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Item No. 10 - CONSIDERATION OF INVESTMENT OF FUNDS IN THE LOS ANGELES COUNTY TREASURY POOLAGENDA ITEM NO. 10 AGENDA STAFF REPORT City of West Covina I Office of the City Manager DATE: May 4, 2021 TO: Mayor and City Council FROM: David Carmany City Manager SUBJECT: CONSIDERATION OF THE INVESTMENT OF FUNDS IN THE LOS ANGELES COUNTY TREASURY POOL RECOMMENDATION: It is recommended that the City Council adopt the following resolution: RESOLUTION NO.2021-35 - A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF WEST COVINA, CALIFORNIA, AUTHORIZING THE INVESTMENT OF EXCESS FUNDS IN THE LOS ANGELES COUNTY TREASURY POOL AND AUTHORIZING THE EXECUTION OF A MEMORANDUM OF UNDERSTANDING RELATING THERETO DISCUSSION: As the City reaches its $75 million cap in deposits with the State of California Local Agency Investment Fund (LAIF), staff recommends renewing its participation in the Los Angeles County Treasury Pool. This will allow the City to achieve greater diversity and possibly a higher return while still maintaining liquidity. The County Pool and LAIF had equal Average Monthly Effective Yields in January 2021. Additionally, the City previously invested funds with the County Pool which is an allowable Investment Type under the City's Investment Policy. Adoption of this resolution formally requests participation in the pool; authorizes the execution of the Memorandum of Understanding (MOU) (Attachment No. 2); and will authorize the City Manager, Finance Director, and Assistant Finance Director to commit City funds to be invested by the County Treasurer, request the County Treasurer's consent to deposit in the County Treasury Pool those funds deemed to be excess and not required for immediate use, for the purpose of investment pursuant to Government Code Sections 53601 and 53635, and subject to the terms and conditions set forth in Government Code Sections 53684 and 27136. LEGAL REVIEW: The City Attorney's Office has reviewed the resolution and MOU and approved them as to form. Fiscal Impact FISCAL IMPACT: Adoption of this resolution will allow the City to further diversify its investment portfolio with the objective of attaining a market rate of return, while safeguarding principal and meeting the City's liquidity needs. Attachments Attachment No. 1 - Resolution No. 2021-35 Attachment No. 2 - MOU with County Treasurer and Tax Collector CITY Achieve Fiscal Sustainability and Financial Stability COUNCIL Financial Recovery Plan/Corrective Action GOALS & OBJECTIVES: ATTACHMENT NO.1 RESOLUTION NO.2021-35 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF WEST COVINA, CALIFORNIA, AUTHORIZING THE INVESTMENT OF EXCESS FUNDS IN THE LOS ANGELES COUNTY TREASURY POOL AND AUTHORIZING THE EXECUTION OF A MEMORANDUM OF UNDERSTANDING RELATING THERETO WHEREAS, California Government Code ("Government Code') Section 53684 allows local agencies to deposit excess fiords in the Los Angeles County Treasury Pool for the purpose of investment by the Treasurer and Tax Collector of the County of Los Angeles (the "County Treasurer'); and WHEREAS, the City Council of the City of West Covina (the "City"), has determined or may determine from titre to time, that the City has excess funds which are not required for immediate use; and WHEREAS, the City is a "local agency" as that term is defined in Government Code Section 53600;and WHEREAS, the Board of Supervisors (the "County Board') of the County of Los Angeles (the "Count}') made Government Code Section 53684 operative in the County on February 24,1987, as amended by said County Board on May 31, 1988; and WHEREAS, with the consent of the County Treasurer, the County Treasurer may accept for investment, deposits of the City, upon the adoption by the City of a resolution authorizing the investment of excess fiords by the County Treasurer pursuant to Government Code Section 53684; and WHEREAS, the City Council of the City of West Covina has determined that it would be desirable to deposit the excess funds in the County Treasury Pool for the purpose of investment pursuant to Government Code Sections 53601 and 53635. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF WEST COVINA, CALIFORNIA, DOES HEREBY RESOLVE AS FOLLOWS: SECTION 1. The City Council hereby finds that it may, from time to time, be advantageous to make deposits for purposes of investment with the County Treasurer in the County Treasury Pool SECTION 2. The City Council hereby finds that excess funds of the City are not required for immediate use and that the investment of such fiords in the County Treasury Pool is an appropriate investment of its moneys. SECTION 3. The City Council hereby authorizes the deposit of moneys of the City into the County Treasury Pool for purposes of investment by the County Treasurer in accordance with the provisions of Section 53684 of the California Government Code and the "Memorandum of Understanding for the Deposit and Invesunant of Excess Funds in the Los Angeles County Treasury Pool" (the Agreement'), which has been presented to the City Council and which is approved substantially in the form presented and in such final form as approved by the City Attorney. SECTION 4. The City Council hereby authorizes the following City officers holding the title(s) specified bereinbelow or their successors in office to commit City funds to be invested by the County Treasurer, to request the County Treasurer's consent to deposit in the County Treasury Pool those funds deemed to be excess and not required for iranediate use for the purpose of investment pursuant to Goverment Code Sections 53601 and 53635, and subject to the terms and conditions set forth in Government Code Sections 53684 and 27136, and to execute and deliver any and all documents necessary or advisable in order to effectuate the purposes of this resolution and the transactions contemplated hereby. David N. Carmany Robbeyn Bird Stephanie Sikkema City Manager Finance Director Assistant Finance Director SECTION 5. The City Clerk shall certify to the passage and adoption of this resolution and enter it into the book of original resolutions. SECTION 6. The City Clerk shall provide a certified copy of this resolution to the County Treasurer. APPROVED AND ADOPTED by the City Council of West Covina on this 4th day of May, 2021. Letty Lopez-Viado Mayor APPROVED AS TO FORM ATTEST Thomas P. Duarte Lisa Sherrick City Attorney Assistant City Clerk I, LISA SHERRICK, ASSISTANT CITY CLERK of the City of West Covina, California, do hereby certify that the foregoing Resolution No. 2021-35 was duly adopted by the City Council of the City of West Covina, California, at a regular meeting thereof hell on the 4th day of May, 2021, by the following vote of the City Council: AYES: NOES: ABSENT: ABSTAIN: Lisa Sherrick Assistant City Clerk ATTACHMENT NO.2 MEMORANDUM OF UNDERSTANDING FOR THE DEPOSIT AND INVESTMENT OF EXCESS FUNDS IN THE LOS ANGELES COUNTY TREASURY POOL between the City Council of the City of West Covina and the Los Angeles County Treasurer and Tax Collector This Memorandum of Understanding ("MOU") is entered into as of the date fully executed by and between the City Council of the City of West Covina (the "City') and the Treasurer and Tax Collector ("Treasurer") of the County of Los Angeles (the "County'). RECITALS WHEREAS, California Government Code ("Government Code") Section 53684 allows local agencies to deposit excess funds in the County Treasury Pool for the purpose of investment by the Treasurer; and WHEREAS, the City Council of the City of West Covina ("City Council") has determined or may determine from time to time, that the City has excess funds which are not required for immediate use; and WHEREAS, the City Council has determined that it may be advantageous and has authorized the deposit and investment of excess funds of the City with the Treasurer for purposes of investment pursuant to Government Code Section 53684; and WHEREAS, with the consent of the Treasurer, the Treasurer may accept for investment, deposits of the City, upon the adoption by the City of West Covina of a resolution authorizing the investment of excess funds by the Treasurer pursuant to Government Code Section 53684; and NOW THEREFORE, it is mutually understood and agreed to as follows: I. PARTIES This MOU constitutes an agreement between the City and the Treasurer for the Treasurer to invest excess funds of the City at the request of the City. II. PURPOSE The purpose of this MOU is to define the roles and responsibilities of the City and the Treasurer related to the City Council's request for the Treasurer to invest excess funds of the City. The MOU specifies the contractual terms and conditions pursuant to which the Treasurer will manage and invest the City's excess funds which have been deposited for investment with the Treasurer. III. CITY RESPONSIBILITIES • The City understands that the funds it deposits for investment pursuant to this MOU will be held in the County Treasury Pool and shall be invested by the Treasurer in accordance with the then current County of Los Angeles Treasurer and Tax Collector Investment Policy ("Investment Policy'). • The City acknowledges that it has received and carefully reviewed the Investment Policy and is familiar with its contents. Having considered and weighed the risks of investing, the City Council has determined that it is appropriate and legal to invest its moneys in the County Treasury Pool, as permitted by the Investment Policy. The City has been advised and understands that the Investment Policy may be amended by the Treasurer without the review and consent of City. • The City shall inform the Treasurer if and to the extent any of the Citys funds deposited in the County Treasury Pool pursuant to this MOU are proceeds of the issuance of bonds, certificates of participation, notes or other evidences of indebtedness ("Bond Proceeds"). If the Bond Proceeds are restricted by a certificate of the City relating to compliance with federal tax requirements ("Nonarbitrage Certificate"), the City agrees to provide the Nonarbitrage Certificate to the Treasurer so that the Treasurer can provide the market value of the Bond Proceeds as of the rebate calculation dates as provided in the Nonarbitrage Certificate. Notwithstanding the foregoing, the County takes no responsibility and the City is solely responsible for compliance with the terms and conditions of the Nonarbitrage Certificate and of any federal tax requirements that may apply to the Bond issuance. The City will review bond documents to determine if funds can be deposited into the County Treasury Pool. • The City agrees that the County shall not be liable for damage or losses of any nature resulting from or arising out of (i) investments made or authorized by the Treasurer in accordance with Government Code Sections 53601 or 53635; (ii) misrepresentations or false or erroneous information provided by the City or any of its officers, employees or agents; (iii) noncompliance with investment policies or guidelines adopted by the City; (iv) violation of yield or investment limitations applicable to the funds deposited with the Treasurer for investment (such as federal arbitrage regulations with respect to the investment of proceeds of borrowings, or state or federal restrictions on the investment of grant proceeds); (v) circumstances beyond the reasonable control of the County, such as a declaration of a banking moratorium or the suspension of trading on any securities exchange; (vi) acts or omissions of the County, its officers and employees that do not constitute gross negligence or willful misconduct, or acts or omissions of the County's custodial bank, depository bank and investment manager (the "Agent Banks"), provided that the City shall be subrogated to the rights of the County to pursue a claim against the Agent Banks or any of them under the contractual arrangements between the County and the Agent Banks. The City shall provide the Treasurer with a list of positions and/or authorized personnel designated and approved to commit City funds to be invested by the Treasurer on "Attachment A — List of Authorized Designees" of this MOU. The designated personnel whose name(s), currently held title(s), and specimen signature(s) appear on Attachment A of this MOU are authorized and directed to request the Treasurer's consent to deposit in the County Treasury Pool those funds he or she deems to be excess and not required for immediate use, for the purpose of investment pursuant to Government Code Sections 53601 and 53635, and subject to the terms and conditions set forth in Government Code Sections 53684 and 27136, and in accordance with the resolutions entitled "Resolution of the Board of Supervisors of the County of Los Angeles Authorizing the County Treasurer and Tax Collector to Invest Excess Funds of Local Agencies" and "Resolution of the Board of Supervisors of the County of Los Angeles Authorizing the County Treasurer and Tax Collector to Invest Excess Funds of Public Agencies" adopted by the Board of Supervisors of the County of Los Angeles, on February 24, 1987, and on May 31, 1988, respectively. The City agrees that the County may calculate the average daily balances of participants in the County Treasury Pool and may allocate monthly interest payments thereon pursuant to any reasonable method established by the County and consistently applied. City further agrees to reimburse to the County Treasury Pool any amounts disbursed to City in error promptly upon the discovery of such error or upon the request of the Treasurer. The City agrees that the Treasurer shall deduct administrative charges from its gross interest income pursuant to Government Code Sections 53684(b) and 27013. • When the City requests a withdrawal of funds from the County Treasury Pool, City shall comply with all applicable withdrawal provisions pursuant to California law, as now in effect and as may be subsequently added, including but not limited to Government Code Section 27136. IV. TREASURER RESPONSIBILITIES • The Treasurer shall, at least quarterly, apportion any interest or other increment derived from the investment of the City's excess funds in an amount proportionate to the average daily balance of the amounts deposited by the City and to the total average daily balance of deposits in the County Treasury Pool. In apportioning and distributing that interest or increment, the Treasurer may use the cash method, the accrual method, or any other method in accordance with generally accepted accounting principles. The Treasurer shall notify the City of any proposed changes in the accounting method at least 30 days prior to the date on which the proposed changes take effect. • The Treasurer will deduct the actual costs incurred by the County in administering the investment of excess funds pursuant to Government Code Section 53684 in proportion to the average daily balance of the amounts deposited by the City and to the total average daily balance of deposits in the County Treasury Pool. • Upon receipt of the City's list of designated persons authorized to commit the City's funds, the Treasurer shall rely upon such designations until the Treasurer has received written notice from the City that the designations are revoked or amended. The positions, as well as the names and specimen signatures of the persons currently holding the designated positions, are contained in Attachment A, which is attached hereto and incorporated herein by this reference. The Treasurer may rely on the latest authorized list received from the City. • When the City requests a withdrawal of funds from the County Treasury Pool, the Treasurer shall comply with all applicable withdrawal provisions pursuant to California law, as now in effect and as may be subsequently added, including but not limited to Government Code Section 27136. V. AMENDMENTS TO THE MOU Any changes to the MOU must be accomplished by written consent of both parties. This excludes revisions to the City's List of Authorized Designees (Attachment A) which the City may revise as necessary at any time, without advance notice to the Treasurer. VI. EFFECTIVE DATE OF MOU The City Council of the City shall adopt a resolution authorizing the deposit of excess funds in the Treasury Pool. A certified copy of the resolution shall be provided to the Treasurer. The MOU shall become effective upon approval by the City Council of the City and execution of the MOU by both parties. VII. TERMINATION OF MOU Either party may terminate the provision of services under this MOU, in whole or in part, whenever either party determines that such termination is in its best interest. Any such termination shall be effected by delivery to the other party of a Notice of Termination specifying the extent to which services under this MOU are terminated, and the date upon which such termination will become effective. After receipt of a Notice of Termination, and except as otherwise agreed: (a) The County shall stop performing under this MOU on the date specified and to the extent specified in the Notice of Termination. (b) The City shall request no further services requiring work to be performed after the termination date as specified in the Notice of Termination. (c) Upon termination, the City agrees to pay the County for all services performed prior to termination. Where required to be given under this MOU, notice shall be in writing and shall be deemed given when delivered personally or deposited in the United States mail, postage prepaid, certified, addressed as follows: City City of West Covina Attention: Finance Director 1444 W. Garvey Ave S. West Covina, CA91790 County Los Angeles County Treasurer and Tax Collector Attention: Internal Controls Branch - LACPIF 500 West Temple Street, Room 462 Los Angeles, CA 90012 IX. INDEMNIFICATION AND LIABILITY The City shall indemnify, defend and hold harmless the Treasurer, the County of Los Angeles, and their elected and appointed officers, employees, agents and representatives from and against any and all liability, including but not limited to demands, claims, actions, fees, costs and expenses (including attorney and expert witness fess), arising from or connected with the Citys acts or omissions arising from or relating to this MOU. The Treasurer and the County of Los Angeles shall indemnify, defend, and hold harmless the City and its elected and appointed officers, employees and agents from and against any and all liability, including but not limited to demands, claims, actions, fees, costs and expenses (including attorney and expert witness fees) arising from or connected with the Treasurer's acts or omissions arising from or relating to this MOU. X. ENTIRE AGREEMENT This MOU along with Attachment A constitutes the entire understanding and agreement of the parties and no prior oral or written understanding shall be of any force or effect. No part of this MOU may be modified without the written consent of both parties. The MOU includes the following Attachments: A. List of Authorized Designees for the City SIGNATURES IN WITNESS HEREOF, the parties hereto have signed their names and executed this MOU through their duly authorized officers this day of LOS ANGELES COUNTY CITY OF WEST COVINA TREASURER AND TAX COLLECTOR CITY COUNCIL By: By: Treasurer and Tax Collector Lefty Lopez-Viado Mayor APPROVED AS TO FORM: RODRIGO CASTRO-SILVA ACTING COUNTY COUNSEL By: Deputy County Counsel Attachment A List of Authorized Designees for the City Name Title Specimen Signature David N. Carmany City Manager Robbeyn Bird Finance Director Stephanie Sikkema Assistant Finance Director Date: May 4, 2021