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Packet Pg. 474 Attachment: A: City of San Ramon Fiscal Year 2023-24 Proposed Budget (2023-064 : FY 23/24 Proposed Budget) Reference Materials Glossary of Terms
Proposed Budget 2023-2024 196
Capital Outlay: Fixed assets, which have a value of $5,000 or more and have a useful economic life of more than
one (1) year.
Capital Project: Major construction, acquisition, or
renovation activities which add value to a government’s physical assets or significantly increase their useful life; also called capital improvements.
Contingency: An appropriation of funds to cover
unforeseen events that occur during the fiscal year such as federal mandates, shortfalls in revenue, and similar eventualities.
Contract Services: This is an agreement for a specific
term in professional or contractual service.
Debt Service: The cost of paying principal and interest on borrowed money according to the predetermined
payment schedule.
Defer: The means to delay expenditure until a future
budget year.
Department: A major organizational unit of the City with overall management responsibility for an operation or a group of related operations within a functional area. In San Ramon, Department Heads are the chief administrators
within a department. Program Managers typically report
to either the Department Head or a Division Manager.
Division: An organization sub-unit of a department, which encompasses a substantial portion of the duties assigned to a department.
Encumbrance: The commitment of appropriated funds
for future expenditures.
Expenditure: The outflow of funds paid or to be paid for an asset obtained or goods and services obtained. Note:
An encumbrance is not an expenditure an encumbrance
reserves funds to be expended.
Fiscal Year: The period designated by the City for the
beginning and ending of financial transactions. In San
Ramon, this period of time is July 1 through June 30.
Fixed Assets: These are non-consumable assets of a longterm nature such as land, buildings, machinery, furniture, and other equipment. The City has defined such assets
as those with an expected life in excess of one (1) year and an acquisition cost in excess of $5,000.
Full-Time Equivalent (FTE): The decimal equivalent of a position converted to a full-time basis. For example, one person working half time would count as 0.50 FTE; one
person working full-time would count as 1.0 FTE. Elected positions are budgeted however; they are not included
in net FTE totals.
Fund: Municipal governments organize and operate their
accounting systems on a fund basis. The formal definition of the fund is an independent financial and accounting
entity with a self-balancing set of accounts in which
cities record financial transactions relating to revenue, expenditures, assets, and liabilities. Each fund has a
budget with the exception of the General Fund (which
accounts for general-purpose actions and has unrestricted revenue sources). Each remaining fund typically has a
unique funding source and purpose. Establishing funds
enables the City to account for the use of restricted
revenue sources and carry on specific activities or pursue specific objectives.
Fund Balance: The fund balance is the excess of the assets of a fund over its liabilities, reserves, and carryover.
Generally Accepted Accounting Principles (GAAP):
Uniform minimum standards and guidelines for financial
accounting and reporting. They govern the form and
content of the financial statements of an entity. GAAP
encompasses the conventions, rules and procedures
necessary to define accepted accounting practice at a
particular time. The primary authoritative body on the
application of GAAP to State and local governments is
the Government Accounting Standards Board (GASB).
General Fund: The City’s principal operating fund, all
revenue that is not allocated by law or contractual
agreement to a specific fund, which is supported by
general taxes and fees and which can be used for any
legal purpose.
Goal: A statement of broad direction, purpose or intent. In San Ramon’s budget, goals are synonymous with mission
statements.
Grant: A transfer or awarding of funds from either the
Federal or State government to the City in order to finance a specific activity or program. The City receiving the grant funds is not required to repay the awarding entity the
amount in the future.
General Obligation (GO) Bonds: A type of municipal bond in which the bond repayments (principal and interest)
are guaranteed by the total revenue generated by the
government entity. In other words, the repayment is
guaranteed by both tax revenue and operating revenue
generated by various projects. GO bonds are primarily
used to subsidize the development of public projects. No assets are used as collateral.
Indirect Costs: Those elements of cost necessary in the performance of a service, which cannot be accurately
or readily allocated to the unit of service. Usually, they
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Packet Pg. 475 Attachment: A: City of San Ramon Fiscal Year 2023-24 Proposed Budget (2023-064 : FY 23/24 Proposed Budget) Reference Materials Glossary of Terms
197 Proposed Budget 2023-2024
relate to those expenditures, which are not an integral part of the service.
Infrastructure: The physical assets of the government
(e.g., streets, parks and public buildings).
Interest: Income earned on the investment of available
cash balances.
Internal Service: Accounts for capital equipment
purchases, insurance and benefit liability, and investment management.
Materials and Supplies: Expendable materials and
operating supplies necessary to conduct departmental
orientation.
Non-Departmental: Program costs that do not relate to
any one particular department, but represent costs of a general Citywide nature.
Objective: Something to be accomplished in specific,
well-defined, and measurable terms and that is achievable within a specific timeframe.
Operating Budget: The operating budget provides a plan
for current expenditures and the proposed means of
financing them. In a broader sense, the annual operating budget is a statement of what services the municipality will deliver to its citizens.
Other Costs: Expenditure category which includes
employee training and development, insurance and
subsidies.
Personnel Services: An expenditure category which
generally accounts for the salaries of full-time, parttime and temporary employees, overtime expenses, all employee benefits for City employees, such as medical,
dental and retirement.
Program: Represents major areas or support functions;
they are defined as a service provided to citizens, other departments, or other agencies.
Program Revenue (Income): This is revenue earned by a
program, including fees for services, license and permit fees, and fines.
Proposed Budget: Proposed level of expenditures/
revenue/FTEs as outlined in the proposed budget
document. This is the City Manager’s recommended
budget, which will be considered by the City Council for approval.
Reprogram: The re-appropriation of funds that were
previously earmarked for another use.
Reserve: An account which the City uses to either set
aside revenue that it does not need to spend in the
current fiscal year or to earmark revenue for a specific future purpose. Reserves are typically established and
budgeted through City Council policy action.
Resolution: A special order by the City Council requiring less legal formality than an Ordinance in terms of public notice prior to approval.
Resources: Total amount available for appropriation,
including estimated revenue, beginning fund balances,
and fund transfers.
Revenue: Amount of funds received from the collection
of taxes, fees, permits, licenses, interest, and grants during the fiscal year.
Special Revenue Fund: A fund used to account for revenue sources that are restricted by law or administrative action to expenditures for special purposes.
Structural Deficit: The permanent financial gap that
results when, discounting economic cycles, ongoing
revenue does not match or keep pace with ongoing
expenditures.
Surplus: An excess of total current resources over total current requirements.
Transfers In/Out: Amounts transferred from one fund
to another to assist in financing the services for the
recipient fund.
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Packet Pg. 476 Attachment: A: City of San Ramon Fiscal Year 2023-24 Proposed Budget (2023-064 : FY 23/24 Proposed Budget) Reference Materials Glossary of Terms
Proposed Budget 2023-2024 198
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Packet Pg. 477 Attachment: A: City of San Ramon Fiscal Year 2023-24 Proposed Budget (2023-064 : FY 23/24 Proposed Budget) Reference Materials Acronyms
199 Proposed Budget 2023-2024
Acronyms
AB Assembly Bill
ADA American Disabilities Act
ARPA American Rescue Plan Act of 2021
AT&T American Telephone & Telegraph (Formerly
Pacific Bell)
BAAQMD Bay Area Air Quality Management District
BMX Bicycle Motocross
CAFR Comprehensive Annual Financial Report
CalPERS California Public Employees’ Retirement System
CIP Capital Improvement Program
COP Certificates of Participation
CRM Citizen Request Management
CSA County Service Area
CSMFO California Society of Municipal Finance Officers
DOT Department of Transportation
DRFA Dougherty Regional Fire Authority
DV Dougherty Valley
DVOC Dougherty Valley Oversight Committee
EBMUD East Bay Municipal Utility District
EBRCS East Bay Regional Communication System
EBTR Employer Based Trip Reduction
EDAC Economic Development Advisory Committee
EDSP Economic Development Strategic Plan
EIR Environmental Impact Report
EMS Energy Management System
ERP Enterprise Resource Planning
EPA Environmental Protection Agency
FPPC Fair Political Practice and Commission
F/T Full Time
FTE Full-Time Equivalent
FY Fiscal Year
GAAP Generally Accepted Accounting Principles
GASB Governmental Accounting Standards Board
GFOA Government Finance Officers Association
GHAD Geologic Hazard Abatement District
GIS Geographic Information System
HOA Homeowners Association
HVAC Heating, Ventilation, and Air Conditioning
IT Information Technology
I/S Information Services
ISF Internal Service Fund
L & L Landscaping and Lighting District
LED Light Emitting Diode
LLC Limited Liability Company
LLP Limited Liability Partnership
LOCC League of California Cities
LUCA Local Update of Census Addresses
MOU Memorandum of Understanding
MPA Municipal Pooling Authority
MRP Municipal Regional Permit
MVLF Motor Vehicle License Fees
NPDES National Pollutant Discharge Elimination System
NWSP Northwest Specific Plan
NWSR Northwest San Ramon
OBAG One Bay Area Grant
OPEB Other Post-Employment Benefits
PCI Pavement Condition Index
PD Police Department
PCS Parks & Community Services
PEG Public Education & Government
PEPRA Public Employees’ Pension Reform Act
PERS Public Employees’ Retirement System
PDA Priority Development Area
PG&E Pacific Gas & Electric
POB Pension Obligation Bond
RDA Redevelopment Agency
RFP Request for Proposal
RHNA Regional Housing Needs Allocation
SCCJEPA South Contra Costa Joint Exercise Powers
Agreement
SB Senate Bill
SRPD San Ramon Police Department
SRVB San Ramon Valley Blvd
SRVFPD San Ramon Valley Fire Protection District
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Packet Pg. 478 Attachment: A: City of San Ramon Fiscal Year 2023-24 Proposed Budget (2023-064 : FY 23/24 Proposed Budget) Reference Materials Acronyms
Proposed Budget 2023-2024 200
SRVUSD San Ramon Valley Unified School District
SWAT Southwest Area Transportation
TA Tax Allocation
TAC Transportation Advisory Committee
TDM Transportation Demand Management
TOT Transient Occupancy Tax
TRAFFIX Congestion relief program aimed at schoolrelated traffic. The program is funded by Measure J, the V cent sales tax approved by
Contra Costa voters in 2004
TVTC Tri-Valley Transportation Council
UCLA University of California Los Angeles
WAN Wide Area Network
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Packet Pg. 479 Attachment: A: City of San Ramon Fiscal Year 2023-24 Proposed Budget (2023-064 : FY 23/24 Proposed Budget) 201 Proposed Budget 2023-2024
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Packet Pg. 480 Attachment: A: City of San Ramon Fiscal Year 2023-24 Proposed Budget (2023-064 : FY 23/24 Proposed Budget) Reference Materials Listing of Funds
Proposed Budget 2023-2024 202
Listing of Funds
101 General Fund
201 Planning Cost Recovery
202 Geographic information System
203 Child Care* *
204 City Beautification*
205 Conditions of Approval*
206 Creek Study & Mitigation*
207 Drainage Mitigation*
208 Gas Tax
209 Park Development
211 Crow Canyon Project
212 South Contra Costa Joint Exercise Powers
Agreement (SCCJEPA)
213 Street Maintenance and Improvement
214 Traffic Improvement
215 Tri-Valley Transportation
216 Public Education & Government (PEG)
217 Vehicle Refuse Impact
218 Open Space Development
219 American Rescue Plan Act of 2021
251 Community Facilities District 2014-1 (Acres)
252 Community Facilities District 2014-1 (Faria)
301 Citywide Landscaping
302 Citywide Lighting
303 Canyon Lakes**
304 Vista San Ramon**
305 Summerwood Lo
306 West Branch**
307 Bent Creek**
308 Deerwood**
309 Country View**
310 Old Ranch Estates**
311 Village Parkway**
312 El Nido**
313 Crown Ridge**
314 Four Oaks**
315 Circle E Ranch**
316 Thomas Ranch**
317 Henry Ranch**
318 Old Ranch Summit**
319 Glass House**
330 The Preserve Lighting & Landscaping
341 Canyon Park
342 Village Center Common Area
343 Dougherty Valley CSA
344 Solid Waste
345 Non-Point Drainage / Stormwater
346 Street Smarts
347 TDM Programs
348 Local Law Enforcement Block Grant
349 Police Special Revenue
350 Narcotic Asset Forfeiture
351 TRAFFIX Program
361 Dougherty Valley GHAD
362 Northwest San Ramon GHAD
371 San Ramon Housing - Unrestricted
401 Capital Improvement Projects - Capital Project
Fund
501 Pension Obligation Bonds (2010) - Debt Service
Fund
512 COP #12 (2011) - Debt Service Fund
513 COP #13 (2019) - Debt Service Fund
514 Pension Obligation Bonds (2021) - Debt Service
Fund
521 LED Lights (2012) - Debt Service Fund
601 Investments - Internal Service Fund
602 Vehicle/Equipment Replacement - Internal
Service Fund
603 Info Services Equipment Replacement - Internal
Service Fund
610 Insurance Liability - Internal Service Fund
611 Healthcare - Internal Service Fund
618 Infrastructure Maintenance - Internal Service
Fund
*Development Mitigation Funds
**Special Landscaping and Lighting Zones
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Packet Pg. 481 Attachment: A: City of San Ramon Fiscal Year 2023-24 Proposed Budget (2023-064 : FY 23/24 Proposed Budget) Reference Materials Budget Resolution & Appropriation Limit 203 Proposed Budget 2023-2024
Budget Resolution & Appropriation Limit
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Packet Pg. 482 Attachment: A: City of San Ramon Fiscal Year 2023-24 Proposed Budget (2023-064 : FY 23/24 Proposed Budget) Reference Materials Budget Resolution & Appropriation Limit Proposed Budget 2023-2024 204
RESOLUTION NO. 2023-24xxx
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN RAMON ADOPTING THE FISCAL YEAR 2023-24 OPERATING AND CAPITAL BUDGET, ESTABLISHING
AN APPROPRIATION LIMIT, AND AUTHORIZING CARRYOVER PROJECT
APPROPRIATIONS
WHEREAS, in a budget workshops held on April 11, 2023, the City Council reviewed the Proposed Fiscal Year 2023- 24 Operating and Capital Budget; and
WHEREAS, in a second budget workshop held on May 9, 2023 the City Council has reviewed the Proposed Fiscal Year 2023-24 Operating Budget and Capital Improvement Program; and WHEREAS, the Planning Commission in a meeting held on May 16, 2023 found the Capital Improvement Program consistent with the General Plan; and WHEREAS, the Capital Improvement Program, referred to as the Capital Budget requires annual appropriation approval by the City Council; and
WHEREAS, Article XIIB of the State of California Constitution requires local government agencies to annually adopt an appropriation limit; and
NOW, THEREFORE BE IT RESOLVED, as follows:
Section 1. The City Council approves the Fiscal Year 2023-24 Proposed Operating and Capital Budget totaling $131,117,168 as summarized on Exhibit 1 and a carryover of unspent Capital Budget appropriations from Fiscal Year 2022-23.
Section 2. The City Council approves the Fiscal Year 2023-24 Appropriation Limits as required by Article XIIIB of the State Constitution as shown on Exhibit 2.
Section 3. Upon finalizing the budget document for publication, a copy of the budget document will be made available for public review at City Hall and other convenient public places.
Signatures on following page
PASSED, APPROVED AND ADOPTED on May 23, 2023 by the following vote:
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Packet Pg. 483 Attachment: A: City of San Ramon Fiscal Year 2023-24 Proposed Budget (2023-064 : FY 23/24 Proposed Budget) Reference Materials Budget Resolution & Appropriation Limit 205 Proposed Budget 2023-2024
AYES:
NOES:
ABSENT:
ABSTAIN:
________________________
Dave Hudson, Mayor
ATTEST:
Christina Franco, City Clerk
Exhibit 1: Statement of Revenues, Expenditures and Changes in Fund Balance Exhibit 2: City of San Ramon Appropriate Limit Calculation
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Packet Pg. 484 Attachment: A: City of San Ramon Fiscal Year 2023-24 Proposed Budget (2023-064 : FY 23/24 Proposed Budget) Reference Materials Budget Resolution & Appropriation Limit Proposed Budget 2023-2024 206
Exhibit 1
Statement of Revenues, Expenditures and Changes in Fund Balance Governmental Fund
General Fund
Special Rev
-Operating
Special
Rev -NonOperatingSpecial Rev
-GHADs
Special Rev
-Housing
Successor
FUND BALANCE - 07/01/23 $ 25,103,135 $ 8,161,054 $ 23,113,337 $ 14,624,558 $ 2,218,334
REVENUES
Property Tax 25,114,068 - - - -
Special Assessments - 5,708,997 - 2,751,937 -
Sales and Use Tax 13,262,289 - - - -
Property Transfer Tax 1,317,992 - - - -
Transient Occupancy Taxes (TOT) 2,248,541 - - - -
Franchise Fees 5,688,497 - - - -
Licenses and Permits 3,283,250 - - 3,000 -
Intergovernmental 526,220 22,693,352 4,493,792 - -
Charges for Services 6,766,228 1,617,670 594,093 - -
Fines and Forfeitures 263,000 - - - -
Investment Income 333,167 - - 63,943 -
Development Fees - 595,821 12,324,927 - 4,015,500
Miscellaneous Revenue 3,670,772 1,331,444 - 36,988 -
TOTAL REVENUES 62,474,024 31,947,284 17,412,812 2,855,868 4,015,500
EXPENDITURES
General Government 3,676,647 234,144 - - -
Administrative Services 6,108,673 - - - -
Community Development 5,412,638 - 203,504 - -
Police Services 18,170,314 10,671,942 - - -
Public Works 17,153,016 20,575,107 102,732 1,209,496 -
Parks & Community Services 9,311,640 - - - -
Non-Departmental 50,000 250,000 - - 4,948,387
Housing Programs - - - - -
Debt Service - - - - -
Capital Improvement Program
(CIP) - - - - -
Vehicle/IS Replacement - - - - -
Insurance - - - - -
Healthcare - - - - -
TOTAL EXPENDITURES 59,882,928 31,731,193 306,236 1,209,496 4,948,387
OTHER FINANCING SOURCES (USES)
Operating Transfers In 5,099,457 4,336,926 - - -
Operating Transfers Out (11,515,021) (5,654,715) (5,522,889) (124,037) -
TOTAL OTHER FINANCING
SOURCES (USES) (6,415,564) (1,317,789) (5,522,889) (124,037) - NET INCREASE (DECREASE) (3,824,468) (1,101,698) 11,583,687 1,522,335 (932,887) FUND BALANCE - 06/30/24 $ 21,278,667 $ 7,059,356 $ 34,697,024 $ 16,146,893 $ 1,285,447
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Packet Pg. 485 Attachment: A: City of San Ramon Fiscal Year 2023-24 Proposed Budget (2023-064 : FY 23/24 Proposed Budget) Reference Materials Budget Resolution & Appropriation Limit 207 Proposed Budget 2023-2024
Exhibit 1
Statement of Revenues, Expenditures and Changes in Fund Balance Governmental Fund Proprietary
Debt Service
Capital
Projects Total
Internal
Service
Funds Grand Total
FUND BALANCE - 07/01/23 $ 997,823 $ 3,936,493 $ 86,426,065 $ 10,477,091 $ 96,903,156
REVENUES
Property Tax - - 25,114,068 - 25,114,068
Special Assessments - - 8,460,934 - 8,460,934
Sales and Use Tax - - 13,262,289 - 13,262,289
Property Transfer Tax - - 1,317,992 - 1,317,992
Transient Occupancy Taxes (TOT) - - 2,248,541 - 2,248,541 Franchise Fees - - 5,688,497 - 5,688,497
Licenses and Permits - - 3,286,250 - 3,286,250
Intergovernmental - 3,339,313 31,052,677 537,780 31,590,457 Charges for Services - - 8,977,991 102,000 9,079,991
Fines and Forfeitures - - 263,000 - 263,000
Investment Income - 300,000 697,110 94,134 791,244
Development Fees - - 16,936,248 - 16,936,248
Miscellaneous Revenue 3,485,778 1,000,000 9,524,982 14,111,714 23,636,696 TOTAL REVENUES 3,485,778 4,639,313 126,830,579 14,845,628 141,676,207
EXPENDITURES
General Government - - 3,910,791 - 3,910,791
Administrative Services - - 6,108,673 91,461 6,200,134
Community Development - - 5,616,142 - 5,616,142
Police Services - - 28,842,256 - 28,842,256
Public Works - - 39,040,351 - 39,040,351
Parks & Community Services - - 9,311,640 - 9,311,640
Non-Departmental - - 5,248,387 - 5,248,387
Housing Programs - - - - -
Debt Service 5,895,543 - 5,895,543 - 5,895,543
Capital Improvement Program
(CIP) - 10,600,371 10,600,371 - 10,600,371
Vehicle/IS Replacement - - - 1,516,726 1,516,726
Insurance - - - 4,905,471 4,905,471
Healthcare - - - 10,029,356 10,029,356
TOTAL EXPENDITURES 5,895,543 10,600,371 114,574,154 16,543,014 131,117,168
OTHER FINANCING SOURCES (USES)
Operating Transfers In 5,895,543 10,481,154 25,813,080 1,997,327 27,810,407 Operating Transfers Out (3,692,877) (100,000) (26,609,539) (1,188,368) (27,797,907)
TOTAL OTHER FINANCING
SOURCES (USES) 2,202,666 10,381,154 (796,459) 808,959 12,500 NET INCREASE (DECREASE) (207,099) 4,420,096 11,459,966 (888,427) 10,571,539 FUND BALANCE - 06/30/24 $ 790,724 $ 8,356,589 $ 97,886,031 $ 9,588,664 $ 107,474,695
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Packet Pg. 486 Attachment: A: City of San Ramon Fiscal Year 2023-24 Proposed Budget (2023-064 : FY 23/24 Proposed Budget) Reference Materials Budget Resolution & Appropriation Limit Proposed Budget 2023-2024 208
Exhibit 2
Appropriation Limit Calculation
FISCAL YEAR 2023-24 APPROPRIATIONS LIMIT
A. FY 2022-23 APPROPRIATIONS LIMIT $ 95,486,122
B. ADJUSTMENT FACTORS
1. City Population Growth 0.9914
2. California Per Capita Income 1.0444
Total Adjustment % 1.0703
C. ANNUAL ADJUSTMENT 6,712,674
D. OTHER ADJUSTMENTS -
E. TOTAL ADJUSTMENTS 6,712,674
F. FY 2022-23 APPROPRIATIONS LIMIT $102,198,796
FISCAL YEAR 2023-24 APPROPRIATIONS SUBJECT TO LIMITATION A. PROCEEDS OF TAXES:
Property Tax $ 25,114,068
Sales & Use Tax 13,262,289
Property Transfer Tax 1,317,992
Transient Occupancy Tax 2,248,541
Motor Vehicle In Lieu -
Off-Highway Vehicles -
Interest Earned on Proceeds of Taxes 223,677
Total Proceeds of Taxes $ 42,166,567
B. EXCLUSIONS:
Debt Service (5,594,521)
Qualified Capital Outlays -
Total Exclusions $ (5,594,521)
C. APPROPRIATIONS SUBJECT TO LIMITATION $ 36,572,046
D. CURRENT YEAR LIMIT $ 102,198,796
E. OVER (UNDER) LIMIT $ (65,626,750)
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Packet Pg. 487 Attachment: A: City of San Ramon Fiscal Year 2023-24 Proposed Budget (2023-064 : FY 23/24 Proposed Budget) Reference Materials General Fund Reserve Policy
209 Proposed Budget 2023-2024
General Fund Reserve Policy
Dougherty Station Community Center
City of San Ramon Amador Rancho Center
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Packet Pg. 488 Attachment: A: City of San Ramon Fiscal Year 2023-24 Proposed Budget (2023-064 : FY 23/24 Proposed Budget) Reference Materials General Fund Reserve Policy
Proposed Budget 2023-2024 210
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Packet Pg. 489 Attachment: A: City of San Ramon Fiscal Year 2023-24 Proposed Budget (2023-064 : FY 23/24 Proposed Budget) Reference Materials General Fund Reserve Policy
211 Proposed Budget 2023-2024 FY2022-23 ADOPTED BUDGET
225
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Packet Pg. 490 Attachment: A: City of San Ramon Fiscal Year 2023-24 Proposed Budget (2023-064 : FY 23/24 Proposed Budget) Reference Materials General Fund Reserve Policy
Proposed Budget 2023-2024 212
FY2022-23ADOPTEDBUDGET226
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Packet Pg. 491 Attachment: A: City of San Ramon Fiscal Year 2023-24 Proposed Budget (2023-064 : FY 23/24 Proposed Budget) Reference Materials General Fund Reserve Policy
213 Proposed Budget 2023-2024
City Of San Ramon
Statement Of General Fund Reserve Policy
Purpose
To provide guidelines to the City Council and staff for establishing, maintaining, and the annual review of a minimum target General Fund reserve for the City of San Ramon. This policy is developed to consider the minimum level necessary to maintain the City’s creditworthiness and to adequately provide for:
■ Economic uncertainties and other financial hardships or downturns in the local or national economy ■ Extreme events
■ Future debt or capital obligations
■ Cash flow requirements
■ Legal requirements
The General Reserve Policy is an integral part of the City’s multi-year financial business plan. The City General Fund Reserve Policy was approved by City Council Resolution No. TBD.
Introduction
One of the key components of a financially stable organization is the adherence to a policy of maintaining an appropriate level of reserves. Establishing a target minimum General Fund reserve is a mechanism that governments can implement to help ensure adequate levels of fund balance arc available to help mitigate current and future risks. A minimum General Fund reserve is generally considered a prudent and conservative fiscal policy to deal with unforeseen situations. Some examples of unforeseen situations include, but are not limited to:
■ Extreme Events
■ Economic Downturns
■ Reduced Revenues
■ Federal/Slaie/County Budget Cuts
■ Unfunded Legislative or Judicial Mandates
■ Cash Flow Requirements
■ Capital Obligations
■ One-Time City Council Approved Expenditures
■ Innovative Opportunities for the Betterment of the Community The Government Finance Officers Association (GFOA), an international organization that promotes the professional management of governments for the public interest, recommends, al a minimum, that general-purpose governments, regardless of size, maintain unrestricted fund balance in their General Fund of no less than two months of operating revenues or operating expenditures, or a minimum of approximately 16.67% of General Fund operating expenditures. The GFOA further recommends that reserve levels be directly related to the degree of uncertainty the local government faces, specifically, the greater the uncertainty, the greater the financial resources necessary.
Most cities choose General Fund Operating Expenditures as the basis for reserve. Typically, there is less fluctuation and risk in forecasting future expenditures. The General Fund Operating Expenditures methodology is also typically considered the more conservative basis for establishing a General Fund reserve.
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Packet Pg. 492 Attachment: A: City of San Ramon Fiscal Year 2023-24 Proposed Budget (2023-064 : FY 23/24 Proposed Budget) Reference Materials General Fund Reserve Policy
Proposed Budget 2023-2024 214
There are additional benefits to establishing a minimum General Fund reserve. Credit rating agencies carefully monitor levels of fund balance and unreserved fund balance in a government’s General Fund to evaluate a government’s continued creditworthiness. Finally, fund balance levels are a crucial consideration in long-term financial planning.
Policy
For purposes of this policy, the term “reserve” includes undesignated, unreserved fund balance. Il is the policy of the City of San Ramon to maintain a minimum target reserve for unforeseen situations that impact the City, and whenever fiscally possible and financially prudent to maintain a greater target reserve. The City will continue lo maintain reserve funds to:
1. Stabilize the fiscal base by anticipating fluctuations in revenues and expenditures; and
2. Provide for non-recurring, unanticipated expenditures; and
3. Provide innovative opportunities for the betterment of the community.
The minimum target reserve or the General Fund reserves will be maintained at thirty-six percent (36%) of General Fund Operating Expenditures, plus the annual transfer amount from the General Fund to the Dougherty Valley Fund.
The minimum reserve level will be calculated annually using the prior Fiscal year’s estimated General Fund Operating Expenditures and estimated annual transfer amount from the General Fund to the Dougherty Valley Fund. General Fund reserves levels will be evaluated at three different time periods during the fiscal year as described below. Staff recommendations will be made to City Council on the available funds and the appropriate reserve levels. In the event the General Fund reserve balance drops below the minimum reserve level, a response plan will be developed to return the General Fund reserves back to the minimum reserve level.
The minimum General Fund Reserve Policy is intended to be a prudent and conservative fiscal policy, which should help contribute to the fiscal security of the City. Nothing in this policy shall prohibit the City Council from maintaining a higher level of reserves than the established minimum General Fund reserve target of thirty-six percent (36%).
Designation of General Fund Reserves
1. Committed - $10.7 million of General Fund reserves are identified and allocated as “committed” to address future revenue stabilization concerns
2. Assigned - $4 million of General Fund reserves arc identified and allocated as “assigned” to address expenditure volatility issues in the future
Monitoring and Maintenance or Reserves
1. General Fund Reserve Levels arc to be monitored at three (3) different time periods during the fiscal year as follows:
a) Actual Reserve Levels as of the end of each fiscal year are to be reported to the City Council at the time that audited financial statements are published.
b) Estimated Reserve Levels arc to be projected as part of the annual mid-year financial review presented to the City Council and projected ending reserve levels shall be measured against the Reserve Policy. c) Budgeted Reserve Levels arc to be projected as part of the annual budget adoption process and projected ending reserve levels shall be measured against the Reserve Policy thresholds.
2. If, at any of the three (3) monitoring time periods, total ending reserves fall below, or are estimated to fall below thirty-six percent (36%), the City Manager shall report the amount of reserves remaining below the thirty-six percent (36%) level to the City Council. This report shall be presented to the City Council within thirty (30) days of determining the total combined reserve level is estimated to be below thirty-six percent (36%).
3. If, in any of the three (3) monitoring lime periods, total ending reserves actually fall below, or are estimated to fall below thirty-six percent (36%), the City Manager shall prepare an action plan to restore reserves to the thirty-six percent (36%). This action plan shall be presented to the City Council within thirty (30) days of determining that the thirty-six percent (36%) threshold is projected to be breached. The City Council will consider the City Manager’s recommended corrective actions.
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Debt Management & Disclosure Policy
Dougherty Station Community Center
City of San Ramon Amador Rancho Center
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RESOLUTION NO. 2020-111
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN RAMON
APPROVING THE STATEMENT OF
DEBT MANAGEMENT AND DISCLOSURE POLICY
WHEREAS, the City Council adopted Resolution 2014-092 to establish formal written debt management policy; and
WHEREAS, the City Council adopted Resolution 2017-026 amending the Statement of Debt Management and Disclosure Policy to comply with Government Code Section 8855(i); and WHEREAS, per the Debt Management Policy, the Administrative Services Director shall conduct a review of the policy and bring forward to the City Council any amendments deemed necessary and appropriate; and
WHEREAS a Statement of the Debt Management and Disclosure Policy was submitted and reviewed with the Finance Committee on November 9, 2020; and WHEREAS, the Finance Committee directed staff to forward the Statement of Debt Management and Disclosure Policy to the City Council for consideration of approval.
NOW, THEREFORE BE IT RESOLVED, that the City Council approves the Statement of Debt Management and Disclosure Policy that is attached as Exhibit 1.
PASSED, APPROVED AND ADOPTED at the meeting of November 24, 2020 by the following votes:
AYES: Cm. Hudson, O’Loane, Perkins, Zafar, and Mayor Clarkson NOES:
ABSENT:
ABSTAIN:
______________________
Bill Clarkson, Mayor
ATTEST:
________________________
Christina Franco, City Clerk
Exhibit 1: Statement of Debt Management and Disclosure Policy 2020 FY2022-23 ADOPTED BUDGET 233
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City Of San Ramon
Statement Of Debt Management And Disclosure Policy
Policy Purpose
This Debt Management Policy (the “Debt Policy”) establishes the parameters within which debt may be issued and administered by the City of San Ramon (the “City”), San Ramon Public Financing Authority, and the San Ramon Successor Agency (collectively, the “Covered Entities”). This Debt Policy is intended to comply with Government Code Section 8855(i), effective on January 1, 2017.
Policy Statement
While the Covered Entities prefer to finance projects on pay-as-you-go basis, in the event debt is necessary, the Policy confirms the commitment of the Council, Boards, management, staff, advisors, and other decision makers to adhere to sound financial management practices, including full and timely repayment of borrowings, achieving the lowest possible cost of capital within prudent risk parameters.
Priorities of the Debt Policy are:
1. Achieve the lowest cost of capital by balancing the City’s service, infrastructure, and liability obligations;
2. Maintain a prudent level of financial risk;
3. Preserve future financial flexibility;
4. Maintain full and complete financial disclosure and reporting;
5. Obtain highest practical credit ratings and good investor relations; and
6. Ensure compliance with state and federal laws and regulations.
The Debt Policy shall govern, except as otherwise covered by the Investment Policy, the issuance and management of all debt and lease financings funded from the capital markets (including private placement and bank loans), including the selection and management of related financial services and products and investment of bond and lease proceeds. While adherence to this policy is required in applicable circumstances, it is recognized that changes in the capital markets, agency programs and other unforeseen circumstances may from time to time produce situations that are not covered by this policy and will require modifications or exceptions to achieve policy goals. In these cases, management flexibility is appropriate, provided specific authorization from the City Manager, City Council and other authorizing Boards is obtained.
This Debt Policy may be amended by the City Council as it deems appropriate from time to time in the prudent management of the debt of the City and its Covered Entities. Any approval of debt by the City Council that is not consistent with this Debt Policy shall constitute a waiver of this Debt Policy.
Responsibilities
The debt program for all City funds shall be operated in conformance with applicable federal, state and other legal requirements, including the Municipal Code.
Responsibility for managing and coordinating all activities related to the structure, issuance, and administration of all long- and short-term debt obligations shall rest with the Administrative Services Director.
No debt obligations shall be presented to the City Council, San Ramon Public Financing Authority Board or San Ramon Successor Agency Board for their authorization without the joint assessment and recommendation of the City Manager and City Attorney. Departments planning debt-financed capital programs or equipment acquisitions
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shall work closely with the City Manager and Administrative Services Director to provide information and otherwise to facilitate the issuance and on-going administration of debt.
The Administrative Services Director shall be responsible for maintaining good communication with rating agencies, investors, and other debt related service providers about the City’s financial condition and will follow a policy of full disclosure as required by the Securities Exchange Commission’s Rule 15c2-12 and in accordance with the specific disclosure reporting requirements detailed in each respective bond transcript.
The Administrative Services Director shall conduct an annual review of this Debt Policy and bring forward to the City Council any amendments deemed necessary and appropriate.
Types Of Debt
For purposes of this Debt Policy, “debt” shall be interpreted broadly to mean bonds, notes, certificates of participation, financing leases, or other financing obligations, but the use of such term in this Debt Policy shall be solely for convenience and shall not be interpreted to
characterize any such obligation as an indebtedness or debt within the meaning of any statutory or constitutional debt limitation where the substance and terms of the obligation comport with exceptions thereto.
The following types of debt are allowable under this Debt Policy:
■ General obligation bonds
■ Bond or grant anticipation notes
■ Lease revenue bonds, certificates of participation and lease-purchase transactions ■ Other revenue bonds and certificates of participation ■ Tax and revenue anticipation notes
■ Land-secured financings, such as special tax revenue bonds issued under the Mello-Roos Community Facilities Act of 1982, as amended, and limited obligation bonds issued under applicable assessment statutes ■ Tax increment financing to the extent permitted under state law ■ Conduit financings, such as financings for affordable rental housing and qualified 501c3 organizations ■ Pension Obligation Bonds
The Covered Entities may from time to time find that other forms of debt would be beneficial to further its public purposes and may approve such debt without an amendment of this Debt Policy.
Debt Considerations
General:
The Covered Entities will evaluate the need for debt financing of a project compared to a pay-as-you-go financing methodology. The Covered Entities prefers to fund projects on a pay-as-you-go basis.
1. Factors favoring a pay-as-you-go methodology include:
a) Current projected revenues, fund balances available are sufficient to fund the project and fund liabilities are manageable.
b) Long-term total costs are lower due to the avoidance of interest expense. c) Existing debt levels adversely affect the City’s credit rating. d) Market conditions are unfavorable or present difficulties in marketing.
2. Factors favoring debt financing include:
a) Current and projected revenues available for debt service are sufficient and reliable so that financings can be marketed with investment grade credit ratings.
b) Market conditions present favorable interest rates leading to efficient financial resource allocation and demand for the City financings.
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c) A project is mandated by state or federal requirements, and current resources are insufficient or unavailable to fully fund the project.
d) The project is immediately required to meet or relieve capacity needs or emergency conditions and current resources are insufficient or unavailable.
The City will review debt limits in conjunction with any proposed financing.
Relationship of Debt to Capital Improvement Program and Budget:
The City is committed to long-term capital planning. The Covered Entities intend to issue debt for the purposes stated in this Debt Policy and to implement policy decisions incorporated in the City’s capital budget and the capital improvement plan.
The Covered Entities shall strive to fund the upkeep and maintenance of its infrastructure and facilities due to normal wear and tear through the expenditure of available operating revenues. The Covered Entities shall seek to avoid the use of debt to fund infrastructure and facilities improvements that are the result of normal wear and tear.
The Covered Entities shall integrate its debt issuances with the goals of its capital improvement program by timing the issuance of debt to ensure that projects are available when needed in furtherance of the City’s public purposes.
The Covered Entities shall seek to avoid the use of debt to fund infrastructure and facilities improvements in circumstances when the sole purpose of such debt financing is to reduce annual budgetary expenditures.
The Covered Entities shall seek to issue debt in a timely manner to avoid having to make unplanned expenditures for capital improvements or equipment from its general fund.
Policy Goals Related to Planning Goals and Objectives:
The City is committed to long-term financial planning, maintaining appropriate reserves levels and employing prudent practices in governance, management and budget administration. The Covered Entities intend to issue debt for the purposes stated in this Debt Policy and to implement policy decisions incorporated in the City’s annual operations budget.
Debt Management
The City will not obligate the General Fund to secure long-term financings except when marketability can be significantly enhanced.
An internal feasibility analysis will be prepared for each long-term financing, which analyzes the impact on current and future budgets for debt service and operations. This analysis will also address the reliability of revenues to support debt service.
The Covered Entities will generally conduct financings on a competitive basis. However, negotiated financings may be used due to market volatility or the use of an unusual or complex financing or security structure.
Debt Capacity
The Covered Entities will carefully monitor its levels of general-purpose debt. Because our general purpose debt capacity is limited, it is important that we only use general purpose debt financing for high-priority projects where we cannot reasonably use other financing methods for two key reasons:
1. Funds borrowed for a project today are not available to fund other projects tomorrow.
2. Funds committed for debt repayment today are not available to fund operations in the future.
In evaluating debt capacity, general-purpose annual debt service payments should generally not exceed 10% of General Operating revenues, which consist of the General Fund and Dougherty Valley Fund; and in no case should they exceed 15%. Further, direct debt will not exceed 2% of assessed valuation; and no more than 60% of capital improvement outlays will be funded from long-term financings.
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Debt Term
The City Council, San Ramon Public Financing Authority Board and San Ramon Successor Agency Board recognize that any new debt obligation will have an impact on the long-term affordability of all outstanding debt and any future planned debt, as well as budgetary impacts associated with the maintenance and operating costs of debtfinanced facilities.
1. Term of Debt - Debt will be structured for the shortest period possible, consistent with a fair allocation of costs to current and future beneficiaries or users. Debt shall not be issued for a term that exceeds the useful life of the debt-financed asset.
2. Debt Repayment - Typically, the Covered Entities desire level debt service payments over the term of the debt. However, the cost of capital, financial risk, current economic conditions, future financial flexibility, credit ratings and available cash flow will be evaluated to determine the most appropriate method of debt amortization for each debt issue. Notwithstanding the above, back loading the debt service will be evaluated as the circumstances dictate. Back loading occurs when debt service payments are lower in the initial years of a debt term and higher toward the later years of a debt term.
Debt Issuance
The Covered Entities have the capacity to issue long- and short-term debt and to refund any outstanding debt. The following details the purposes of debt issuance, the method of sale for such debt, and the practices for obtaining professional assistance in the debt issuance process.
1. Long-term Debt - Long-term debt may be used to finance the acquisition or improvement of land, infrastructure, facilities, or equipment for which it is appropriate to spread the costs of such over more than one budget year. Long-term debt may be used to fund capitalized interest, cost of issuance, required reserves and any other financing related costs that may be legally capitalized. Long-term debt shall not be used to fund City operating costs.
2. Short-term Debt - Short-term debt will be considered as an interim source of funding in anticipation of longterm debt. Short-term debt may be issued for any purpose for which long-term debt may be issued, including capitalized interest and financing-related costs.
Short-term debt is also appropriate to address legitimate short-term cash flow requirements during a given fiscal year to fund the operating costs of the City to provide necessary public services. The Covered Entities will not engage in short-term borrowing solely for the purpose of generating investment income.
3. Refunding - Refunding opportunities will be identified by periodic reviews of outstanding debt obligations.
Refunding will be considered when there is a net economic benefit from the refunding. Non-economic refunding may be undertaken to achieve City objectives relating to changes in covenants, call provisions, operational flexibility, tax status, issuer, or other non-economic factors related to the debt.
4. Method of Sale - Debt is typically issued under either a competitive sale or a negotiated sale. The Covered Entities shall have the flexibility to determine which method of sale is appropriate for each debt issuance.
Determination of the appropriate method of sale will rest collectively with the City Manager and Administrative Services Director.
5. Private Placement - The Covered Entities may determine that private placement of debt is most appropriate.
Use of private placement will be considered collectively by the City Manager and Administrative Services Director.
6. Pooled Financing - The City may also consider use of pooled financing as a method of accessing the capital markets. Use of pooled financing will be evaluated collectively by the City Manager and Administrative Services Director on a case-by-case basis.
7. Selection of Financing Professionals - Selection of financing professionals (financial advisor, underwriter, bond counsel, disclosure counsel, trustee, etc.) shall generally be on a competitive basis; however, the City Manager is authorized to select financing professionals on a sole source basis. Selection shall balance service
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(experience, professional reputation and capabilities) with costs. Once selected, the Financial Advisor may assist the Covered Entities with selecting the rest of the members of the financing team.
Debt Structure
1. Credit Ratings - It is a policy goal of the Covered Entities to protect taxpayers, ratepayers and constituents by utilizing conservative financing methods and techniques so as to obtain the highest practical credit ratings (although not all debt with be rated) and the lowest practical borrowing costs. The Covered Entities will seek to maintain the appropriate balance between high credit ratings and operational flexibility. In those cases where debt will be rated, the Covered Entities will seek credit ratings from at least one of the three major ratings agencies. Ratings from multiple rating agencies may be sought for a single debt issue, based upon market expectations and conditions at the time of the issuance.
2. Fixed-rate and Variable-rate Debt - The Covered Entities prefer to issue fixed-rate debt. Variable-rate debt may be used, if market conditions warrant at the time of issuance. It is acknowledged that variable-rate debt passes an unknown obligation onto future budget cycles.
3. Derivatives - Derivative products may have application with regard to certain borrowing programs. The City Manager and Administrative Services Director will evaluate the use of derivative products on a case-by-case basis.
4. Call Provisions - The timing for when bonds are callable varies and is determined at the time of pricing such bonds. The Covered Entities preferred structure is to negotiate for optional redemption at par in order to maintain flexibility in the future.
5. Credit Enhancements - The Covered Entities may use credit enhancements (letters of credit, bond insurance, surety bonds, etc.) when such credit enhancements prove to be cost-effective. The Covered Entities will consider the use of credit enhancements on a case-by-case basis.
Interfund Borrowings
The City may borrow internally from other funds with temporary cash surpluses to meet shortterm cash needs in lieu of issuing debt. The fund(s) from which the money is borrowed shall be repaid with interest at the average earnings rate of the Local Agency Investment Fund (LAIF). Interfund borrowing extending for more than one year will be brought to Council for approval.
Market Communication, Debt Administration And Reporting Requirements
1. Responsibilities:
The Administrative Services Director shall be responsible for administering the City’s debt management program.
To that end, this position shall:
a) Comply with all reporting requirements within the bond documents b) Review all outstanding debt for refunding opportunities c) Maintain positive working relationships with rating agencies and other financial professionals d) Review and recommend appropriate structures for all new debt issuances. e) Ensure compliance with the Investment Policy and bond documents regarding investing bond proceeds.
2. Rating Agencies:
The Administrative Services Director shall be responsible for maintaining the Covered Entities relationships with Standard & Poor’s Ratings Services, Fitch Ratings, and Moody’s Investors Service, as appropriate. The City shall, from time to time, deal with one, two or all of these agencies as circumstances dictate. In addition to general communication, the Administrative Services Director shall (1) meet, (either in person or via phone) with credit analysts periodically as appropriate; and (2) prior to each competitive or negotiated sale, offer conference calls or meeting(s) with rating analysts in connection with the planned sale.
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3. Observance of Debt Covenants:
The Administrative Services Director will periodically review that the City is in compliance with all legal covenants for each debt issue.
4. Continuing Disclosure:
The Administrative Services Director will remain in compliance with Rule 15c2-12.
5. Record Keeping:
A copy of all debt-related records shall be retained at the City’s Administrative Services offices or in an approved storage facility. At minimum, these records shall include all official statements, bid documents, bond documents/ transcripts, resolutions, trustee statements, leases, and title reports for each financing (to the extent available).
To the extent possible, the City shall retain an electronic copy of each document, preferably in PDF or CD-ROM format.
6. Arbitrage Rebate:
The City will comply with the administratively adopted policies and procedures regarding tax-exempt financings and tax-exempt financed property, as well as the tax and arbitrage certifications associated with each issue.
Internal Control Procedures
It is the policy of the City to ensure that proceeds of debt are spent only on lawful and intended uses. Whenever reasonably possible, proceeds of debt will be held by a third-party trustee and the City will submit written requisitions for such proceeds. The City will submit a requisition only after obtaining the signature of the City Manager. The Administrative Services Director shall ensure that records of all expenditures of proceeds will be retained through the final payment date for the debt.
Initial And Continuing Disclosure Compliance
1. Disclosure Coordinator:
The Administrative Services Director of the City shall be the disclosure coordinator of the City (“Disclosure Coordinator”).
2. Review and Approval of Official Statements:
The Disclosure Coordinator of the City shall review any Official Statement prepared in connection with any debt issuance by the Covered Entities in order to ensure there are no misstatements or omissions of material information in any sections that contain descriptions of information prepared by the City. Additionally, the Disclosure Coordinator will participate on all Due Diligence reviews with the Covered Entities finance team prior to debt issuance.
In connection with its review of the Official Statement, the Disclosure Coordinator shall consult with third parties, including outside professionals assisting the City, and all members of City staff, to the extent that the Disclosure Coordinator concludes they should be consulted so that the Official Statement will include all “material” information (as defined for purposes of federal securities law).
As part of the review process, the Disclosure Coordinator shall submit all Official Statements to the City Council, San Ramon Public Financing Authority or San Ramon Successor Agency for approval by the appropriate body.
The cover letter used by the Disclosure Coordinator to submit the Official Statements shall be in substantially the form of Exhibit A.
The approval of an Official Statement by the City Council shall be docketed as a new business matter and shall not be approved as a consent item. The City Council shall undertake such review as deemed necessary by the City Council, following consultation with the Disclosure Coordinator, to fulfill the City Council’s responsibilities under applicable federal and state securities laws. In this regard, the Disclosure Coordinator shall consult with the City’s disclosure counsel to the extent the Disclosure Coordinator considers appropriate.
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3. Continuing Disclosure Filings:
Under the continuing disclosure undertakings that the City, San Ramon Public Financing Authority or San Ramon Successor Agency have entered into in connection with its debt offerings, the appropriate agency is required each year to file annual reports with the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access (“EMMA”) system in accordance with such undertakings. Such annual reports are required to include certain updated financial and operating information, and the City’s audited financial statements.
The City is also required under its continuing disclosure undertakings to file notices of significant/ material events with EMMA.
The Disclosure Coordinator is responsible for establishing a system (which may involve the retention or one or more consultants) by which:
a) the City will make the annual filings required by its continuing disclosure undertakings on a complete and timely basis, and
b) the City will file notices of enumerated events as required by Rule 15c2-12.
4. Public Statements Regarding Financial Information:
Whenever the City makes statements or releases information relating to its finances to the public that are reasonably expected to reach investors and the trading markets, the City is obligated to ensure that such statements and information are complete, true, and accurate in all material respects.
5. Training:
The Disclosure Coordinator shall ensure that the members of the City staff involved in the initial or continuing disclosure process and the City Council are properly trained to understand and perform their responsibilities.
The Disclosure Coordinator shall arrange for disclosure training sessions conducted by the City’s disclosure counsel.
Such training sessions shall include education on these Disclosure Procedures, the City’s disclosure obligations under applicable federal and state securities laws and the disclosure responsibilities and potential liabilities of members of the City’s staff and members of the City Council. Such training sessions may be conducted using a recorded presentation.
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EXHIBIT A
City Council Staff Report
Date:
To: City Council/City Manager
From:
Subject
This Staff Report relates to the proposed issuance of (the “Obligations”) by the City. The City Council is asked to approve issuance of the Obligations and all related documents. The near-final versions of these documents are attached.
The attached Preliminary Official Statement has been reviewed and approved for transmittal to the City Council by the City’s financing team. The distribution of the Preliminary Official Statement by the City is subject to federal securities laws, including the Securities Act of 1933 and the Securities Exchange Act of 1934. These laws require the Preliminary Official Statement to include all facts that would be material to an investor in the Obligations. Material information is information that there is a substantial likelihood would have actual significance in the deliberations of the reasonable investor when deciding whether to buy or sell the Obligations. If the City Council concludes that the Preliminary Official Statement includes all facts that would be material to an investor in the Obligations, it must adopt a resolution that authorizes staff to execute a certificate to the effect that the Preliminary Official Statement has been “deemed final.”
The Securities and Exchange Commission (the “SEC”), the agency with regulatory authority over the City’s compliance with the federal securities laws, has issued guidance as to the duties of the City Council with respect to its approval of the Preliminary Official Statement. In its “Report of Investigation in the Matter of County of Orange, California as it Relates to the Conduct of the Members of the Board of Supervisors” (Release No. 36761 / January 24, 1996) (the “Release”), the SEC indicated that, if a member of the City Council has knowledge of any facts or circumstances that an investor would want to know about prior to investing in the Obligations, whether relating to their repayment, tax-exempt status, undisclosed conflicts of interest with interested parties, or otherwise, he or she should endeavor to discover whether such facts are adequately disclosed in the Preliminary Official Statement. In the Release, the SEC indicated that the steps that a member of the City Council could take include becoming familiar with the Preliminary Official Statement and questioning staff and consultants about the disclosure of such facts.
Set forth below is a summary of the financing, including cross-references to specific sections of the Preliminary Official Statement.
Section 1. Purpose of Financing.
Section 2. Documents for Approval; Security for the Obligations.
Section 3. Risks Relating to Repayment and Tax-Exempt Status of the Obligations.
Section 4. Requested Approvals.
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Investment Policy
City Center Bishop Ranch
Bishop Ranch Business Offices
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City Of San Ramon
Statement Of Investment Policy
Fiscal Year 2023-24
Purpose
This statement implements §53646 of the Government Code, of the State of California, by providing a Statement of Investment Policy. It is intended to provide sound procedures for the prudent investment and management of public funds of the City of San Ramon. Consistent with provisions of this code section, this policy shall be annually reviewed and adopted by the City Council.
Scope
This policy applies to all liquid financial assets of the City of San Ramon. These assets are accounted for in the City’s Comprehensive Annual Financial Report (CAFR), which includes the annual independent audit report, under the following categories:
General Fund
Special Revenue Funds
Capital Project Funds
Debt Service Funds
Internal Service Funds
Trust and Agency Funds
Funds excluded from this policy:
1. Bond Proceeds - The investment of bond proceeds held with trustees is directed by the City, but is governed by the restrictions on permitted investments in the applicable bond indenture or similar agreements.
2. Deferred Compensation, Retirement, Other Post-Employment Benefits (OPEB) 115 Trust, and Supplement Pension 115 Trust - Investments related to these plans are not subject to this policy since third-party administrators or trustees manage the funds and either the individual plan participants or trustees direct investment selection.
Objective
The City’s objective is to accurately monitor and forecast expenditures and revenues, thus enabling the City to invest idle funds to the fullest extent possible. Idle cash management and investment transactions are the responsibility of the Finance Division of the Administrative Services Department. The City shall attempt to obtain a market rate of return, provided that criteria for safety and liquidity are adequately met, and that all provisions of this investment policy are strictly adhered to.
Investment Principles
The City of San Ramon operates its temporary pooled idle cash investments under the “prudent investor standard “. This standard states: 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 familiarity with those matters would use in the conduct of funds of a like character and
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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.
Consistent with this principle, the following basic tenets shall serve to guide the City’s investment program:
Safety — The first priority for the investment program shall be the safety of principal investment. Procedures for ensuring safety of principal shall involve compliance with legal requirements set forth under sections of the Government Code, development and maintenance of adequate records and controls, and avoidance of market speculation through an underlying “buy and hold” investment strategy.
Liquidity — The second priority for the investment program shall be to provide adequate cash for operations or capital purposes on an as-needed basis. Procedures for ensuring adequate liquidity shall include maintenance of pro forma City cash needs through analysis of historical and projected future cash flows, and matching investment maturities to cash requirements.
Yield — The City’s investment portfolio shall be designed with the objective of attaining a market rate of return throughout budgetary and economic cycles, taking into consideration the investment risk constraints and liquidity needs. Yield on the City’s investment portfolio is of secondary importance compared to the safety and liquidity objectives described above. Investments are limited to relatively low-risk securities in anticipation of earning a market rate of return relative to the risk being assumed. Nevertheless, investment performance shall be periodically monitored and evaluated by the Administrative Services Director by comparison with other benchmark yields
Delegation of Authority
The City of San Ramon Municipal Code assigns treasury responsibilities to the Administrative Services Director who serves as the City Treasurer. The Administrative Services Director currently performs the duties of the Director of Finance. The authority to invest City Funds rests with the Administrative Services Director and his designated staff, herein referred to as the Deputy Treasurer. The Administrative Services Director has further authority, with consent of the City Council, to delegate investment portfolio management to FTN Financial Main Street Advisors, an Investment Advisory firm. No person may engage in an investment transaction except as provided for under the terms of this policy. The Administrative Services Director shall be responsible for all transactions undertaken and will establish a system of controls to regulate the activities of subordinate officials.
Ethics and Conflicts of Interest
Officers, Councilmembers, and employees involved in the investment process shall refrain from personal business activity that conflicts with proper execution of the investment program, or impairs their ability to make impartial investment decisions. Employees, Councilmembers and investment officials shall disclose any material financial interests that could be related to the performance of the City’s investment portfolio.
GASB 31
The Government Accounting Standards Board (GASB) Statement No. 31 requires that governmental entities report all investments with a maturity in excess of one-year at fair market value in the balance sheet or other statement of financial condition as of the end of the annual reporting cycle. Market value increases/declines are recognized by booking the variation against earnings at year-end. This book gain/loss would be realized by way of an increase/reduction in reserves, increasing/reducing funds available for appropriation. Because longer-term investments are subject to greater fluctuations in price and market value, specific constraints in the form of percentage limitations have been incorporated into this policy. These limitations minimize material gains/losses in the value of the portfolio in a declining/rising interest rate environment and mitigate the risks inherent in GASB Statement 31.
Permitted Investments
■ Bonds issued by the City of San Ramon or other local agency of the State of California, provided that the obligations are rated Aa3, AA-, A A- or higher by a Nationally Recognized Statistical Rating Organization
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(NRSRO), Moody’s Investors Services (Moody’s), Standard and Poor’s Ratings Services (S&P), or Fitch Ratings (Fitch), respectively. Purchases of eligible municipal securities shall not exceed five years to maturity. ■ United States Treasury notes, bonds, bills or other obligations for which full faith and credit of the United States are pledged for payment of principal and interest. Purchases of eligible treasury securities shall not exceed five years to maturity.
■ Federal Agency Securities. Federal agency or United States government-sponsored enterprise obligations, participations or other instruments, including those issued by or fully guaranteed as to principal and interest by federal agencies or United States government-sponsored enterprises. Purchases of eligible federal agency securities shall not exceed five years maturity.
■ Bonds issued by the State of California. Provided that the obligations are rated Aa3 or higher provided by (Moody’s), has an A A- or higher rating provided by (S&P), or has an AA- or higher rating provided by (Fitch).
Purchases of eligible federal agency securities shall not exceed five years to maturity. ■ Bankers’ Acceptances, issued by domestic or foreign banks, which are eligible for purchase by the Federal Reserve System, the short-term paper of which is rated in the highest category by Moody’s or by S&P. Purchases of Bankers’ Acceptances may not exceed 180 days to maturity, or 40% of the City’s surplus funds, nor may the City invest more than 2% of its surplus funds in the Bankers’ Acceptances of any one commercial bank. ■ Commercial Paper issued by corporations organized and operating within the United States with total assets in excess of $500,000,000. Commercial paper must have a minimum short term rating by at least two of the following NRSRO’s: A-l by S&P, P-1 by Moody’s, or F-l by Fitch and a minimum long-term debt rating of A2 by Moody’s, A by S&P, or A by Fitch. Purchases of eligible Commercial Paper may not exceed 270 days to maturity nor represent more than 10% of the outstanding paper of an issuing corporation, nor may the City’s investments in Commercial Paper exceed 25% for the City’s surplus funds. ■ FDIC Insured Certificates of Deposit issued by a nationally or state-chartered bank, or a state or federal savings and loan association, or by a state-licensed branch of a foreign bank. The invested amount per institution shall not exceed the current FDIC insured limit (currently $250,000). Purchases of eligible FDIC insured certificates of deposit shall not exceed five years to maturity. ■ Negotiable Certificates of Deposit issued by a nationally or state-chartered bank or a state or federal savings and loan association or by a state-licensed branch of a foreign bank; provided (1) that the senior debt obligations of the issuing institution are rated Aa2 or better by Moody’s or rated A A or better by-S&P and (2) that the financial institution has received a minimum overall “satisfactory” rating for meeting the credit needs of California communities in its most recent evaluation. Purchases of negotiable certificates of deposit may not to exceed 30% of the City’s surplus funds, nor in excess of the greater of either the net worth of the depository or $500,000. Purchases of eligible negotiable certificates of deposit shall not exceed five years maturity.
■ Repurchase Agreements used solely as short-term investments not to exceed 30 days. The following collateral restrictions will be observed. Only U.S. Treasury securities or Federal Agency securities allowable in this policy will be acceptable collateral. All securities underlying Repurchase Agreements must be delivered to the City’s custodian bank by book entry, physical delivery, or third-party custodial agreement. The total of all collateral for each Repurchase Agreement must equal or exceed, on the basis of market value, 102 percent of the funds borrowed against those securities. For any Repurchase Agreement with a term of more than one day, the value of the underlying securities must be reviewed on a weekly basis. Investments in repurchase agreements shall not exceed 30% of the City’s surplus funds.
Additional Repurchase Agreement Provisions: Market value must be calculated each time there is a substitution of collateral.
The City or its trustee shall have perfected first security interest under the Uniform Commercial Code in all securities subject to Repurchase Agreement
The City may enter into Repurchase Agreements only with primary dealers of the Federal Reserve Bank of New York.
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The City will have specific written agreements with each firm with which it enters into Repurchase Agreements. ■ Medium-Term Corporate Notes issued by corporations organized and operating within the United States or by depository institutions licensed by the United States or any state operating within the United States.
Medium-term corporate notes shall have a maximum maturity of five years, and a minimum long-term debt rating by at least two of these NRSRO’s: A2 by Moody’s, A by S&P, or Aby Fitch. Purchases shall not to exceed 30% of the City’s surplus funds.
■ State of California Local Agency Investment Fund. Investment in LAIF may not exceed $40 million. No more than 15% of the total City investment portfolio is to be invested in LAIF. ■ Negotiable Order of Withdrawal that functions as an interest bearing checking account that is fully collateralized with securities rated “ AA” or higher and offered by a nationally or state-chartered bank or a State or Federal savings and loan association or by a state-licensed branch ‘of a foreign bank with assets exceeding $5 Billion.
No more than $3,500,000 of the City investment portfolio is to be invested in this type of account. ■ Supranational Debt Obligations. United States dollar-denominated senior unsecured unsubordinated obligations issued or unconditionally guaranteed by the International Bank for Reconstruction and Development of the World Bank (IBRD), International Finance Corporation (IFC), and Inter-American Development Bank (IABD), with maximum remaining maturity of five years or less, and eligible for purchase and sale within the United States. Investments must have a minimum rating of AA or better by at least two of the following NRSRO’s: Moody’s, S&P, or Fitch, and shall not exceed 30% of the City’s surplus funds. ■ Shares of beneficial interest issued by diversified management companies, that are money market funds (MMFs) registered with the Securities and Exchange Commission under the Investment Advisory Company Act of 1940 (15 U.S.C. Sec 80a-1 et seq.). To be eligible for investment pursuant to this subdivision these companies shall either (1) attain the highest ranking letter or numerical rating provided by not less than two of the three largest nationally recognized rating services or (2) have an investment advisor registered or exempt from registration with the Securities and Exchange Commission with not less than five years’ experience investing in the securities and obligations listed above and with assets in excess of $500,000,000. The MMF invests only in Treasury and Federal Government Agency securities, and in repurchase agreements backed by Treasury and Federal Government Agency securities.
The purchase price of the MMF shares shall not exceed 20% of the City’s surplus funds. (Per section 53601-L) Ineligible Investments
Any security type not specifically approved by this policy is hereby specifically prohibited. Security types which are thereby prohibited include, but are not limited to:
■ “Complex” derivative structures such as range notes, dual index notes, inverse floaters, leveraged or unleveraged floating-rate notes, or any other complex variable-rate or structured note. ■ Interest only strips that are derived from a pool of mortgages, or any security that could result in zero interest accrual if held to maturity.
■ Asset Backed Securities
■ Common Stocks
■ Reverse Repurchase Agreements
Maximum Maturity
Pursuant to Government Code §53601, the City Council limits investments to securities with remaining maturity periods of no greater than five years.
Credit/Issuer Risk
The City will seek to mitigate credit risk by requiring that issuers meet specific qualifying criteria.
The following guidelines will be used to determine the distribution of funds between issuers.
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For medium term corporate notes and negotiable certificates of deposit, issuers must possess an acceptable longterm senior debt rating by at least two of the nationally recognized ratings services, i.e. Moody’s, S&P’s, and Fitch, as detailed below:
1. For maturities of four years or less, a minimum rating of A2 by Moody’s, A by S&P, or A by Fitch.
2. For maturities of four to five years, a minimum rating of Aa3 by Moody’s, AA- by S&P, or AA- by Fitch.
In the event an issuer is downgraded to below A2 (Moody’s) or A (S&P or Fitch), an analysis will be prepared of the exposure to the City and a recommendation will be made regarding holding the security or a possible sale.
Market Risk
Market risk shall be addressed by diversification of security types and distribution. Percentage limitations and maturity restrictions will comply with the State of California Government Code. Maturity distribution, particularly as impacted by changes in the yield curve will be frequently monitored by staff. Market risk will further be mitigated by limiting the portion of the portfolio investments with maturities in excess of one-year to 70%. The weighted average maturity of the portfolio shall not exceed 2.5 years.
Diversification by Investment Type and Issuer
Percentage limitations by investment type are outlined in Section 53600 of the Government Code. As described above the City will further diversify the portfolio by issuer, with the exception of Treasury securities, which will have no percentage limitations. The City shall seek to preserve principal by mitigating credit risk by diversifying the investment portfolio so that the failure of any one issuer or backer will not place an undue financial burden on the City. Listed below are sector and issuer limitations:
Sector
Sector
Limit
Issuer
Limit
Max
Years
Minimum Rating
(NRSROs: S&P, Moody’s, Fitch)
U.S. Treasuries 100% 100% 5 Years N/A
Federal Agencies 100% 50% 5 Years N/A
Money Market 20% 20% N/A AAA/Aaa by at least two NRSROs City of San Ramon Bonds 10% 10% 5 Years Aa3 or AA- by one NRSRO State of California Obligations 3% 3% 5 Years Aa3 or AA- by one NRSRO Local Agencies of California 10% 2% 5 Years Aa3 or AA- by one NRSRO Bankers’ Acceptances 40% 2%* 180 Days Al/Pl by S&P or Moody’s Commercial Paper 25% 2%* 270 Days A1/P1/F1 and long-term by one NRSRO Negotiable CDs 30% 2%* 5 Years See page 4 for rating criteria Medium-Term Notes 30% 2%* 5 Years A/A2 less than 4 yrs, Aa-/Aa3 greater than 4 yrs by at least two NRSROs
Supranational Obligations (IFC,
IBRD, and IADB)
30% 5% 5 Years AA/Aa2 by at least two NRSROs
*The issuer limits for Banker’s Acceptances, Commercial Paper, Negotiable Certificates of Deposits and Medium-Term Corporate Notes shall be calculated in aggregate at time of purchase.
Sale of Securities
The City does not make investments for the purpose of trading or speculation, but buys with the prevalent intent to hold securities to maturity. The prohibition of speculative investment precludes pursuit of profit through unusual risk or conjectural fluctuations in market prices. However, fluctuations in market rates or changes in credit quality may produce situations where securities may be sold at a nominal loss in order to mitigate further erosion of principal.
Securities shall generally be held until maturity with the following exceptions:
■ A security with declining credit may be sold early to minimize loss of principal.
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■ A security swap would improve the quality, yield, or target duration in the portfolio. ■ Liquidity needs of the portfolio require that the security be sold.
Brokers/Dealers
A competitive bid/offer process, utilizing a minimum of three financial institutions on the approved broker/dealer list maintained by the City or the City’s Investment Advisor, will be used to place all investment purchases and sales of secondary traded issues, if possible. Some secondary issues may be offered by only one or two broker/dealers.
Purchases of securities that are new issues do not require three offers.
All brokers/dealers with whom business is transacted shall be subject to regulation by the Securities and Exchange Commission. The investment advisor annually conducts a review of all broker/dealers, including their adherence to the Securities and Exchange Commission Uniform Net Capital Rule (Rule 15c3-l).
Safekeeping and Custody
The assets of the City shall be secured through third-party custody and safekeeping procedures. Bearer instruments shall be held only through third-party institutions. Collateralized securities such as repurchase agreements shall be purchased using the delivery versus payment procedures.
Reporting Requirements
Pursuant to Government Code §53646, the Administrative Services Director shall render a quarterly investment report to the City Manager and City Council showing the type of investment, issuer, purchase date, purchase price, date of maturity, amount of deposit, coupon rate of interest, investment yield, and, for investments with a maturity exceeding 12 months, current market value, and source of market valuation. The quarterly report shall state its relationship to the adopted investment policy and shall provide assurance that the investment portfolio provides sufficient cash flow to meet the cash requirements for the following six months. The investment report shall be submitted within 30 days following the end of the quarter. Additionally, pursuant to Government Code §53607, a monthly transaction report shall be presented to the City Manager and City Council.
Performance Standards
The City portfolio is managed with the objective of obtaining a market rate of return, commensurate with identified risk constraints and cash flow characteristics. The appropriate benchmarks will be periodically reviewed by the City Council Finance Committee.
Allocation of Interest
Interest from the City’s pooled investments is allocated proportionately to the City’s various funds in the month it is received.
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Glossary
Agencies: Federal agency securities.
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. The drafts are drawn on a bank by an exporter or importer to obtain funds to pay for specific merchandise.
An acceptance is a high grade negotiable instrument.
Benchmark: A comparative base for measuring the
performance or risk tolerance of the investment portfolio.
A benchmark should represent a close correlation to the level of risk and the average duration of the portfolio’s investments.
Bid: The price offered by a buyer of securities. (When
you are selling securities, you ask for a bid.)
Broker: A broker brings buyers and sellers together for a commission. He/she does not take a position.
Certificate of Deposit (CD): A time deposit with a specific maturity evidenced by a certificate. Large-denomination CD’s are typically negotiable.
Collateral: Securities, evidence of deposit or other
property, which a borrower pledges to secure repayment
of a loan. Also refers to securities pledged by a bank to secure deposits of public monies.
Commercial Paper: Short term unsecured promissory
note issued by a corporation (including limited liability companies) to raise working capital. These negotiable
instruments are purchased at a discount to par value or at par value with interest bearing. Commercial paper is issued by corporations such as General Motors Acceptance Corporation, IBM, Bank of America, etc.
Comprehensive Annual Financial Report (CAFR): The
official annual report for the City. It includes combined statements for each individual fund and account
group prepared in conformity with Generally Accepted
Accounting Principles. It also includes supporting
schedules necessary to demonstrate compliance with
finance-related legal and contractual provisions, extensive introductory material and a detailed Statistical section.
Coupon: a) The annual rate of interest that a bond’s issuer promises to pay the bondholder on the bond’s face value, b) A certificate attached to a bond evidencing interest due on a payment date.
Custody: A banking service that provides safekeeping
for the individual securities in a customer’s investment portfolio under a written agreement which also calls
for the bank to collect and pay out income, to buy, sell, receive and deliver securities when ordered to do so by the principal.
Dealer: A dealer, as opposed to a broker, acts as a principal in all transactions; buying and selling for his/her own account.
Delivery versus Payment: There are two methods of
delivery of securities: delivery versus payment and
delivery versus receipt. Delivery versus payment is delivery of securities with an exchange of money for the securities.
Delivery versus receipt is delivery of securities with an exchange of a signed receipt for the securities.
Derivatives: (1) Financial instruments whose return profile is linked to, or derived from, the movement of one or more underlying index or security, and may include a leveraging factor, or (2) financial contracts based upon notional
amounts whose value is derived from an underlying
index or security (interest rates, foreign exchange rates, equities or commodities).
Diversification: Dividing investment among a variety of securities offering independent returns with the objective of lowering risk.
Federal Deposit Insurance Corporation (FDIC): A Federal agency that insures bank deposits, currently up to
$250,000 per deposit.
Federal Home Loan Banks (FHLB): Government
sponsored wholesale banks which lend funds and provide
correspondent banking services to member commercial
banks, thrifty institutions, credit unions and insurance companies. The mission of the FHLBs is to liquefy the
housing related assets of its members who must purchase stock in their district Bank.
Federal Home Loan Mortgage Corporation (FHLMC):
The FHLMC was created under the Federal Home Loan
Mortgage Act, Title III of the Emergency Home Finance Act of 1970 as a stockholder owned government-sponsored
enterprise. Freddie Mac, as the corporation is called,
is charged with providing stability and assistance to
the secondary home mortgage market by buying first
mortgages and participation interests and reselling these securities in the form of guaranteed mortgage securities.
Although agency obligations are not explicitly guaranteed by the federal government, the rating agencies believe
that in the unlikely event of financial difficulties, the federal government will support the agency to the extent necessary to provide for full and timely payment on their securities.
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Federal National Mortgage Association (FNMA):
FNMA, like GNMA was chartered under the Federal
National Mortgage Association Act in 1938. FNMA is a
federal corporation working under the auspices of the
Department of Housing and Urban Development (HUD).
It is the largest single provider of residential mortgage funds in the United States. Fannie Mae, as the corporation is called, is a private stockholder-owned corporation. The corporation’s purchases include a variety of adjustable mortgages and second loans, in addition to fixed-rate
mortgages. FNMA’s securities are also highly liquid and are widely accepted. FNMA assumes and guarantees
that all security holders will receive timely payment of principal and interest.
Federal Reserve System: The central bank of the United
States created by congress and consisting of a sevenmember Board of Governors in Washington, D.C.; 12 regional banks and approximately 38 percent of the 8,039 commercial banks in the United States are members of
the Federal Reserve System. National banks must be
members; state-chartered banks may join if they meet
certain requirements.
Interest Rate: The annual yield earned on an investment, expressed as a percentage.
Liquidity: A liquid asset is one that can be converted easily and rapidly into cash without a substantial loss of value.
A security is said to be liquid if the spread between bid and asked prices is narrow and a reasonable size can be done at those quotes.
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.
Money Market: A segment of the financial market in
which short-term debt instruments (bills, commercial
paper, bankers’ acceptances, etc.) are traded.
Municipal Securities of Local Agencies: Debt securities issued by states, cities, counties and other governmental entities to fund day-to-day obligations and to finance
capital projects. The purchase of municipal securities is a loan to the bond issuer in exchange for regular interest payments and the return of the original investment.
Nationally Recognized Statistical Rating Organization
(“NRSRO”): Firms that review and assess the
creditworthiness of an obligor as an entity or with respect to specific securities or money market instruments and
express their opinion in the form of a letter rating. A credit rating agency may apply to the SEC for registration as a nationally recognized statistical rating organization (“NRSRO”). The primary rating agencies are Standard &
Poor’s Corporation, Moody’s Investor Services, Inc. and Fitch, Inc.
Negotiable Certificates of Deposit: Unsecured obligations of the financial institution, bank or savings and loan, bought at par value with the promise to pay face value
plus accrued interest at maturity. They are high-grade
negotiable instruments, paying a higher interest rate
than regular certificates of deposit.
Offer: The price asked by a seller of securities. (When you are buying securities, you ask for an offer.) See “Asked” and “Bid”.
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 Securities and Exchange Commission (SEC)-registered 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, the
current income return.
Repurchase Agreement (RP OR REPO): A holder of
securities sells these securities to an investor with an agreement to repurchase them at a fixed date. The
security “buyer” in effect lends the “seller” money for the period of the agreement, and the terms of the agreement are structured to compensate him for this.
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’s vaults for protection.
Structured Notes: Notes issued by Government Sponsored
Enterprises (FHLB, FNMA, FHLMC, etc.) and Corporations, which have imbedded option (e.g. call features, step-up coupons, floating rate coupons, derivative-based returns) into their debt structure. Their market performance is
impacted by the fluctuation of interest rates, the volatility of the imbedded options and shifts in the shape of the
yield curve.
Securities & Exchange Commission: Agency created by
Congress to protect investors in securities transactions by administering securities legislation.
SEC Rule 15C3-1: See “Uniform Net Capital Rule”.
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Supranational Securities: A supranational organization is formed by a group of countries through an international treaty with specific objectives such as promoting economic development. Supranational organizations also issue debt in the United States. The most commonly recognized
supranational debt is issued by the International Bank for Reconstruction and Development (IBRD or World Bank).
Treasury Bills: A non-interest bearing discount security issued by the U.S. Treasury to finance the national debt.
Most bills are issued to mature in three months, six
months, or one year.
Treasury Bond: Long-term U.S. Treasury securities having initial maturities of more than 10 years.
Treasury Notes: Intermediate-term coupon bearing U.S.
Treasury having initial maturities of from one year to
ten years.
Trustee: A financial institution with powers to act in a fiduciary capacity for the benefit of the bondholders in enforcing the terms of the bond contract.
Uniform Net Capital Rule: Securities and Exchange
Commission requirement that member firms as well
as nonmember broker/dealers in securities maintain a
maximum ratio of indebtedness to liquid capital of 15
to 1; also called net capital rule and net capital ratio.
Indebtedness covers all money owed to a firm, including margin loans and commitments to purchase securities,
one reason new public issues are spread among members
of underwriting syndicates. Liquid capital includes cash and assets easily converted into cash.
Yield: The rate of annual income return on an investment, expressed as a percentage, (a) Income Yield is obtained by dividing the current dollar income by the current market price for the security, (b) Net Yield or Yield to Maturity is the current income yield 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
purchase to the date of maturity of the bond.
June 8,2021 - Resolution No. 2021-081
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PROPOSED OPERATING BUDGET
FISCAL YEAR 2023-2024
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