TO:	city of san jose financing authority board	FROM:	Scott P. Johnson
SUBJECT:	See Below	DATE:	November 3, 2003

SUBJECT: ADOPTION OF A RESOLUTION AUTHORIZING OFFICERS OF THE CITY OF SAN JOSE FINANCING AUTHORITY AND THE CITY OF SAN JOSE TO INVEST MONIES IN THE LOCAL AGENCY INVESTMENT FUND ON BEHALF OF THE CITY OF SAN JOSE FINANCING AUTHORITY

Recommendation

Adoption of a resolution of the City of San José Financing Authority (the “Authority”) Board authorizing the City of San José (the “City”) Director of Finance, in his capacity as the Authority Treasurer, and other authorized officers of the City, who routinely conduct debt management activity on behalf of the Authority, to order the deposits or withdrawals of monies in the Local Agency Investment Fund on behalf of the Authority.

Background

The State of California manages an investment pool called the Local Agency Investment Fund (“LAIF”) that allows municipalities to invest bond proceeds and other municipal funds through an investment account structure (a “LAIF Account”). Municipalities are able to benefit from the higher yield the pool receives as compared to separate smaller investment accounts due to economies of scale. The City of San José currently includes LAIF Accounts as authorized investments in the City’s investment policy.

On September 18, 2003, the Authority issued the City of San José Financing Authority Lease Revenue Bonds, Series 2003A (Central Service Yard Refunding Project). A portion of the proceeds were used to fund the debt service reserve fund at $1,693,170, and the Treasurer of the Authority has determined that it would be advantageous to invest that reserve fund in a LAIF Account.

Although the Authority has previously established LAIF Accounts for other of its bond issues, a new LAIF policy now requires the governing board of the investing authority to adopt a resolution designating the officers authorized to deposit and withdraw monies invested in LAIF Accounts. The designations must identify each officer by name and title along with a sample signature of the officer. The resolution resembles a signature card that is commonly used by banks.

Analysis

The City of San José Financing Authority was formed on December 8, 1992, by a joint powers agreement between the City and the Redevelopment Agency (“JPA Agreement”) for the purpose of issuing bonds to finance various public improvements. The JPA Agreement designates the Director of Finance as the Treasurer of the Authority. As the Authority’s Treasurer, the Director of Finance is authorized to invest the funds under the Authority’s control. Accordingly, the City’s Investment Policy applies to the funds under the Authority’s control. Under the City’s Investment Policy, LAIF is a permissible investment vehicle.

LAIF has been and continues to be a prudent and attractive investment option for the Authority’s bond proceeds and the resolution is necessary for the Authority to establish new LAIF Accounts. The Authority’s Treasurer and Executive Director will be designated as authorized officers of the Authority for the purpose of ordering the deposit and withdrawal of Authority funds invested in LAIF Accounts. Other authorized representatives of the City acting on behalf of the Authority include the Deputy Directors of Finance, the Debt Administrator and the Cash Manager.

Coordination

This staff report has been prepared by the Finance Department in coordination with the City Attorney’s Office.

Cost Implications

There is no cost implication associated with this action.

CEQA

Not a project.

SCOTT P. JOHNSON

Director of Finance, City of San José

Treasurer, City of San José Financing Authority