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7.1.G. - Page 73 <br /> Notes to the Basic Financial Statements <br /> For the year ended June 30, 2013 <br /> NOTE 2 — CASH AND INVESTMENTS (CONTINUED) <br /> investment purchased at par will now reflect changes in its value at each succeeding fiscal year -end, but <br /> these recognized gains or losses will net to zero if the investment is held to maturity. By following the <br /> requirements of GASB 31, the City is reporting the amount of resources which would actually have been <br /> available if it had been required to liquidate all its investments at any fiscal year -end. <br /> C. Restricted Cash <br /> The City's restricted cash consisted of $20,341,348 in cash and investments as of June 30, 2013 held by <br /> trustees or fiscal agents. The City had $7,719,365 in restricted cash and investments held by the City. <br /> This restricted cash is pledged for the payment or security of certain bonds, certificates of participation, <br /> and lease obligations. The California government code provides that these monies, in the absence of <br /> specific statutory provisions governing the issuance of bonds, certificates, or leases, may be invested in <br /> accordance with the ordinance, resolutions, or indentures specifying the types of investments its <br /> trustees or fiscal agents may make. In some situations, these investments differ from those permitted <br /> by the City investment policy. Included in these investments at June 30, 2013 is a guaranteed <br /> investment contract with a maturity date in fiscal year 2035 authorized in the bond indenture and by <br /> City Council prior to purchase. <br /> D. External Investment Pools <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 <br /> mortgage obligation, mortgage- backed securities, other asset - backed securities, loans to certain state <br /> funds, and floating rate securities issued by federal agencies, government- sponsored enterprises, and <br /> corporations. These investments may include the following: <br /> Structured Notes - are debt securities (other than asset - backed securities) whose cash flow characteristics <br /> (coupon rate, redemption amount, or stated maturity) depend upon one or more indices and /or that have <br /> embedded forwards or options. <br /> Asset - Backed Securities - the bulk of which are mortgage- backed securities, entitle their purchasers to <br /> receive a share of the cash flows from a pool of assets such as principal and interest repayments from a <br /> pool of mortgages (such as Collateralized Mortgage Obligations) or credit card receivables. <br /> As of June 30, 2013, the City had $56,271,177 (estimated fair value) invested in LAIF. LAIF had invested <br /> 1.96% of the pool investment funds in Structured Notes and Asset - Backed Securities. LAIF determines <br /> fair value on its investment portfolio based on market quotations for those securities where market <br /> 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, 2013, <br /> by multiplying its account balance with LAIF times a fair value factor determined by LAIF. The fair value <br /> factor was determined by dividing all LAIF participants' total aggregate fair value by total aggregate <br /> amortized costs. <br /> 45 <br />