STATEMENT OF INVESTMENT POLICY

20.0 Exceptions | Occasionally, exceptions to some of the requirements specified in this Investment Policy may occur for pooled investments because of events subsequent to the purchase of investment instruments, e.g., the rating of a corporate note held in the portfolio is downgraded below an "AA" rating, or total assets in the portfolio decline causing the percentage invested in corporate notes to rise above 30%, or an unforeseen expenditure causes investments maturing within one year to fall below the approved operating budget of the current fiscal year.

Section 53601.7(d) of the California Government code requires that exceptions be reviewed for possible corrective action. Exceptions may be temporary or more lasting; they may be self-correcting or require specific action. If specific action is required, the City Treasurer will determine the course of action that will correct exceptions to move the portfolio into compliance with State and City requirements. Decisions to correct exceptions will not expose the assets of the portfolio to undue risk, and will not impair the meeting of financial obligations as they fall due. Any subsequent investments will not extend existing exceptions. Exceptions, and the decisions to correct the exceptions, will be reviewed with the Investment Review Committee referred to in paragraph 22.0 below.

21.0 Internal control | This policy and the strategy for and conduct of the investment of City funds will be reviewed by an Investment Review Committee as set forth below and by the City's auditors in the conduct of their annual audit of the City.

22.0 Review | An Investment Review Committee is hereby established to conduct reviews of the City's investment portfolio, the strategy being utilized for the investment of City funds, and the City's investment policy. This Committee will be composed of the City Treasurer (acting as the Chair), the City Attorney or designee, the Assistant City Manager, the Administrative Services Director, and the Deputy City Treasurer (when not one of the foregoing). Additionally, an outside financial advisor may be included as an advisor without a vote. The Committee will convene periodically as necessary or desirable but no less frequently than once each quarter.

23.0 Investment policy adoption | Section 53646(a) of the California Government Code requires the City Treasurer to render to the City Council and the Investment Review Committee a statement of investment policy no less frequently than once each year. The City's investment policy and any modifications thereto shall be considered at a public meeting. Adoption shall be made by resolution of the City Council.