HomeMy WebLinkAboutRES 201212-P - Amend Investment PolicyRESOLUTION NO. CQ 0 rt
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF GEORGETOWN,
TEXAS, AMENDING THE EXISTING CITY OF GEORGETOWN INVESTMENT
POLICY EFFECTIVE DECEMBER 12, 2000.
WHEREAS, the goal of the City of Georgetown is to implement an investment policy that utilizes
all current municipal investment practices, while ensuring the safety and availability of all funds entrusted
to the City in compliance with state federal, state and local laws; and
WHEREAS, the City Council of the City of Georgetown has reviewed the investment policy; and
WHEREAS, the City Council of the City of Georgetown wishes to amend its Investment Policy
(as last amended March 28, 2000); and
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
GEORGETOWN, TEXAS, THAT:
SECTION 1. The facts and recitations contained in the preamble of this resolution are hereby
found and declared to be true and correct, and are incorporated by reference herein and expressly made a
part hereof, as if copied verbatim. The City Council hereby finds that this ordinance implements the
following policy of the Century Plan - Policy Plan Element:
1. Finance Policy End 14.00, which states: "All municipal operations are conducted
in an efficient business-like manner and sufficient financial resources for both current and
future needs are provided",
and further finds that the enactment of this ordinance is not inconsistent or in conflict with any other
Century Plan Policies, as required by Section 2.03 of the Administrative Chapter of the Policy Plan.
SECTION 2. The Investment Policy attached as Exhibit "A" is hereby adopted by the City
Council of the City of Georgetown, Texas.
SECTION 3. This resolution shall be effective immediately upon adoption.
RESOLVED this 12th day of December, 2000.
ATTEST: TH CITY OF GEORGETO WN:
Sandra Lee By: MARYELLEN KERSCH
City Secretary
APPROVED AS TO FORM:
Marianne Landers Banks
City Attorney
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2000 Investment Resolution No.ap-1—aAal—P
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Mayor
CITY OF GEORGETOWN, TEXAS
INVESTMENT POLICY
Table of Contents
Section 1: SCOPE & OBJECTIVES
1.1 Scope
1.2 Statement of Cash Management Philosophy
1.3 Objectives
Section 2: STANDARD OF CARE
2.1 Prudence
2.2 Ethics & Conflict of Interest
2.3 Delegation of Authority
Section 3: INVESTMENT STRATEGIES
3.1 Operating Funds
3.2 Contingency Reserves (or operating reserves)
3.3 Debt
3.3.1 Reserves
3.3.2 Interest & Sinking
3.4 Bond Proceeds (capital improvement funds)
Section 4: AUTHORIZED INVESTMENTS
4.1 Allowable Investments
4.1.1
Certificates of Deposit
4.1.2
US Treasuries and Agencies
4.1.3
Investment Pools
4.1.4
Money Market Mutual Funds
4.1.5
Repurchase Agreements
4.1.6
Other Investments
4.2 Compliance with State Law
4.3 Cash on Hand
4.4 Length of Investments
Section 5: SAFEKEEPING AND CUSTODY
5.1
Authorized Dealers
5.2
Authorized Financial Institutions
5.3
Internal Controls
5.4
Safekeeping
5.5
Collateralization
Section 6: REPORTING
6.1
Quarterly Reporting
6.2
Annual Reporting
6.3
Performance Standards
6.4
Compliance
Section 7: POLICY REVIEW AND AMENDMENTS
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CITY OF GEORGETOWN, TEXAS
INVESTMENT POLICY
As amended December 12, 2000
1.1 SCOPE
This investment policy applies to all financial assets of the City of Georgetown, Texas, held in all
funds.
1.2 STATEMENT OF CASH MANAGEMENT PHILOSOPHY
The City of Georgetown will maintain a comprehensive cash management program to include the
effective collection of all accounts receivable, the prompt deposit of receipts to the City's bank
accounts, the payment of obligations to comply with state law and in accord with vendor invoices,
and the prudent investment of idle funds in accord with this policy.
1.3 OBJECTIVES
The City's investment program will be conducted to accomplish the following objectives, listed in
priority order:
Safety. The City will give priority to the preservation and safety of the principal
invested. Investments will be made in a manner that will mitigate credit risk and
interest rate risk.
2. Liquidity. The City will maintain the availability of sufficient cash to pay obligations
of the City when they are due.
3. Yield. The City will invest idle cash at the highest possible rate of return,
consistent with state and local laws and the objectives of safety and liquidity
listed above.
It is also the objective of the City of Georgetown to diversify its investments to eliminate the risk of
loss resulting from over concentration of assets in a specific maturity, a specific issuer or a specific
class of securities. It is the intent of the City of Georgetown to invest its funds to maturity.
2.1 PRUDENCE
Investments will be made with judgment and care, under circumstances then prevailing, that
persons of prudence, discretion, and intelligence exercise in the management of their own affairs,
not for speculation, but for investment, considering the probable safety of their capital and the
probable income to be derived. The City Council recognizes that in maintaining a diversified
portfolio occasional measured losses due to market volatility are inevitable and must be considered
within the context of the overall portfolio's investment return, provided that adequate diversification
has been implemented.
City of Georgetown Investment Policy Page 1
2.2 ETHICS & CONFLICT OF INTEREST
Officers and employees involved in the investment process will refrain from personal business
activity that could conflict with the proper execution of the investment program, or which could impair
their ability to make impartial investment decisions. The Officer and his/her employees will comply
with all disclosure and reporting requirements of Section 2256.005 (1) of the Texas Government
Code.
2.3 DELEGATION OF AUTHORITY
The Director of Finance and Administration, as the City's chief financial officer, is responsible for
overall management of the City's investment program and is designated as the City's Investment
Officer. The Controller and Senior Accountant may also conduct day-to-day operations at the
direction of the Director of Finance and Administration. In the event neither is available, the
A6&i&ta4# City Manager and the Director of XaGUAy Support Services may conduct day to day
emergency investment operations. Accordingly, the Director of Finance and Administration and
designees are responsible for day-to-day administration of the investment program and for the
duties listed below:
Maintain current information as to available cash balances in City accounts,
and as to the amount of idle cash available for investment;
2. Make investments and maintain written procedures for the operation and
internal control of the investment program consistent with this policy;
3. Ensure that all investments are adequately secured; and
4. Attend training as required by Section 2256.008 (a) of the Texas Government Code
and ensure that any staff executing transactions covered by this policyattend the
required training. The investment training shall be attended not less than once in a
two-year period and receive not less than 10 hours of instruction relating to
investment responsibilities under this policy. The training must be sponsored by a
recognized professional trade association or accredited college or university or its
affiliate including, but not limited to:
Texas Municipal League
Government Finance Officers Association of Texas (GFOAT)
Government Finance Officers Association of US and Canada
Government Treasurers Association of Texas
University of North Texas
Texas Tech University Center for Professional Development
Unless authorized by state or local laws as provided above, no person may deposit, withdraw,
transfer or manage in any other manner the funds of the City of Georgetown.
City of Georgetown Investment Policy Page 2
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SECTION 3: INVESTMENT STRATEGIES
Operating Funds are defined as cash and investments used for day to day operations that do not
fall into one of the other categories. Operating funds will be invested in a manner suitable for funds
requiring a high degree of liquidity. Investments of Operating Funds shall be limited to a weighted
average maturity no greater than one year, and all investment instruments must meet credit and
safety criteria as required by the Public Funds Investment Act and this policy. Involuntary liquidation
of Operating Fund investments is unlikely due to their short term nature. However, should a
liquidation of investments prior to maturity be necessary, theirshort term nature will make material
losses unlikely. Operating Fund investments will be diverse and include Certificates of Deposit, U.S.
treasuries and agencies, investment pools and money market mutual funds. Investment of
Operating Funds will be structured to attain the highest possible yield given the liquidity and safety
requirements.
3.2 CONTINGENCY RESERVES (or operating reserves)
Contingency Reserves are the minimum fund balance/working capital requirements as defined by
Council in the Annual Operating Plan. Contingency Reserve balances may be used to cover any
cash operating shortfalls due the timing of bond issues, revenue receipts, etc. Investments of these
funds may exceed 24 months with prior approval of the City Manager if short term cash flow needs
are not evident. Any one security may not exceed 36 months in maturity length. The weighted
average maturity for these funds may not exceed 24 months. Involuntary liquidation of Contingency
Reserve investments is unlikely due to their nature. However, should a liquidation of investments
prior to maturity be necessary, the comparatively longer term nature of some of the investments
could result in material losses depending on financial and economic conditions. Contingency
Reserve investments will be diverse and include C.D.'s, U.S. treasuries and agencies, investment
pools and money market mutual funds. Investment of Contingency Reserves will be structured to
attain the highest possible yield given the liquidity and safety requirements.
3.3 DEBT
3.3.1 Reserves. Debt reserves are defined as bond reserve funds required to be set aside
in accordance with bond covenants. The City's bond covenants do not require the City to
maintain any reserve funds, therefore, the City investments are not adversely affected by
any reserve requirement conditions.
3.3.2 Interest & Sinking (or debt service funds). Interest and sinking funds are defined
as those funds accumulated to meet periodic payments required by bond and note maturity
schedules. The investment maturities are limited by pertinent debt service requirements and
tax laws limiting accumulation and earnings for such funds. Involuntary liquidation of
investments is highly unlikely due to the nature of these funds. Interest and sinking fund
investments will be diverse and include C.D.'s, U.S. treasuries and agencies, investment
pools and money market mutual funds.
City of Georgetown Investment Policy
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3.4 BOND PROCEEDS (capital improvement funds)
Bond proceed funds are defined as those funds received from the sales of City of Georgetown
bonds or notes and not otherwise set aside for debt service or reserve purposes. These funds
typically include money to fund infrastructure construction or other large projects. The investment
maturities are limited by pertinent project draw requirements and tax lawsUwAlaq governing
earnings for such funds, but may not have a weighted average maturity in excess of one year, with
no single security greater than 24 months, unless a flexible repurchase agreement is used in
accordance with Section 4.1.5 of this policy. Involuntary liquidation of investment is highly unlikely.
Bond proceed investments will be diverse and include C.D.'s, U.S. treasuries and agencies,
investment pools and money market mutual funds.
4.1 ALLOWABLE INVESTMENTS
The City of Georgetown funds may be invested in the following instruments:
4.1.1 Certificates of Deposit Certificates of Deposit issued by the City's Depository/Depositories.
All certificates of deposits in excess of the FDIC insured amount must be collateralized as
described by Section 2256.009 (a) of the Code. Collateral must be held by a third party and in
accordance with Section 5.4 of this policy.
4.1.2 U.S. Treasuries and Agencies. Obligations of the United States of America, its agencies and
instrumentalities.
4.1.3 Investment Pools. Investment pools that meet the following criteria:
a. An investment pool must provide an offering circular or other similar disclosure
instruments and provide monthly and transaction reporting as required by Section
2256.016 of the Texas Government Code.
b. Investment in a new pool will require the approval of the City Council.
C. A public funds investment pool created to function as a money market mutual fund
must (1) mark its portfolio to market daily, (4 include in its investment objectives the
maintenance of a stable net asset value of $1 for each share and (3) be continuously
rated no lower than AAA or at an equivalent rating by at least one nationally
recognized rating service.
4.1.4. Money Market Mutual Funds. No-load money market mutual funds if the fund:
a. Is regulated by the Securities and Exchange Commission;
b. Marks its portfolio to market daily;
C. Includes in its investment objectives the maintenance of a stable net asset value of
$1 for each share;
d. Has a dollar-weighted average stated maturity of 90 days or fewer;
e. Is continuously rated no lower than AAA or at an equivalent rating by at least one
nationally recognized rating service.
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City of Georgetown Investment Policy
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4.1.5. Repurchase Agreements. Fully collateralized repurchase agreements that:
a. Have a defined termination date;
b. Are secured by obligations as allowed by the PFIA and this policy;
C. Require third party safekeeping of all securities prior to the release of any funds;
d. Are placed through a primary dealer or financial institution doing business in this
state; and
e. Do not create a reverse repurchase agreement by the City.
f. Construction, capital improvement and bond proceed funds may utilize a flexible
repurchase agreement that allows expenditure - related withdrawal of funds, without
penalty, with an average life and termination date limitation based on the anticipated
draw schedule.
4.1.6. Other Investments. Other investments as approved by the City Council and not prohibited
by law.
4.2 COMPLIANCE WITH STATE LAW
All authorized investments outlined above must meet the requirements of the Public Funds
Investment Act, Section 2256 of the Texas Government Code. No investment may be made in any
instrument except as provided above.
4.3 CASH ON HAND
Cash resources required for the immediate needs of the City and not otherwise available forlonger
term investment will be placed in checking account(s) at the City's Depository/ Depositories. Such
checking account(s) will earn interest at the highest rate(s) provided in the respective depository
contract(s).
4.4 LENGTH OF INVESTMENTS
The following general constraints will apply. Maturities exceeding 24 months will require
authorization by the City Manager, with no single maturity greater than 36 months. Maturities will
be staggered to avoid undue concentration of assets in a specific maturity sector and maturities
selected will provide for stability of income and reasonable liquidity. In no instance shall the
maximum stated maturity be greater than its longest stated debt service requirement unless further
restricted in Section 3, Investment Strategies, of this policy; bond covenants or state law.
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5.1 AUTHORIZED DEALERS
Authorized investments in U.S. treasuries and agencies may be purchased only through
brokers/dealers who are licensed and in good standing with the Texas Department of Securities,
the Securities Exchange Commission, the National Association of Securities Dealers or other
applicable self-regulatory organization.
The Investment Officer will maintain a list of approved security broker/dealers selected principally
on the basis of evidenced credit worthiness who are authorized to provide investment services. The
list is approved and included in Attachment "A" of this policy. Before engaging in investment
transactions with a broker/dealer, Investment Pool or Money Market Mutual Fund, the Investment
Officer will have received from said firm a signed Certification Form. This form will attest that the
City of Georgetown Investment Policy
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individual responsible for the City's account with that firm has received and reviewed the City's
Investment Policy and that the brokerage firm has implemented reasonable procedures and controls
in an effort to preclude imprudent activities arising out of investment transactions conducted
between the City and the brokerage firm. The letter must be signed by a qualified representative
as defined by Section 2256.002, of the Texas Government Code.
"Qualified Representative" means a person who holds a position with a business organization who
is authorized to act on behalf of the business organization and who is one of the following: '
(1) a business organization doing business that is regulated by or registered with a securities
commission, a person who is registered under the rules of the National Association of Securities
Dealers;
(2) for a state or federal bank, a savings bank or state or federal credit union, a member of the loan
committee for the bank or branch of the bank or a person authorized by corporate resolution to act
on behalf of and bind the banking institution;
(3) for an investment pool, the person authorized by the elected official or board with authority to
administer the activities of the investment pool to sign the written instrument on behalf of the
investment pool, or
(4) for an investment management firm registered under the Investment Advisers Act of 1940 or,
if not subject of registration under the Act, registered with the State Securities Board, a person who
is an officer or principal of the investment management firm.
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Certificates of Deposit may be purchased at qualified City depositories. The City must have a
written agreement with the qualified depository and that depository must meetall State Law for
deposit of public funds. The City's Depository/Depositories will be selected every two years, unless
otherwise provided by law.
5.3 INTERNAL CONTROLS
All investment transactions will be documented by the Investment Officer. The Investment Officer
may make investments orally, but will follow promptly with a written confirmation to the financial
institution or broker/ dealer, with a copy of such confirmation retained in the City's files.
On investments in U.S. treasuries and agencies, the Investment Officer will take competitive bids.
At least two (2) quotations will be taken for each such investment made.
Market value of the portfolio and each security will be monitored at least quarterly through industry
standard publications/sources for market data such as, but not limited to, The Wall Street Journal.
5.4 SAFEKEEPING
All securities purchased by the City under this policy must be designated as assets of the City, must
be conducted on a delivery-versus-payment (DVP) basis, and must be protected through the use
of a third-party custody/safekeeping agent. The City will enter into a formal agreement with an
institution of such size and expertise as is necessary to provide the services needed to protect and
secure the investment assets of the City.
City of Georgetown Investment Policy
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To the extent not insured by federal agencies that secure deposits, City of Georgetown funds
(including cash on hand and C.D.'s) must be collateralized by collateral securities in compliance
with the Texas Public Funds Collateral Act and pertinent federal banking regulations. Only
securities proscribed as eligible investments under the Public Funds I Investment Act qualify as
pledged securities.
Securities pledged as collateral must be retained in a third party bank in the State of Texas in the
City's name. The City will be provided the original safekeeping receipt on each pledged security.
The City, financial institution, and the safekeeping bank(s) Will operate in accordance with a master
safekeeping agreement signed by each of the parties. Collateral pledged to the City in I ust be
aocumentea as pieagea to tne uity in tne minutes of the meeting The City's Investment Officer
must approve in writing the release -of-c-611-a''tieral' prior to its removal from the safekeeping account
in accordance with the terms of depository agreement.
The financial institution(s) with which the city invests and/or maintains deposits will provide monthly
a listing of the collateral pledged to the City marked to current market prices. The listing will include
total pledged securities itemized by name, type and description of the security; safekeeping receipt
number; par value; current market value; maturity date, if available; and Moody's or Standard &
Poor's rating, if available.
The Investment Officer shall prepare and submit to the Council a quarterly report on investment
transactions for all funds covered by this policy. The report will be prepared in compliance with the
Public Funds Investment Act, and generally accepted accounting principles. The report will cover
the investment position of the City at the end of the each fiscal quarter. The contents will include
at a minimum:
1. Beginning, ending and significant changes in market value of the portfolio;
2. Beginning and ending market value and book value, maturity date, type of
funds, interest coupon, accrued interest and yield for each separate security;
and
3. A statement as to the compliance with this policy and state law.
Within 90 days following the end of the fiscal year, the Investment Officer will present to the City
Council a comprehensive annual report on the investment program and investment activity. In
addition to the information required for quarterly reporting, the annual report will include a review
of the activities and return for the twelve months, suggest policy revisions and improvements that
might enhance the investment program, and include an investment plan for the ensuing fiscal year.
In order to evaluate portfolio performance of funds subject to this policy, the City of Georgetown
portfolio will be compared against appropriately competitive and reasonable benchmarks, including
money market mutual funds or investment pools of similar make-up and maturities.
City of Georgetown Investment Policy
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6.4 COMPLIANCE
A compliance audit of management controls and adherence to this policy as it relates to the City of
Georgetown's investments and investing activity will be performed on an annual basis in conjunction
with the City's annual financial audit.
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This investment policy will be reviewed by the City Council of the City of Georgetown on at least an
annual basis as required by the Public Funds Investment Act and make amendments as necessary.
The Council will review the policy as part of the annual investment report presented by staff.
City of Georgetown Investment Policy
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