinvested as provided by the Policy.
Should an investment’s percentage exceeded the Policy limitation due to an incident such as fluctuation in portfolio size, the affected securities may be held to maturity to avoid losses. When no loss is indicated, the Treasurer shall consider reconstructing the portfolio within the Policy established percentage limits.
All purchases and sales of securities will require a minimum of three quotes when practical. The three-quote rule will be waived for the following transactions:
1. Purchase and sale of new issues of federal agency securities that are still in syndicate.
City of Corona Investment Policy
Adopted by City Council June 187, 20256
6 2. Purchase and sale of US treasury bills or notes in amounts of $5 million or less.
3. Purchase and sale of short-term money market securities (i.e. commercial paper, banker’s acceptances, repurchase agreements, discount notes, treasury bills) that have a final maturity of less than 30 days from settlement date.
4. Proprietary reasons, where only one broker is authorized to make or accept offers.
Repurchase agreements may be used as short-term investment vehicles when economic conditions and alternative short-term investments make it favorable to invest in repurchase agreements. Prior to the investment of any public funds in a repurchase agreement, a Master Repurchase Agreement must be properly executed and countersigned by the financial institution that is a party to the agreement. The Master Repurchase Agreement will be the format prescribed by the Bond Market Association.
Investment of bond proceeds held by fiscal agents will be made in accordance with California Government Code Section 53601 (m), which states that money from bond proceeds should be invested as specified by bond documents. In most cases, these investments will be made under the same guidelines as other City investments.
IX. INVESTMENT POOLS / MUTUAL FUNDS
A thorough investigation of the pool/fund is required prior to investing public funds in any local agency investment pool or mutual fund. The investment of any public funds must comply with the rules set forth in the California Government Code Section 53601.
X. SELECTION OF FINANCIAL INSTITUTIONS
Only institutions that demonstrate financial strength may be selected to provide fiscal agent and/or external investment management or advisory services. They shall be selected using the following criteria: financial strength, reputation, technical investment expertise, security controls and ability to conform to the City and State mandated investment parameters.
Purchases and sales of investments shall, whenever practical, be made directly from the issuer, from a member of a federally regulated securities exchange, from a national or state-chartered bank, or from a qualified broker/dealer.
Primary dealers registered with the Federal Reserve Bank of New York should be used for broker/dealer securities transactions. Exceptions to the primary dealer City of Corona Investment Policy
Adopted by City Council June 187, 20256
7 rule may be made with approval of the Treasury Committee provided they are consistent with the California Government Code Section 53601.5.
A copy of the Policy shall be submitted to all broker/dealers, investment management advisors, fiscal agents and financial institutions with which the City places investments.
The City shall obtain a certification evidencing that they:
1. Have reviewed the City's investment policies and objectives.
2. Are familiar with the City's investment constraints.
3. Have complied with the provisions contained in the Policy.
XI. SAFEKEEPING AND CUSTODY
To protect against fraud, embezzlement, or losses caused by insolvency of individual securities dealers, all securities owned by the City shall be held in safekeeping by the City's custodial bank, a third party bank trust account, acting as agent for the City under the terms of a custody agreement.
Except for federally insured Certificates of Deposit, money market funds or the Local Agency Investment Fund (LAIF), all investments evidenced by physical or book-entry securities shall be secured through third-party custody and the following safekeeping procedures:
1. All transactions described above shall be executed on a delivery versus payment basis.
2. The custodian shall hold assets until the investments mature or the custodial bank receives a request from the City to sell or transfer the securities.
3. Bearer instruments shall be held only through third-party institutions.
XII. COLLATERALIZATION
Certificates of Deposit - The City shall require any commercial bank or savings and loan association to deposit eligible securities with an agency of a depository approved by the State Banking Department to secure any uninsured portion of a non-negotiable Certificate of Deposit. The value of eligible securities as defined pursuant to Government Code Section 53651, pledged against a Certificate of Deposit shall be equal to 150% of the face value of the CD if the securities are classified as mortgages and 110% of the face value of the CD for all other classes of security.
City of Corona Investment Policy
Adopted by City Council June 187, 20256
8 Repurchase Agreements - The City requires that repurchase agreements be collateralized only by securities authorized in this Policy:
1. The securities which collateralize the repurchase agreement shall be priced at market value, including any accrued interest plus a margin. The market value of the securities that underlie a repurchase agreement shall be valued at 102% or greater of the funds borrowed against those securities.
1.2. Securities used as collateral for Repurchase Agreements will be delivered to an acceptable third-party custodian
2.3. Financial institutions shall mark the value of the collateral to market at least monthly and increase or decrease the collateral to satisfy the ratio requirement described above.
3.4. The City shall receive monthly statements of collateral.
XIII. MATURITY
The City shall not make any investments in instruments with a stated remaining maturity that exceeds five years at settlement date.
The maturity of investment instruments in the portfolio shall be consistent with projected cash requirements.
It is the City's intent, at the time of purchase, to hold the majority of investments until maturity to ensure the return of all invested principal dollars. However, it is realized that market prices of securities will vary depending on economic and interest rate conditions at any point in time. As a result, the City may choose to sell a security short of final maturity to realize a capital gain if it is to the City's economic advantage to do so. It is further recognized, that in a well-diversified portfolio, occasional measured losses are inevitable due to economic, bond market or individual security credit analysis. These occasional losses must be considered within the context of the overall investment program objectives and the resultant long-term rate of return.
XIV. LIQUIDITY
In maintaining sufficient liquidity in the City’s portfolio, maturities shall be selected to mature prior to or match the timing of the City's projected cash flow needs. It is intended that a liquidity base equal to forecasted cash flow needs for six months should be maintained. Additionally, the marketability of a security shall be important criteria in selecting an investment.
XV. DIVERSIFICATION
The City will diversify its investments by security type, institution, and maturity date.
Commented [AS1]: Best Practice. Collateralization section should reference that THIRD PARTY CUSTODIANS will be
utilized for repurchase agreements.
City of Corona Investment Policy
Adopted by City Council June 187, 20256
9 Mitigating Credit Risk in the Portfolio
Credit Risk is the risk that a security or a portfolio will lose some or all of its value due to a real or perceived change in the ability of the issuer to repay its debt. The City shall mitigate credit risk by adopting the following strategies:
1. The diversification requirements included in this section are designed to mitigate credit risk in the portfolio.
2. No more than 5% of the total portfolio may be invested in securities of any single issuer, other than the US government, its agencies and instrumentalities, money market mutual funds and LAIF.
3. The City may elect to sell a security prior to its maturity and record a capital gain or loss in order to improve the quality, liquidity or yield of the portfolio in response to market conditions or the City’s risk preferences.
4. If securities owned by the City are downgraded by a Nationally Recognized Statistical Rating Organization (NRSRO) to a level below the quality required by this Policy, it shall be the City’s policy to review the credit situation and make a determination as to whether to sell or retain such securities in the portfolio. Moody’s, Standard and Poor’s, and Fitch are currently used as the NRSRO.
a. If a security is downgraded below the level required by the Policy, the City Treasurer will use discretion in determining whether to sell or hold the security based on its current maturity, the loss in value, the economic outlook for the issuer, and other relevant factors. b. If a decision is made to retain a downgraded security in the portfolio, its presence in the portfolio will be monitored and reported monthly to the City Council.
XVI. REPORTING
The City Treasurer shall file a monthly investment report with the City Council which provides a clear picture of the status of current investments. The investment report may include comments on the fixed income markets and economic conditions, discussions regarding restrictions on percentages of investments by category, possible changes in the portfolio structure and significant changes to investment strategies. The monthly investment report filed with the City Council will contain the following:
1. Percentages of the portfolio represented by each investment category.
2. An investment inventory including types and amounts of investments, issuing financial institutions and maturities.
3. A list of all investment transactions that occurred during the reporting month.
4. Investments or programs under the management of contracted parties.
City of Corona Investment Policy
Adopted by City Council June 187, 20256
10 5. Average maturity of the portfolio.
6. Average total yield to maturity of the portfolio relative to the prescribed benchmarks.
7. Current market value of investments with maturities of more than 12 months.
8. A statement denoting that the investment portfolio has sufficient liquidity to meet the City’s anticipated expenditure requirements for the upcoming six months.
9. Percent of portfolio invested by type of instrument.
10. Written explanations for any variances to the Policy.
XVII. INTERNAL CONTROLS
Internal controls shall be established and maintained to prevent losses of public funds arising from fraud, employee error, and misrepresentation by third parties, or imprudent actions by employees and officers of the City.
Controls deemed most important include: segregation of duties, separation of transaction authority from accounting and record keeping, custodial safekeeping, clear delegation of authority, specific limitations regarding securities losses and remedial action, control over wire transfers, minimizing the number of authorized investment officials and documentation of transactions and strategies.
The City Treasurer shall establish an annual process of independent review by an external auditor. This review will provide internal control by assuring compliance with the policies and procedures set forth in this document.
XVIII. PERFORMANCE STANDARDS
The investment portfolio shall be designed with the objective of obtaining a rate of return throughout budgetary and economic cycles, commensurate with the investment risk constraints and the cash flow needs.
The duration of each portfolio will be approximately equal to the duration (typically, plus or minus 20%) of a Market Benchmark, an index selected by the City based on the investment objectives, constraints and risk tolerances for each portfolio. The investment performance objective for the portfolio shall be to earn a total rate of return over a market cycle which is approximately equal to the return on a benchmark index of one to five- year government securities.
XIX. INVESTMENT POLICY ADOPTION
At the direction of the City Treasurer, the City's Investment Policy shall be reviewed annually, to reflect changes in the California state codes, general market Commented [AS2]: Best Practice. The City has multiple
portfolios (operating reserve, LAIF, liquidity, etc.). Each portfolio should have a benchmark that aligns to the objective of the account.
City of Corona Investment Policy
Adopted by City Council June 187, 20256
11 conditions or to provide further clarification of the City's policy. The Policy shall be formally presented to the City Council for approval at a public meeting. Any change in the Policy shall also be approved at a public meeting by the City Council.
City of Corona Investment Policy
Adopted by City Council June 187, 20256
12 GLOSSARY OF TERMS
Accrued Interest - Interest earned but not yet received.
Asset Backed Securities – Securities supported by pools of installment loans or leases or by pools of revolving lines of credit.
Banker’s Acceptance (BA) - A draft or bill or exchange accepted by a bank or trust company. The accepting institution guarantees payment of the bill, as well as the issuer.
Bond - A financial obligation for which an issuer promises to pay the bondholder a specified stream of future cash flows, including periodic interest payments and a principal repayment.
Broker - A broker brings buyers and sellers together for a commission. The broker does not take a position.
Certificate of Deposit - A deposit insured up to $100,000 by the FDIC at a set rate for a specified period of time.
Collateral - Securities, evidence of deposit or pledges to secure repayment of a loan.
Also refers to securities pledged by a bank to secure deposit of public funds.
Collateralized Mortgage Obligation (CMO) – classes of bonds that redistribute the cash flow of mortgage securities (and whole loans) to create securities that have different levels of prepayment risk, as compared to the underlying mortgage securities.
Commercial Paper – A short-term, unsecured promissory note issued by a large corporation.
Coupon - a) The annual rate of interest that a bond's issuer promises to pay the bold holder on the bond's face value. b) A certificate attached to a Bond evidencing interest due on the payment date.
Dealer - A dealer, as opposed to a broker, acts as a principal in all transactions, buying and selling for his own account.
Delivery Versus Payment - There are two methods of delivery of securities: delivery versus payment and delivery versus receipt. Delivery versus payment is the delivery of securities with an exchange of money for the securities. Delivery versus receipt is the delivery of securities with an exchange of a signed receipt for the securities.
Discount - The difference between the cost price of a security and its maturity when quoted at a lower than face value. A security selling below original offering price shortly after sale also is considered to be at a discount.
Discount Notes - Non-interest bearing money market instruments that are issued at a Discount and redeemed at maturity for full face value (e.g., U.S. treasury bills).
City of Corona Investment Policy
Adopted by City Council June 187, 20256
13 Diversified Management Companies – Mutual funds or money market mutual funds registered with the Securities and Exchange Commission pursuant California Government Code Section 53601(k).
Federal Reserve System - The central bank of the United States created by Congress and consisting of a seven member-board of governors in Washington, D.C., 12 regional banks and about 5,700 commercial banks are members of the system.
IADB – Inter-American Development Bank, one of the three Washington, D.C. based Supranational issuers.
IBRD – International Bank for Reconstruction and Development, one of the three Washington, D.C. based Supranational issuers.
IFC – International Finance Corporation, one of the three Washington, D.C. based Supranational issuers.
Liquidity - A liquid asset is one that can be converted easily and rapidly to cash without a substantial loss of value.
Local Government Investment Pool - The aggregate of all funds from political subdivisions that are placed in the custody of the State Treasurer for investment and reinvestment. (i.e. Local Agency Investment Fund or LAIF).
Market Value - The price at which a security is trading and could presumably be purchased or sold.
Maturity - The date upon which the principal or stated value of an investment becomes due and payable. The investment’s term or remaining maturity is measured from the settlement date to final maturity.
Medium Term Notes – All corporate and depository institution debt securities with a maximum remaining maturity of five years or less, issued by corporations organized and operating within the United States or by depository institutions licensed by the United States.
Mortgage-Backed Pass-Through Securities - A securitized participation in the interest and principal cash flows from a specified pool of mortgages. Principal and interest payments made on the mortgages are passed through to the holder of the security.
New Issue - Term used when a security is originally "brought" to the market.
Offering Price - The price asked by a seller of securities. (When you are buying securities, you ask for an offer.) See "Asked" and "Bid".
City of Corona Investment Policy
Adopted by City Council June 187, 20256
14 Portfolio - Collection of securities held by an investor.
Primary Dealer - A group of government securities dealers who submit daily reports of market activity and positions and monthly financial statements to the Federal Reserve Bank of New York and are subject to its informal oversight. Primary dealers include SECregistered securities broker/dealers, banks and a few unregulated firms.
Rate of Return - The yield obtainable on a security based on its purchase price or its current market price. This may be the amortized yield to maturity on a bond or the current income return.
Repurchase Agreement (REPO) - A transaction where the seller (bank) agrees to buy back from the buyer (City) the securities at an agreed upon price after a stated period of time. The buyer in effect lends the seller money for the period of the agreement, and the terms of the agreement are structured to compensate the buyer for this.
Reverse Repurchase Agreement – An agreement to sell securities in return for cash with an agreement to repurchase the securities at an agreed upon price.
Risk - Degree of uncertainty of return on an asset.
Safekeeping - A service to customers rendered by banks, for a fee, whereby securities and valuables of all types and descriptions are held in the bank vaults for protection.
Securities and Exchange Commission (SEC) – An agency created by Congress to protect investors in securities transactions by administering securities legislation.
Supranational – A Supranational is a multi-national organization whereby member states transcend national boundaries or interests to share in the decision making to promote economic development in the member countries.
Treasury Bills - U.S. treasury bills are short-term, direct obligations of the U.S. government issued with original maturities of 13 weeks and 52 weeks in book form only.
Treasury Notes - Intermediate-term Coupon bearing U.S. securities having maturities from one year to ten years.
Yield - The rate of annual income return on an investment, expressed as a percentage.
It is obtained by dividing the current dollar income by the current market price of the security.
Yield to Maturity - The rate of income return on an investment, minus any premium above par or plus any discount from par in purchase price, with the adjustment spread over the period from the date of the purchase to the date of maturity of the bond.
City of Corona Investment Policy
Adopted by City Council June 187, 20256
15 Zero Coupon Bond – A bond on which interest is not payable until maturity (or earlier redemption), but compounds periodically to accumulate to a stated maturity amount.
City of Corona Investment Policy
Adopted by City Council June 187, 20256
16 Attachment A – Allowable Investments
ALLOWABLE INVESTMENTS*
CITY OF CORONA LIMITS STATE CODE LIMITS
Instrument Diversification Term Quality Diversification Term Quality Bankers
Acceptances
Not to exceed
25% in any one
institution;
Not to exceed
20% of
portfolio
Not to
exceed
180
days
Eligible for
purchase by the
Federal
Reserve System
Not to exceed
30% in any one
institution;
May not
exceed 40% of
portfolio
Not to
exceed
180
days
Eligible for
purchase by
the Federal
Reserve
System
Bonds issued by the
City, including Bonds
payable solely out of
revenue from a
revenue producing
property owned,
controlled or
operated by the City
Not to exceed
25% of the
portfolio for
combined
municipal debt
“A” rating
category or
better ranking
by nationally
recognized
rating services
No limit Not to
exceed
5 years
Bonds, Notes or
other evidence of
indebtedness of any
local agency within
California, or state
warrants, or Treasury
Notes or Bonds of
California
Not to exceed
25% of the
portfolio for
combined
municipal debt
“A” rating
category or
better ranking
by nationally
recognized
rating services
No limit Not to
exceed
5 years
Bonds, Notes or
other evidence of
indebtedness in any
of the other 49
states, in addition to
California
Not to exceed
25% of the
portfolio for
combined
municipal debt
“A” rating
category or
better ranking
by nationally
recognized
rating services
No limit Not to
exceed
5 years
Commercial Paper Not to exceed
25% of
Portfolio;
Under a
provision
sunsetting on
January 1,
20262031, no
more than 40%
of the portfolio
may be
invested in
Commercial
Paper if the
Agency’s
investment
assets under
management
Not to
exceed
270
397
days
“A1/P1” rating
category for
issuer’s
Commercial
Paper; “A2/A” or
higher rating on
long-term debt;
US domiciled
corporations
with assets
greater than
$500 million
Not to exceed
25% of
Portfolio; Under
a provision
sunsetting on
January 1,
20262031, no
more than 40%
of the portfolio
may be
invested in
Commercial
Paper if the
Agency’s
investment
assets under
management
are greater
Not to
exceed
270
397
days
Prime quality
with the highest
letter/number
rating and “A”
or higher rating
on the issuer’s
long-term debt;
US domiciled
corporations
with assets
greater than
$500 million
Commented [AS3]: Senate Bill 595 extends this provision from 1/1/26 to 1/1/31, effective January 1, 2026.
City of Corona Investment Policy
Adopted by City Council June 187, 20256
17 ALLOWABLE INVESTMENTS*
CITY OF CORONA LIMITS STATE CODE LIMITS
Instrument Diversification Term Quality Diversification Term Quality are greater
than
$100,000,000.
May not
represent more
than 10% of
issuer’s
outstanding
paper
than
$100,000,000.
May not
represent more
than 10% of
issuer’s
outstanding
paper
Diversified
Management
Companies, as
defined by Section
53601(l) of the
Government Code**
Not to exceed
10% of
Portfolio
N/A Highest ranking
by not less than
2 of the 3
largest rating
services;
Have an SEC
registered
investment
advisor with
more than 5
years of
experience and
assets under
management
greater than
$500 million
Not to exceed
20% of
Portfolio**;
Not more than
10% of
Portfolio in one
fund
N/A Highest ranking
by not less than
2 of the 3
largest rating
services;
Have an SEC
registered
investment
advisor with
more than 5
years of
experience and
assets under
management
greater than
$500 million
Money Market
Mutual Funds
registered with the
Securities and
Exchange
Commission under
the Investment
Company Act of
1940**
Not to exceed
20% of
Portfolio
N/A Highest ranking
by not less than
2 of the 3
largest rating
services;
Have an SEC
registered
investment
advisor with
more than 5
years of
experience and
assets under
management
greater than
$500 million
Not to exceed
20% of
Portfolio**;
Not more than
20% of
Portfolio in one
fund
N/A Highest ranking
by not less than
2 of the 3
largest rating
services;
Have an SEC
registered
investment
advisor with
more than 5
years of
experience and
assets under
management
greater than
$500 million
City of Corona Investment Policy
Adopted by City Council June 187, 20256
18 ALLOWABLE INVESTMENTS*
CITY OF CORONA LIMITS STATE CODE LIMITS
Instrument Diversification Term Quality Diversification Term Quality Federal agency or
United States
governmentsponsored enterprise
obligations,
participations, or
other instruments,
including those
issued by or fully
guaranteed as to
principal and interest
by federal agencies
or United States
governmentsponsored
enterprises.
No limit
The maximum
percent of
callable agency
securities in
the portfolio will
be 20%.
Not to
exceed
5 years
No limit Not to
exceed
5 years
Financial Futures
and Financial Option
Contracts
Not authorized Pursuant to
Section 53601
Not to
exceed
5 years
Pursuant to
Section 53601
Medium-Term Notes
issued by
Corporations
Not to exceed
30% of
Portfolio
Not to
exceed
5 years
Rated in a rating
category of “A”
or its equivalent
or better by at
least one
nationally
recognized
rating service
US domiciled
corporations or
US licensed
depository
Not to exceed
30% of
Portfolio
Not to
exceed
5 years
“A” or better
ranking by a
nationally
recognized
rating service
US domiciled
corporations or
US licensed
depository
Negotiable
Certificates of
Deposit issued by a
Nationally or State
Chartered Bank, a
Federal Association,
or a State Licensed
Branch of a Foreign
Owned Bank
(Insured by Federal
Government)
Not to exceed
20% of
Portfolio
May not
exceed
shareholder’s
equity of
issuing bank or
net worth of
issuing S & L
or Federal
Association
Not to
exceed
3 years
Bank or Savings
& Loans with
“A1/P1” rating
category or
better short term
debt rating and
“A2/A” or better
long-term debt
rating
Not to exceed
30% of
Portfolio
May not
exceed
shareholder’s
equity of
issuing bank or
net worth of
issuing S & L or
Federal
Association
Not to
exceed
5 years
Not specified
Non-Government
issued MortgageBacked PassThrough
Not to exceed
20% of
Portfolio
Not to
exceed
5 years
Securities are
rated in a rating
category of “AA”
or its equivalent
Not to exceed
20% of
investing
Not to
exceed
5 years
Securities are
rated in a rating
category of
“AA” or its
City of Corona Investment Policy
Adopted by City Council June 187, 20256
19 ALLOWABLE INVESTMENTS*
CITY OF CORONA LIMITS STATE CODE LIMITS
Instrument Diversification Term Quality Diversification Term Quality Securities
Collateralized
Mortgage Obligations
and Asset–Backed
Securities
or better by a
NRSRO
agency’s
surplus
equivalent or
better by a
NRSRO
Repurchase
Agreements
Not to exceed
10% of
Portfolio
Not to
exceed
14 days
Collateral of
102% or greater
with securities
permitted in the
Policy
None Not to
exceed
1 year
Authorized
Collateral of
102% or
greater
Reverse Repurchase
Agreements
Not authorized None Not to
exceed
1 year
Extensive
conditions
listed in Section
53601 (i)
State of California
Local Agency
Investment Fund
(LAIF) or other Local
Government
Investment Pools
established by public
entities
Limit set by
LAIF
N/A Instruments
consistent with
State Code
No requirement N/A
Shares of Beneficial
Interest Issued by a
Joint Powers
Authority (JPA)
Invests in
securities
under 53601(a)
to (r), inclusive
N/A Invests in
securities
under 53601(a)
to (r), inclusive
N/A
Other Local
Government
Investment Pools
established by public
entities
Not to exceed
20% of
portfolio
N/A None N/A
Supranationals Not to exceed
30% of
portfolio; Not to
exceed 10%
per issuer
Not to
exceed
5 years
“AA” rating
category or
better ranking
by a nationally
recognized
rating service
Washington,
D.C. based
issuers: IADB,
IBRD, and IFC
Not to exceed
30% of portfolio
Not to
exceed
5 years
“AA” or better
ranking by a
nationally
recognized
rating service
Washington,
D.C. based
issuers: IADB,
IBRD, and IFC
United States
Treasury Notes,
Bonds, Bills, or other
certificates of
No limit Not to
exceed
5 years
No limit Not to
exceed
5 years
Commented [AS5]: CGC § 16429.1
Commented [AS6]: CGC § 53601(p)
Commented [AS7]: e.g., county pools under CGC § 27133
City of Corona Investment Policy
Adopted by City Council June 187, 20256
20 ALLOWABLE INVESTMENTS*
CITY OF CORONA LIMITS STATE CODE LIMITS
Instrument Diversification Term Quality Diversification Term Quality indebtedness backed
by the US
Government
Zero Coupon
Bonds***
Not authorized Not specified
* Unless otherwise specified in this policy, no more than 5% of the total portfolio may be invested in securities of any single issuer, other than the US government, its agencies and instrumentalities, money market mutual funds and LAIF.
** Total amount invested in Mutual funds and Money Market Mutual Funds may be no more than 20% of the total portfolio.
***Under a provision sunsetting on January 1, 20262031, securities backed by the U.S. Government that could result in a zero- or negative-interest accrual if held to maturity are permitted.
Commented [AS8]: Senate Bill 595 extends this provision from 1/1/26 to 1/1/31, effective January 1, 2026.
City of Corona Investment Policy
Adopted by City Council June 187, 20256
21 Attachment B – Sample Resolution Approving the Investment Policy RESOLUTION NO. 2026-077
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF CORONA, CALIFORNIA, APPROVING THE CITY OF
CORONA’S INVESTMENT POLICY
WHEREAS, the City Council of the City of Corona has considered a document entitled “City of Corona’s Investment Policy” which outlines the policy enacted to provide guidelines for the prudent investment of inactive cash for all funds in the investment portfolio as well as guidelines for maximizing the efficiency of the cash management system for the City, the Corona Utility Authority, the Corona Housing Authority, and the Corona Public Financing Authority; and
WHEREAS, the “City of Corona’s Investment Policy” has also been administratively assigned City Administrative Policy No. 01200-602; and WHEREAS, the “City of Corona’s Investment Policy” provides for a creation of a Treasury Committee comprised of the City Treasurer, City Manager, Assistant City Manager and Finance Director; and
WHEREAS, at the direction of the City Treasurer, the City of Corona’s Investment Policy shall be reviewed annually to reflect changes in the California state codes, general market conditions or to provide further clarification of the City’s policy; and WHEREAS, the Finance Director has recommended to the City Council that the “City of Corona’s Investment Policy” be approved and established as the policy of the City, the Corona Utility Authority, the Corona Housing Authority, and the Corona Public Financing Authority and such other entities as may be established for cash management; and WHEREAS, the City Council has determined that the “City of Corona’s Investment Policy” be approved and established as recommended by the Finance Director.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF
THE CITY OF CORONA, CALIFORNIA that the “City of Corona’s Investment Policy,” as presented to the City Council at the meeting in which this Resolution is adopted, is hereby approved and established as the policy of the City with respect to investments.
City of Corona Investment Policy
Adopted by City Council June 187, 20256
22 PASSED, APPROVED AND ADOPTED this 187th day of June, 20265. ________________________________
Mayor of the City of Corona, California
ATTEST:
______________________________________________
City Clerk of the City of Corona, California
City of Corona Investment Policy
Adopted by City Council June 187, 20256
23 CERTIFICATION
I, Sylvia Edwards, City Clerk of the City of Corona, California, do hereby certify that the foregoing Resolution was regularly introduced and adopted by the City Council of the City of Corona, California, at a regular meeting thereof held on the 178th day of June, 20265, by the following vote of the Council:
AYES:
NOES:
ABSENT:
ABSTAINED:
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of Corona, California this 178th day of June, 20256.
City Clerk of the City of Corona, California
(SEAL)