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<br />NOTE 2 - CASH AND INvESTMENTS (CONTINUED) <br /> <br />c. <br /> <br />Funds Held by Fiscal Agents <br /> <br />The City had $73,418,203 in cash and investments as of June 30, 2005 held by trustees or fiscal agents <br />pledged for the payment or security of certain bonds, certificates of participation, and lease obligations. <br />The California government code provides that these monies, in the absence of specific statutory <br />provisions governing the issuance of bonds, certificates, or leases, may be invested in accordance with <br />the ordinance, resolutions, or indentures specifying the types of investments its trustees or fiscal agents <br />may make. In some situations, these investments differ from those permitted by the City investment <br />policy. Included in these investments at June 30, 2005 are guaranteed investment contracts with maturity <br />dates in fiscal year 2012, 2026, 2028 and 2029 authorized in the bond indenture and by City Council <br />prior to purchase. <br /> <br />D. <br /> <br />Extemal Investment Pools <br /> <br />The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by <br />California Government Code Section 16429 under the oversight of the Treasurer of the State of <br />California. The City reports its investment in LAIF at the fair value amount provided by LAIF. The <br />balance available for withdrawal is based on the accounting records maintained by LAIF, which are <br />recorded on an amortized cost basis. Included in LAIF's investment portfolio are collateralized mortgage <br />obligation, mortgage-backed securities, other asset-backed securities, loans to certain state funds, and <br />floating rate securities issued by federal agencies, government-sponsored enterprises, and corporations. <br />These investments may include the following: <br /> <br />Structured Notes - are debt securities (other than asset-backed securities) whose cash flow <br />characteristics (coupon rate, redemption amount, or stated maturity) depend upon one or more <br />indices and/or that have embedded fOIwards or options. <br /> <br />Asset-Backed Securities - the bulk of which are mortgage-backed securities, entitle their purchasers <br />to receive a share of the cash flows from a pool of assets such as principal and interest repayments <br />from a pool of mortgages (such as Collateralized Mortgage Obligations) or credit card receivables. <br /> <br />As of June 20, 2005, the City had $14,145,289 (estimated fair value) invested in LAIF, which had <br />invested 2.4028% of the pool investment funds in Structured Notes and Asset-Backed Securities. LAIF <br />determines fair value on its investment portfolio based on market quotations for those securities where <br />market quotations are readily available and based on amortized cost or best estimate for those securities <br />where market value is not readily available. The City valued its investments in LAIF as of June 30, <br />2005, by multiplying its account balance with LAIF times a fair value factor determined by LAIF. The <br />fair value factor was determined by dividing all LAIF participants' total aggregate fair value by total <br />aggregate amortized costs by total aggregate fair value. <br /> <br />Accordingly, as of June 30, 2005, the City's investment in LAIF at fair value amounted to $14,145,289 <br />using a LAIF fair value factor of .0997747753. <br /> <br />38 <br />