Attached is the proposed statement of Investment Policy for 2007 that sets forth the basic policy for investment of public funds.  Issues addressed are basic policy and objectives, types of investments permitted, maturity limitations, qualifications of banks/brokers, payment procedure for securities, safekeeping, portfolio diversification, cash management objective, reporting requirements, internal controls, and compliance with government code.

The recommended changes to the policy are as follows:

Incorporate new language that the State of California revised on Investment Philosophy (page 2).

This year the monthly liquidity amount increased from $61 million to $69 million.  This was based on keeping 8 weeks of the annual appropriations less purchased power liquid and to increase out beyond five years (maximum 10 years) from $10 million to 5% of the portfolio (page 3).

Decrease from 10% to 2% of the pool that may be invested in commercial paper issued by any one corporation.  Also add that our medium-term notes will be rated by two of the three major nationally recognized rating services, and decrease from 10% to 5% of the pool that may be invested in notes issued by one corporation (page 6).

Language was changed for clarification purposes under qualified dealers to read �qualified regional dealers� (page 8).

Under the list of Qualified Brokers, Jason Hamblen moved to Countrywide Securities and added Joe Alan Sexton, First Tennessee and Don Collins, Brookstreet Securities (page 15).

Finally the last change is on Exhibit B which is the State of California Statutes applicable to Municipal Investments. Commercial paper legal limit changed to 25% and the rating must be A-1/P-1/F-1 (page 16).

These recommendations has been reviewed and approved by the Fiscal & Treasurer�s Review Group (F&TRG) and the Treasurer�s Oversight Review Committee (TORC).  The F&TRG members are Michael Flad, Assistant City Manager, Bob Torrez, Financial Services Director, Bob Liu, Assistant General Manager Finance & Administration, BWP, Dave Golonski, Council Liaison to the Treasurer�s Office, and David Gordon, Council Liaison to the Treasurer�s Office.  The TORC members are Dave Hackett, Bob Jensen, Kirk Bowren, and Richard Bertain.

I recommend that the City, Redevelopment Agency, Parking Authority, Youth Endowment Services and Housing Authority adopt motions approving the Investment Policy for 2007.

Attachment

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