HomeMy WebLinkAboutAgenda CC 02.22.2013 WorkshopNotice of Meeting of the
Governing Body of the
City of Georgetown, Texas
JANUARY 22, 2013
The Georgetown City Council will meet on JANUARY 22, 2013 at 3:00 P.M. at the Council Chambers at
101 E. 7th Street, Georgetown, Texas
If you need accommodations for a disability, please notify the city in advance.
Policy Development/Review Workshop -
A Annual review of proposed changes to the City's investment policy -- Susan Morgan, Finance Director
and Micki Rundell, Chief Financial Officer
B Presentation and discussion on statewide cable franchise, PEG (public, education, government)
channels, and the GTV and Video Programming Plan -- Paul E. Brandenburg, City Manager and Keith
Hutchinson, Public Communications Manager
Executive Session
In compliance with the Open Meetings Act, Chapter 551, Government Code, Vernon's Texas Codes,
Annotated, the items listed below will be discussed in closed session and are subject to action in the regular
session.
C Sec. 551.071: Consultation with Attorney
- Advice from attorney about pending or contemplated litigation and other matters on which the attorney
has a duty to advise the City Council, including agenda items
- LCRA Update
- Airport Tenants
- Rivery Development
- GenTex Contract Discussion
D Sec. 551.072: Deliberation about Real Property
- 1460 Inner Loop Right of Way
- Albertson's Building
E Sec 551.074: Personnel Matters
- Acting City Attorney, Bridget Chapman
F Sec. 551.086: Competitive Matters
- Electric Rate Review
Adjournment
Certificate of Posting
I, Jessica Brettle, City Secretary for the City of Georgetown, Texas, do hereby certify that this Notice of
Meeting was posted at City Hall, 113 E. 8th Street, a place readily accessible to the general public at all
times, on the day of , 2012, at , and remained so posted for at least
72 continuous hours preceding the scheduled time of said meeting.
Jessica Brettle, City Secretary
City of Georgetown, Texas
January 22, 2013
SUBJECT:
Annual review of proposed changes to the City's investment policy -- Susan Morgan, Finance Director and
Micki Rundell, Chief Financial Officer
ITEM SUMMARY:
The City's financial investments are guided by the City's investment policy, which was created in
compliance with Chapter 2256 of the Texas Government Code. This state law requires that a governing body
review its investment policy annually. The City's policy was last reviewed on January 24, 2012.
The proposed changes to the policy are summarized in the attached memo.
The proposed policy changes have been reviewed with the General Government and Finance Advisory
(GGAF) Subcommittee with any suggestions included in the final proposal.
COMMENTS
The City's investment advisor, Susan Anderson, with Valley View Consulting, will be available, along with
staff, to answer questions regarding public funds investing.
FINANCIAL IMPACT:
A overview presentation of the City's investment policy will be provided at the workshop.
SUBMITTED BY:
ATTACHMENTS:
Memo
Investment Policy Redline
Chapter 2256 Texas Government Code
Cover Memo
Item # A
Attachment number 1 \nPage 1
EST. 111411
GEORGETOWN
TEXAS
MEMORANDUM
DATE: January 14, 2013
TO: Mayor & Council
Paul Brandenburg, City Manager
Micki Rundell, Chief Financial Officer
FROM: Susan Morgan, CPA, Finance Director
SUBJECT: Proposed Updates to City of Georgetown Investment Policy
ATTACHMENTS: Redline version of the City of Georgetown Investment Policy
The City's investments are guided by the City's investment policy, which was created pursuant to
Chapter 2256 of the Texas Government Code, known as the Public Funds Investment Act (PFIA).
The law requires the governing body of local governments to review the policy annually. City staff
and its investment advisory firm, Valley View Consulting, L.L.C., have reviewed the current policy
and made recommended changes to enahnce the policy and make minor language clarifications.
There has been no state legislative changes since last year's review.
These proposed changes were reviewed with the GGAF on January 9, 2013 with no modifications
suggested by the committee. The policy and proposed changes will be reviewed during workshop
at the January 22, 2013 Georgetown City Council Meeting.
A summary of the changes proposed is outlined below.
Section 1.3 Objectives
Minor wording clarification.
Section 2.1 Prudence
Minor wording clarification.
Section 4.1.6 Municipal Issuers (new section)
This section is added to allow the City to purchase obligations of the State or Texas or political
subdivisions in Texas (no out of state entities) rated "A" or better. This investment is allowable
under PFIA and would give the city an additional investment tool if the opportunity arises. We
expect that only limited investments in Texas municipal bond obligations will be available, but it will
allow a safe alternative for the City's funds.
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Attachment number 1 \nPage 2
Section 5.1 Authorized Brokers/Dealers and Investment Policy Certification
Minor wording clarification.
Section 5.5 Collateral ization
The first part of this section is enhanced to clearly give the City authority ask for additional
collateral should the financial institution fail to maintain the 102% standard.
The second section is a wording clarification to clear up duplicative language and more accurately
reflect the requirements and practices by financial institutions under the Financial Institutions
Reform, Recovery and Enforcement Act (FIRREA.) It does not change the actual requirements or
practices currently observed by the City or the financial institutions we do business with.
Attachment "A" Approved Broker/Dealer List
Morgan Keegan's merger with Raymond James that became official in 2012; therefore, a minor
update is needed.
Upcoming Legislative Changes
Neither staff nor the City's investment advisors are aware of any major legislative changes for
investments being proposed for the upcoming Texas legislative session. We do expect some
minor updates to the PFIA and the Public Funds Collateral Act to keep those current with federal
law. We will monitor any changes that occur and include them in next year's update as needed.
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Attachment number 2 \nPage 1
CITY OF GEORGETOWN, TEXAS
INVESTMENT POLICY
As amended January 22, 2013
SECTION 1: SCOPE & OBJECTIVES
1.1 SCOPE
This Investment Policy applies to all financial assets of the City of Georgetown, Texas, which
includes the City of Georgetown Economic Development Corporation and the Georgetown
Transportation Enhancement Corporation, held in all funds.
1.2 STATEMENT OF CASH MANAGEMENT PHILOSOPHY
The City 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. Public Trust. Investment Officers shall seek to act responsibly as custodians of
the public trust. Investment Officers shall avoid transactions that might impair
public confidence in the City's ability to govern effectively.
4 Yield. The City will invest idle cash in a manner that will maximize earnings to
the greatest extent possible, consistent with State and local laws and the
objectives of safety and liquidity listed above.
It is also the objective of the City 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
investments, when appropriate. It is the intent of the City to hold investments to maturity.
SECTION 2: STANDARD OF CARE
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
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In determining whether an Investment Officer has exercised prudence with respect to an
investment decision, the determination shall be made taking into consideration:
A. The investment of all funds, or funds under the City's control, over which the Officer had
responsibility rather than a consideration as to the prudence of a single investment.
B. Whether the investment decision was consistent with the written Investment Policy of the
City.
The Investment Officer, acting in accordance with written procedures and exercising due
diligence, shall not be held personally responsible for a specific investment's adverse credit risk
or market price changes, provided that these deviations are reported immediately to the City
Manager and/or the Council and that appropriate action is taken to control adverse
developments.
2.2 ETHICS & CONFLICT OF INTEREST
Investment 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. Investment Officers and
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 Chief Financial Officer, Finance Director and Controller are the City's Investment Officers.
The Chief Financial Officer is responsible for overall management of the City's investment
program and may direct the other Investment Officers in their duties. Accordingly, the
Investment Officers 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 Policy
attend the required training. The investment training shall be attended not less
than once in a two-year period that begins on the first day of the City's fiscal year
and consists of the two consecutive fiscal years after that date and receive not
less than 10 hours of instruction relating to investment responsibilities under this
Policy. The training must be sponsored by:
Texas Municipal League
Government Finance Officers Association of Texas (GFOAT)
Government Finance Officers Association of US and Canada
Government Treasurers Organization of Texas (GTOT)
University of North Texas
Texas Tech University Center for Professional Development
City of Georgetown Investment Policy Page 2
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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.
SECTION 3: INVESTMENT STRATEGIES
3.1 OPERATING FUNDS
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, their short term
nature will make material losses unlikely. Operating Fund investments will be diverse and may
include financial institution deposits, 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 to 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 investment 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 may
include financial institution deposits, 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's 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 may include financial institution
deposits, U.S. treasuries and agencies, investment pools, and money market mutual
funds.
3.4 BOND PROCEEDS (capital improvement funds)
City of Georgetown Investment Policy Page 3
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Bond proceed funds are defined as those funds received from the sales of City 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 laws governing earnings for such funds,
but may not have a weighted averaqe maturity in excess of one year, with no sinqle security
qreater 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 may include financial institution deposits, U.S.
treasuries and agencies, investment pools, and money market mutual funds.
SECTION 4: AUTHORIZED INVESTMENTS
4.1 ALLOWABLE INVESTMENTS
City funds may be invested in the following instruments:
4.1.1 Financial Institution Deposits. Certificates of Deposit and other evidences of deposit at
a financial institution that, a) has its main office or a branch office in Texas and is guaranteed or
insured by the Federal Deposit Insurance Corporation or its successor, b) is secured by
obligations in a manner and amount provided by law for deposits of the City, or c) is executed
through a depository institution or approved broker that has its main office or a branch office in
Texas that meets the requirements of the Public Funds Investment Act. All financial institution
deposits in excess of the FDIC insured amount must be collateralized as described by Section
5.5 COLLATERALIZATION.
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, (2) 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 AAAm 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. Is continuously rated no lower than AAA or at an equivalent rating by at least one
nationally recognized rating service.
4.1.5. Repurchase Agreements. Fully collateralized repurchase agreements that:
a. Have a defined termination date;
b. Are secured by cash or obligations as allowed by the Public Funds Investment
Act and this Policy;
City of Georgetown Investment Policy Page 4
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C. Require independent 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, or similar 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. Municipal Issuers. Obligations of:
a. This State and its agencies or instrumentalities; and
b. Counties, cities, and other political subdivisions of the State of Texas rated as to
investment quality by a nationally recognized investment rating firm not less than
A or its equivalent.
4.1.7. Other Investments. Other investments as approved by the City Council and not
prohibited by law.
Investment securities purchased prior to this Policy's revision, that do not meet the revised
requirements of this Policy, are not required to be liquidated. The City shall monitor each
security's status to determine whether it is in the best interest of the City to hold or liquidate the
security.
4.2 CREDIT RATING REVIEW AND EFFECT OF LOSS OF REQUIRED RATING
Not less than quarterly, the Investment Officers will obtain from a reliable source the current
credit rating for each held investment that has a PFIA-required minimum rating. Any Authorized
Investment that requires a minimum rating and does not qualify at any time during the period, is
considered to not have the minimum rating. The City shall take all prudent measures that are
consistent with this Policy to liquidate an investment that does not have the minimum rating.
4.3 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.
4.4 CASH ON HAND
Cash resources required for the immediate needs of the City and not otherwise available for
longer term investment will be placed in account(s) at the City's Depository/ Depositories. Such
account(s) will earn interest at the highest rate(s) provided in the respective depository
contract(s).
4.5 LENGTH OF INVESTMENTS
The following general constraints will apply. Maturities exceeding 36 months will require
authorization by the City Manager, with no single maturity greater than 60 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.
City of Georgetown Investment Policy Page 5
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City of Georgetown Investment Policy Page 6
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SECTION 5: SAFEKEEPING AND CUSTODY
5.1 AUTHORIZED BROKER/DEALERS and INVESTMENT POLICY CERTIFICATION
Authorized investment securities 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 Financial Industry Regulatory Authority, or other applicable self -
regulatory organization. The Investment Officers will maintain a list of broker/dealers 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 financial institution, broker/dealer, Investment
Pool, or Money Market Mutual Fund, the Investment Officers will have received from said firm a
signed Certification Form. This form will attest that the individual responsible for the City's
account with that firm has received and reviewed the City's Investment Policy and that the 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 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 Financial Industry Regulatory
Authority;
(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.
5.2 AUTHORIZED FINANCIAL INSTITUTIONS
Financial institution deposits and other evidences of deposit may be purchased at qualified City
Depositories and other financial institutions. Qualifications will be determined by the Investment
Officers. The City must have a written agreement with the Depository and other financial
institutions, and that depository and other financial institutions must meet all State Laws for
deposit of public funds. The City's main operating Depository/Depositories will be selected as
provided by law and the City's purchasing procedure.
5.3 INTERNAL CONTROLS
All investment transactions will be documented by the Investment Officers. The Investment
Officers 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.
City of Georgetown Investment Policy Page 7
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On investments, the Investment Officers will solicit competitive quotes. Where appropriate, at
least two (2) quotations will be solicited for each such investment made.
Market value of the portfolio and each investment will be monitored at least quarterly through
industry standard publications/sources for market data such as, but not limited to, The Wall
Street Journal. Market value may also be determined through the City's investment software
application, which uses industry standard publications/sources for its market data.
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.
5.5 COLLATERALIZATION
To the extent not insured by federal agencies that secure deposits, City funds (including
financial institution deposits and C.D.'s) must be collateralized or enhanced in compliance with
the Texas Public Funds Collateral Act and pertinent federal banking regulations. With the
exception of deposits secured with irrevocable letters of credit at 100% of deposit plus accrued
interest, the aggregate market value of pledged securities shall be equal to at least one hundred
two percent (102%) of the of the deposit (including accrued interest) less an amount insured by
the Federal Deposit Insurance Corporation. Should the depository fail to adequately maintain
the required collateral level, the City may increase the minimum to 110%. The City reserves the
right, in its sole discretion, to accept or reject any form of insurance or collateral ization pledged
towards depository deposits. Institutions serving as a depository will be required to sign a
Depository/Collateral Agreement with the City. The collateralized deposit portion of the
Agreement shall define the City's rights to the collateral in case of default, bankruptcy, or closing
and shall establish a perfected security interest in compliance with Federal and State
regulations, including:
• The agreement must be in writing;
• The agreement has to be executed by the Depository and the City contemporaneously
with the acquisition of the asset;
• The agreement must be approved by the Board of Directors or designated committee of
the Depository and a copy of the meeting minutes must be delivered to the City; and
• The agreement must be part of the Depository's "official record" continuously since its
execution.
Securities pledged as collateral must be retained in an independent third party bank and marked
as pledged to the City. The City will be provided the original safekeeping receipt on each
pledged security. With the exception of the Federal Reserve Bank, the City, financial institution,
and the safekeeping bank(s) will operate in accordance with a master safekeeping agreement.
The City's Investment Officers must approve in writing the release of collateral prior to its
removal from the safekeeping account in accordance with the terms of the depository
agreement.
The financial institution(s) with which the City invests and/or maintains deposits will require the
custodian to 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, CUSIP, type
and description of the security; safekeeping receipt number; par value; current market value;
maturity date; and Moody's or Standard & Poor's rating, if available.
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SECTION 6: REPORTING
6.1 QUARTERLY REPORTING
The Investment Officers 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. 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 and ending 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.
6.2 ANNUAL REPORTING
Within 90 days following the end of the fiscal year, the Investment Officers 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.
6.3 PERFORMANCE STANDARDS
In order to evaluate portfolio performance of funds subject to this Policy, the City establishes
"weighted average yield to maturity" as the standard portfolio performance measurement. The
portfolio's performance will be compared against appropriately competitive and reasonable
benchmarks, including money market mutual funds or investment pools of similar make-up and
maturities.
6.4 COMPLIANCE
The quarterly reports shall be formally reviewed and a compliance audit of management
controls and adherence to this Policy as it relates to the City's investments and investing activity
will be performed on an annual basis in conjunction with the City's annual financial audit. The
results shall be reported to the City Council.
SECTION 7: POLICY REVIEW AND AMENDMENTS
This Investment Policy will be reviewed by the City Council 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.
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CITY OF GEORGETOWN INVESTMENT POLICY
Attachment "A"
Approved Broker/Dealer List
Bank of America/Merrill Lynch
UBS Paine Webber, Inc.
Duncan Williams
Rice Financial
Raymond James - Morgan Keegan
JPMorgan Chase Securities
Coastal Securities
These broker/dealers meet the City's Investment Policy requirements.
City of Georgetown Investment Policy
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Item # A
GOVERNMENT CODE CHAPTER 2256. PUBLIC FUNDS INVESTMENT Page I of 31
GOVERNMENT CODE
CHAPTER 2256. PUBLIC FUNDS INVESTMENT
Sec. 2256.001. SHORT TITLE. This chapter may be cited as the
Public Funds Investment Act. <
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Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995.
Sec. 2256.002. DEFINITIONS. In this chapter:
(1) "Bond proceeds" means the proceeds from the sale of
bonds, notes, and other obligations issued by an entity, and reserves
and funds maintained by an entity for debt service purposes.
(2) "Book value" means the original acquisition cost of an
investment plus or minus the accrued amortization or accretion.
(3) "Funds" means public funds in the custody of a state
agency or local government that:
(A) are not required by law to be deposited in the
state treasury; and
(B) the investing entity has authority to invest.
(4) "Institution of higher education" has the meaning
assigned by Section 61.003, Education Code.
(5) "Investing entity" and "entity" mean an entity subject
to this chapter and described by Section 2256.003.
(6) "Investment pool" means an entity created under this
code to invest public funds jointly on behalf of the entities that
participate in the pool and whose investment objectives in order of
priority are:
(A) preservation and safety of principal;
(B) liquidity; and
(C) yield.
(7) "Local government" means a municipality, a county, a
school district, a district or authority created under Section 52(b)
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(1) or (2), Article III, or Section 59, Article XVI, Texas
Constitution, a fresh water supply district, a hospital district, and
any political subdivision, authority, public corporation, body
politic, or instrumentality of the State of Texas, and any nonprofit
corporation acting on behalf of any of those entities.
(8) "Market value" means the current face or par value of
an investment multiplied by the net selling price of the security as
quoted by a recognized market pricing source quoted on the valuation
date.
(9) "Pooled fund group" means an internally created fund
of an investing entity in which one or more institutional accounts of
the investing entity are invested.
(10) "Qualified representative', means a person who holds a
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position with a business organization, who is authorized to act on
behalf of the business organization, and who is one of the following:
(A) for 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;
(B) for a state or federal bank, a savings bank, or a
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;
(C) 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
(D) for an investment management firm registered
under the Investment Advisers Act of 1940 (15 U.S.C. Section 80b-1 et
seq.) or, if not subject to registration under that Act, registered
with the State Securities Board, a person who is an officer or
principal of the investment management firm.
(11) "School district" means a public school district.
(12) "Separately invested asset" means an account or fund
of a state agency or local government that is not invested in a pooled
fund group.
(13) "State agency" means an office, department,
commission, board, or other agency that is part of any branch of state
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government, an institution of higher education, and any
nonprofit corporation acting on behalf of any of those entities.
Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995;
Acts 1997, 75th Leg., ch. 1421, Sec. 1, eff. Sept. 1, 1997; Acts
1999, 76th Leg., ch. 1454, Sec. 1, eff. Sept. 1, 1999.
Sec. 2256.003. AUTHORITY TO INVEST FUNDS; ENTITIES SUBJECT TO
THIS CHAPTER. (a) Each governing body of the following entities may
purchase, sell, and invest its funds and funds under its control in
investments authorized under this subchapter in compliance with
investment policies approved by the governing body and according to
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the standard of care prescribed by Section 2256.006:
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(1) a local government;
(2) a state agency;
(3) a nonprofit corporation acting on behalf of a local
government or a state agency; or
(4) an investment pool acting on behalf of two or more
local governments, state agencies, or a combination of those entities.
(b) In the exercise of its powers under Subsection (a), the
governing body of an investing entity may contract with an investment
management firm registered under the Investment Advisers Act of 1940
(15 U.S.C. Section 80b-1 et seq.) or with the State Securities Board
to provide for the investment and management of its public funds or
other funds under its control. A contract made under authority of
this subsection may not be for a term longer than two years. A
renewal or extension of the contract must be made by the governing
body of the investing entity by order, ordinance, or resolution.
(c) This chapter does not prohibit an investing entity or
investment officer from using the entity's employees or the services
of a contractor of the entity to aid the investment officer in the
execution of the officer's duties under this chapter.
Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995;
Acts 1999, 76th Leg., ch. 1454, Sec. 2, eff. Sept. 1, 1999.
Sec. 2256.004. APPLICABILITY. (a) This subchapter does not
apply to:
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(1) a public retirement system as defined by Section
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(2) state funds invested as authorized by Section 404.024;
(3) an institution of higher education having total
endowments of at least $95 million in book value on May 1, 1995;
(4) funds invested by the Veterans' Land Board as
authorized by Chapter 161, 162, or 164, Natural Resources Code;
(5) registry funds deposited with the county or district
clerk under Chapter 117, Local Government Code; or
(6) a deferred compensation plan that qualifies under
either Section 401(k) or 457 of the Internal Revenue Code of 1986 (26
U.S.C. Section 1 et seq.), as amended.
(b) This subchapter does not apply to an investment donated to E
an investing entity for a particular purpose or under terms of use
specified by the donor.
Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995;
Acts 1997, 75th Leg., ch. 505, Sec. 24, eff. Sept. 1, 1997; Acts
1997, 75th Leg., ch. 1421, Sec. 2, eff. Sept. 1, 1997; Acts 1999,
76th Leg., ch. 62, Sec. 8.21, eff. Sept. 1, 1999; Acts 1999, 76th
Leg., ch. 1454, Sec. 3, eff. Sept. 1, 1999.
Sec. 2256.005. INVESTMENT POLICIES; INVESTMENT STRATEGIES;
INVESTMENT OFFICER. (a) The governing body of an investing entity
shall adopt by rule, order, ordinance, or resolution, as appropriate,
a written investment policy regarding the investment of its funds and
funds under its control.
(b) The investment policies must:
(1) be written;
(2) primarily emphasize safety of principal and liquidity;
(3) address investment diversification, yield, and
maturity and the quality and capability of investment management; and
(4) include:
(A) a list of the types of authorized investments in
which the investing entity's funds may be invested;
(B) the maximum allowable stated maturity of any
individual investment owned by the entity;
(C) for pooled fund groups, the maximum dollar-
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weighted average maturity allowed based on the stated
maturity date for the portfolio;
(D) methods to monitor the market price of
investments acquired with public funds;
(E) a requirement for settlement of all transactions,
except investment pool funds and mutual funds, on a delivery versus
payment basis; and
(F) procedures to monitor rating changes in
investments acquired with public funds and the liquidation of such
investments consistent with the provisions of Section 2256.021.
(c) The investment policies may provide that bids for
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certificates of deposit be solicited:
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(1) orally;
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(2) in writing;
(3) electronically; or
(4) in any combination of those methods.
(d) As an integral part of an investment policy, the governing
body shall adopt a separate written investment strategy for each of
the funds or group of funds under its control. Each investment
strategy must describe the investment objectives for the particular
fund using the following priorities in order of importance:
(1) understanding of the suitability of the investment to
the financial requirements of the entity;
(2) preservation and safety of principal;
(3) liquidity;
(4) marketability of the investment if the need arises to
liquidate the investment before maturity;
(5) diversification of the investment portfolio; and
(6) yield.
(e) The governing body of an investing entity shall review its
investment policy and investment strategies not less than annually.
The governing body shall adopt a written instrument by rule, order,
ordinance, or resolution stating that it has reviewed the investment
policy and investment strategies and that the written instrument so
adopted shall record any changes made to either the investment policy
or investment strategies.
(f) Each investing entity shall designate, by rule, order,
ordinance, or resolution, as appropriate, one or more officers or
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employees of the state agency, local government, or investment
pool as investment officer to be responsible for the investment of its
funds consistent with the investment policy adopted by the entity. If
the governing body of an investing entity has contracted with another
investing entity to invest its funds, the investment officer of the
other investing entity is considered to be the investment officer of
the first investing entity for purposes of this chapter. Authority
granted to a person to invest an entity's funds is effective until
rescinded by the investing entity, until the expiration of the
officer's term or the termination of the person's employment by the
investing entity, or if an investment management firm, until the
expiration of the contract with the investing entity. In the
administration of the duties of an investment officer, the person
designated as investment officer shall exercise the judgment and care,
under prevailing circumstances, that a prudent person would exercise
in the management of the person's own affairs, but the governing body
of the investing entity retains ultimate responsibility as fiduciaries
of the assets of the entity. Unless authorized by law, a person may
not deposit, withdraw, transfer, or manage in any other manner the
funds of the investing entity.
(g) Subsection (f) does not apply to a state agency, local
government, or investment pool for which an officer of the entity is
assigned by law the function of investing its funds.
Text of subsec. (h) as amended by Acts 1997, 75th Leg., ch. 685, Sec. 1
(h) An officer or employee of a commission created under
Chapter 391, Local Government Code, is ineligible to be an investment
officer for the commission under Subsection (f) if the officer or
employee is an investment officer designated under Subsection (f) for
another local government.
Text of subsec. (h) as amended by Acts 1997, 75th Leg., ch. 1421, Sec.
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(h) An officer or employee of a commission created under
Chapter 391, Local Government Code, is ineligible to be designated as
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an investment officer under Subsection (f) for any investing
entity other than for that commission.
(i) An investment officer of an entity who has a personal
business relationship with a business organization offering to engage
in an investment transaction with the entity shall file a statement
disclosing that personal business interest. An investment officer who
is related within the second degree by affinity or consanguinity, as
determined under Chapter 573, to an individual seeking to sell an
investment to the investment officer's entity shall file a statement
disclosing that relationship. A statement required under this
subsection must be filed with the Texas Ethics Commission and the
governing body of the entity. For purposes of this subsection, an
investment officer has a personal business relationship with a
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business organization if:
(1) the investment officer owns 10 percent or more of the
voting stock or shares of the business organization or owns $5,000 or
more of the fair market value of the business organization;
(2) funds received by the investment officer from the
business organization exceed 10 percent of the investment officer's
gross income for the previous year; or
(3) the investment officer has acquired from the business
organization during the previous year investments with a book value of
$2,500 or more for the personal account of the investment officer.
(j) The governing body of an investing entity may specify in
its investment policy that any investment authorized by this chapter
is not suitable.
(k) A written copy of the investment policy shall be presented
to any person offering to engage in an investment transaction with an
investing entity or to an investment management firm under contract
with an investing entity to invest or manage the entity's investment
portfolio. For purposes of this subsection, a business organization
includes investment pools and an investment management firm under
contract with an investing entity to invest or manage the entity's
investment portfolio. Nothing in this subsection relieves the
investing entity of the responsibility for monitoring the investments
made by the investing entity to determine that they are in compliance
with the investment policy. The qualified representative of the
business organization offering to engage in an investment transaction
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with an investing entity shall execute a written instrument in a
form acceptable to the investing entity and the business organization
substantially to the effect that the business organization has:
(1) received and reviewed the investment policy of the
entity; and
(2) acknowledged that the business organization has
implemented reasonable procedures and controls in an effort to
preclude investment transactions conducted between the entity and the
organization that are not authorized by the entity's investment
policy, except to the extent that this authorization is dependent on
an analysis of the makeup of the entity's entire portfolio or requires
an interpretation of subjective investment standards.
(1) The investment officer of an entity may not acquire or
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otherwise obtain any authorized investment described in the investment
policy of the investing entity from a person who has not delivered to
the entity the instrument required by Subsection (k).
(m) An investing entity other than a state agency, in
conjunction with its annual financial audit, shall perform a
compliance audit of management controls on investments and adherence
to the entity's established investment policies.
(n) Except as provided by Subsection (o), at least once every
two years a state agency shall arrange for a compliance audit of
management controls on investments and adherence to the agency's
established investment policies. The compliance audit shall be
performed by the agency's internal auditor or by a private auditor
employed in the manner provided by Section 321.020. Not later than
January 1 of each even -numbered year a state agency shall report the
results of the most recent audit performed under this subsection to
the state auditor. Subject to a risk assessment and to the
legislative audit committee's approval of including a review by the
state auditor in the audit plan under Section 321.013, the state
auditor may review information provided under this section. If review
by the state auditor is approved by the legislative audit committee,
the state auditor may, based on its review, require a state agency to
also report to the state auditor other information the state auditor
determines necessary to assess compliance with laws and policies
applicable to state agency investments. A report under this
subsection shall be prepared in a manner the state auditor prescribes.
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(o) The audit requirements of Subsection (n) do not apply to
assets of a state agency that are invested by the comptroller under
Section 404.024.
Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995;
Acts 1997, 75th Leg., ch. 685, Sec. 1, eff. Sept. 1, 1997; Acts 1997,
75th Leg., ch. 1421, Sec. 3, eff. Sept. 1, 1997; Acts 1999, 76th
Leg., ch. 1454, Sec. 4, eff. Sept. 1, 1999; Acts 2003, 78th Leg., ch.
785, Sec. 41, eff. Sept. 1, 2003.
Amended by:
Acts 2011, 82nd Leg., R.S., Ch. 1004, Sec. 1, eff. June 17, 2011.
Sec. 2256.006. STANDARD OF CARE. (a) Investments shall be
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made with judgment and care, under prevailing circumstances, that a
person of prudence, discretion, and intelligence would exercise in the
management of the person's own affairs, not for speculation, but for
investment, considering the probable safety of capital and the
probable income to be derived. Investment of funds shall be governed
by the following investment objectives, in order of priority:
(1) preservation and safety of principal;
(2) liquidity; and
(3) yield.
(b) In determining whether an investment officer has exercised
prudence with respect to an investment decision, the determination
shall be made taking into consideration:
(1) the investment of all funds, or funds under the
entity's control, over which the officer had responsibility rather
than a consideration as to the prudence of a single investment; and
(2) whether the investment decision was consistent with
the written investment policy of the entity.
Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995.
Sec. 2256.007. INVESTMENT TRAINING; STATE AGENCY BOARD MEMBERS
AND OFFICERS. (a) Each member of the governing board of a state
agency and its investment officer shall attend at least one training
session relating to the person's responsibilities under this chapter
within six months after taking office or assuming duties.
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(b) The Texas Higher Education Coordinating Board shall provide
the training under this section.
(c) Training under this section must include education in
investment controls, security risks, strategy risks, market risks,
diversification of investment portfolio, and compliance with this
chapter.
(d) An investment officer shall attend a training session not
less than once each state fiscal biennium and may receive training
from any independent source approved by the governing body of the
state agency. The investment officer shall prepare a report on this
subchapter and deliver the report to the governing body of the state
agency not later than the 180th day after the last day of each regular
session of the legislature. E
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Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995;
Acts 1997, 75th Leg., ch. 73, Sec. 1, eff. May 9, 1997; Acts 1997,
75th Leg., ch. 1421, Sec. 4, eff. Sept. 1, 1997; Acts 1999, 76th
Leg., ch. 1454, Sec. 5, eff. Sept. 1, 1999.
Amended by:
Acts 2011, 82nd Leg., R.S., Ch. _1004, Sec. 2, eff. June 17, 2011.
Sec. 2256.008. INVESTMENT TRAINING; LOCAL GOVERNMENTS.
(a) Except as provided by Subsections (b) and (e), the treasurer, the
chief financial officer if the treasurer is not the chief financial
officer, and the investment officer of a local government shall:
(1) attend at least one training session from an
independent source approved by the governing body of the local
government or a designated investment committee advising the
investment officer as provided for in the investment policy of the
local government and containing at least 10 hours of instruction
relating to the treasurer's or officer's responsibilities under this
subchapter within 12 months after taking office or assuming
duties; and
(2) except as provided by Subsections (b) and (e), attend
an investment training session not less than once in a two-year period
that begins on the first day of that local government's fiscal year
and consists of the two consecutive fiscal years after that date, and
receive not less than 10 hours of instruction relating to investment
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responsibilities under this subchapter from an independent
source approved by the governing body of the local government or a
designated investment committee advising the investment officer as
provided for in the investment policy of the local government.
(b) An investing entity created under authority of Section 52
(b), Article III, or Section 59, Article XVI, Texas Constitution, that
has contracted with an investment management firm under Section
2256.003(b) and has fewer than five full-time employees or an
investing entity that has contracted with another investing entity to
invest the entity's funds may satisfy the training requirement
provided by Subsection (a)(2) by having an officer of the governing
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body attend four hours of appropriate instruction in a two-year period
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that begins on the first day of that local government's fiscal year
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and consists of the two consecutive fiscal years after that date. The
treasurer or chief financial officer of an investing entity created
under authority of Section 52(b), Article III, or Section 59, Article
XVI, Texas Constitution, and that has fewer than five full-time
employees is not required to attend training required by this section
unless the person is also the investment officer of the entity.
(c) Training under this section must include education in
investment controls, security risks, strategy risks, market risks,
diversification of investment portfolio, and compliance with this
chapter.
(d) Not later than December 31 each year, each individual,
association, business, organization, governmental entity, or other
person that provides training under this section shall report to the
comptroller a list of the governmental entities for which the person
provided required training under this section during that calendar
year. An individual's reporting requirements under this subsection
are satisfied by a report of the individual's employer or the
sponsoring or organizing entity of a training program or seminar.
(e) This section does not apply to a district governed by
Chapter 36 or 49, Water Code.
Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995;
Acts 1997, 75th Leg., ch. 1421, Sec. 5, eff. Sept. 1, 1997; Acts
1999, 76th Leg., ch. 1454, Sec. 6, eff. Sept. 1, 1999; Acts 2001,
77th Leg., ch. 69, Sec. 4, eff. May 14, 2001.
Amended by:
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Acts 2011, 82nd Leg., R.S., Ch. 1004, Sec. 3, eff. June 17, 2011.
Sec. 2256.009. AUTHORIZED INVESTMENTS: OBLIGATIONS OF, OR
GUARANTEED BY GOVERNMENTAL ENTITIES. (a) Except as provided by
Subsection (b), the following are authorized investments under this
subchapter:
(1) obligations, including letters of credit, of the
United States or its agencies and instrumentalities;
(2) direct obligations of this state or its agencies and
instrumentalities;
(3) collateralized mortgage obligations directly issued by
a federal agency or instrumentality of the United States, the
underlying security for which is guaranteed by an agency or
instrumentality of the United States;
(4) other obligations, the principal and interest of which
are unconditionally guaranteed or insured by, or backed by the full
faith and credit of, this state or the United States or their
respective agencies and instrumentalities, including obligations that
are fully guaranteed or insured by the Federal Deposit Insurance
Corporation or by the explicit full faith and credit of the United
States;
(5) obligations of states, agencies, counties, cities, and
other political subdivisions of any state rated as to investment
quality by a nationally recognized investment rating firm not less
than A or its equivalent; and
(6) bonds issued, assumed, or guaranteed by the State of
Israel.
(b) The following are not authorized investments under this
section:
(1) obligations whose payment represents the coupon
payments on the outstanding principal balance of the underlying
mortgage -backed security collateral and pays no principal;
(2) obligations whose payment represents the principal
stream of cash flow from the underlying mortgage -backed security
collateral and bears no interest;
(3) collateralized mortgage obligations that have a stated
final maturity date of greater than 10 years; and
(4) collateralized mortgage obligations the interest rate
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of which is determined by an index that adjusts opposite to
the changes in a market index.
Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995;
Acts 1999, 76th Leg., ch. 1454, Sec. 7, eff. Sept. 1, 1999; Acts
2001, 77th Leg., ch. 558, Sec. 1, eff. Sept. 1, 2001.
Amended by:
Acts 2011, 82nd Leg., R.S., Ch. 1004, Sec. 4, eff. June 17, 2011.
Sec. 2256.010. AUTHORIZED INVESTMENTS: CERTIFICATES OF DEPOSIT
AND SHARE CERTIFICATES. (a) A certificate of deposit or share
certificate is an authorized investment under this subchapter if the <
certificate is issued by a depository institution that has its main E
office or a branch office in this state and is:
(1) guaranteed or insured by the Federal Deposit Insurance
Corporation or its successor or the National Credit Union Share
Insurance Fund or its successor;
(2) secured by obligations that are described by Section
2256.009(a), including mortgage backed securities directly issued by a
federal agency or instrumentality that have a market value of not less
than the principal amount of the certificates, but excluding those
mortgage backed securities of the nature described by Section 2256.009
(b); or
(3) secured in any other manner and amount provided by law
for deposits of the investing entity.
(b) In addition to the authority to invest funds in
certificates of deposit under Subsection (a), an investment in
certificates of deposit made in accordance with the following
conditions is an authorized investment under this subchapter:
(1) the funds are invested by an investing entity through:
(A) a broker that has its main office or a branch
office in this state and is selected from a list adopted by the
investing entity as required by Section 2256.025; or
(B) a depository institution that has its main office
or a branch office in this state and that is selected by the investing
entity;
(2) the broker or the depository institution selected by
the investing entity under Subdivision (1) arranges for the deposit of
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the funds in certificates of deposit in one or more
federally insured depository institutions, wherever located, for the
account of the investing entity;
(3) the full amount of the principal and accrued interest
of each of the certificates of deposit is insured by the United States
or an instrumentality of the United States; and
(4) the investing entity appoints the depository
institution selected by the investing entity under Subdivision (1), an
entity described by Section 2257.041(d), or a clearing broker -dealer
registered with the Securities and Exchange Commission and operating
pursuant to Securities and Exchange Commission Rule 15c3-3 (17 C.F.R.
Section 240.15c3-3) as custodian for the investing entity with respect
to the certificates of deposit issued for the account of the investing E
entity.
Amended by Acts 1995, 74th Leg., ch. 32, Sec. 1, eff. April 28, 1995;
Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995; Acts 1997,
75th Leg., ch. 1421, Sec. 6, eff. Sept. 1, 1997.
Amended by:
Acts 2005, 79th Leg., Ch. 128, Sec. 1, eff. September 1, 2005.
Acts 2011, 82nd Leg., R.S., Ch. 1004, Sec. 5, eff. June 17, 2011.
Sec. 2256.011. AUTHORIZED INVESTMENTS: REPURCHASE AGREEMENTS.
(a) A fully collateralized repurchase agreement is an authorized
investment under this subchapter if the repurchase agreement:
(1) has a defined termination date;
(2) is secured by a combination of cash and obligations
described by Section 2256.009(a)(1); and
(3) requires the securities being purchased by the entity
or cash held by the entity to be pledged to the entity, held in the
entity's name, and deposited at the time the investment is made with
the entity or with a third party selected and approved by the entity;
and
(4) is placed through a primary government securities
dealer, as defined by the Federal Reserve, or a financial institution
doing business in this state.
(b) In this section, "repurchase agreement" means a
simultaneous agreement to buy, hold for a specified time, and sell
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back at a future date obligations described by Section 2256.009
(a)(1), at a market value at the time the funds are disbursed of not
less than the principal amount of the funds disbursed. The term
includes a direct security repurchase agreement and a reverse security
repurchase agreement.
(c) Notwithstanding any other law, the term of any reverse
security repurchase agreement may not exceed 90 days after the date
the reverse security repurchase agreement is delivered.
(d) Money received by an entity under the terms of a reverse
security repurchase agreement shall be used to acquire additional
authorized investments, but the term of the authorized investments
acquired must mature not later than the expiration date stated in the
reverse security repurchase agreement. E
Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995.
Amended by:
Acts 2011, 82nd Leg., R.S., Ch. 1004, Sec. 6, eff. June 17, 2011.
Sec. 2256.0115. AUTHORIZED INVESTMENTS: SECURITIES LENDING
PROGRAM. (a) A securities lending program is an authorized
investment under this subchapter if it meets the conditions provided
by this section.
(b) To qualify as an authorized investment under this
subchapter:
(1) the value of securities loaned under the program must
be not less than 100 percent collateralized, including accrued income;
(2) a loan made under the program must allow for
termination at any time;
(3) a loan made under the program must be secured by:
(A) pledged securities described by Section 2256.009;
(B) pledged irrevocable letters of credit issued by a
bank that is:
(i) organized and existing under the laws of the
United States or any other state; and
(ii) continuously rated by at least one
nationally recognized investment rating firm at not less than A or its
equivalent; or
(C) cash invested in accordance with Section:
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012100101105F I 11
(i) 2256.009;
(ii) 2256.013;
(iii) 2256.014; or
(iv) 2256.016;
(4) the
terms of a loan made under the program must
require that the securities
being held as collateral be:
(A)
pledged to the investing entity;
(B)
held in the investing entity's name; and
(C)
deposited at the time the investment is
made with
the entity or with
a third party selected by or approved by
the
investing entity;
(5) a loan made under the program must be placed
through:
(A)
a primary government securities dealer,
as
E
(D
defined by 5 C.F.R.
Section 6801.102(f), as that regulation
existed on
September 1, 2003;
or
(3)
a financial institution doing business
in this
state; and
(6) an agreement to lend securities that is executed under
this section must have a term of one year or less.
Added by Acts 2003, 78th Leg., ch. 1227, Sec. 1, eff. Sept. 1, 2003.
Sec. 2256.012. AUTHORIZED INVESTMENTS: BANKER'S ACCEPTANCES.
A bankers' acceptance is an authorized investment under this
subchapter if the bankers, acceptance:
(1) has a stated maturity of 270 days or fewer from the
date of its issuance;
(2) will be, in accordance with its terms, liquidated in
full at maturity;
(3) is eligible for collateral for borrowing from a
Federal Reserve Bank; and
(4) is accepted by a bank organized and existing under the
laws of the United States or any state, if the short-term obligations
of the bank, or of a bank holding company of which the bank is the
largest subsidiary, are rated not less than A-1 or P-1 or an
equivalent rating by at least one nationally recognized credit rating
agency.
Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995.
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K H,
Sec. 2256.013. AUTHORIZED INVESTMENTS: COMMERCIAL PAPER.
Commercial paper is an authorized investment under this subchapter if
the commercial paper:
(1) has a stated maturity of 270 days or fewer from the
date of its issuance; and
(2) is rated not less than A-1 or P-1 or an equivalent
rating by at least:
(A) two nationally recognized credit rating
agencies; or
(B) one nationally recognized credit rating agency <
and is fully secured by an irrevocable letter of credit issued by a 4t
bank organized and existing under the laws of the United States or any E 0
state.
Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995.
Sec. 2256.014. AUTHORIZED INVESTMENTS: MUTUAL FUNDS. (a) A
no-load money market mutual fund is an authorized investment under
this subchapter if the mutual fund:
(1) is registered with and regulated by the Securities and
Exchange Commission;
(2) provides the investing entity with a prospectus and
other information required by the Securities Exchange Act of 1934 (15
U.S.C. Section 78a et seq.) or the Investment Company Act of 1940 (15
U.S.C. Section 80a-1 et seq.);
(3) has a dollar -weighted average stated maturity of 90
days or fewer; and
(4) includes in its investment objectives the maintenance
of a stable net asset value of $1 for each share.
(b) In addition to a no-load money market mutual fund permitted
as an authorized investment in Subsection (a), a no-load mutual fund
is an authorized investment under this subchapter if the mutual fund:
(1) is registered with the Securities and Exchange
Commission;
(2) has an average weighted maturity of less than two
years;
(3) is invested exclusively in obligations approved by
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riliqlaill'ini pacansimilliF in inill I iii I
I IN I
this subchapter;
(4) is continuously rated as to investment quality by at
least one nationally recognized investment rating firm of not less
than AAA or its equivalent; and
(5) conforms to the requirements set forth in Sections
2256.016(b) and (c) relating to the eligibility of investment pools to
receive and invest funds of investing entities.
(c) An entity is not authorized by this section to:
(1) invest in the aggregate more than 15 percent of its
monthly average fund balance, excluding bond proceeds and reserves and
other funds held for debt service, in mutual funds described in
Subsection (b);
(2) invest any portion of bond proceeds, reserves and
E
funds held for debt service, in mutual funds described in Subsection
(b); or
(3) invest its funds or funds under its control, including
bond proceeds and reserves and other funds held for debt service, in
any one mutual fund described in Subsection (a) or (b) in an amount
that exceeds 10 percent of the total assets of the mutual fund.
Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995;
Acts 1997, 75th Leg., ch. 1421, Sec. 7, eff. Sept. 1, 1997; Acts
1999, 76th Leg., ch. 1454, Sec. 8, eff. Sept. 1, 1999.
Sec. 2256.015. AUTHORIZED INVESTMENTS: GUARANTEED INVESTMENT
CONTRACTS. (a) A guaranteed investment contract is an authorized
investment for bond proceeds under this subchapter if the guaranteed
investment contract:
(1) has a defined termination date;
(2) is secured by obligations described by Section 2256.009
(a)(1), excluding those obligations described by Section 2256.009(b),
in an amount at least equal to the amount of bond proceeds invested
under the contract; and
(3) is pledged to the entity and deposited with the entity
or with a third party selected and approved by the entity.
(b) Bond proceeds, other than bond proceeds representing
reserves and funds maintained for debt service purposes, may not be
invested under this subchapter in a guaranteed investment contract
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with a term of longer than five years from the date of issuance
of the bonds.
(c) To be eligible as an authorized investment:
(1) the governing body of the entity must specifically
authorize guaranteed investment contracts as an eligible investment in
the order, ordinance, or resolution authorizing the issuance of bonds;
(2) the entity must receive bids from at least three
separate providers with no material financial interest in the bonds
from which proceeds were received;
(3) the entity must purchase the highest yielding
guaranteed investment contract for which a qualifying bid is received;
(4) the price of the guaranteed investment contract must
take into account the reasonably expected drawdown schedule for the
E
bond proceeds to be invested; and
(5) the provider must certify the administrative costs
reasonably expected to be paid to third parties in connection with the
guaranteed investment contract.
Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995;
Acts 1997, 75th Leg., ch. 1421, Sec. 8, eff. Sept. 1, 1997; Acts
1999, 76th Leg., ch. 1454, Sec. 9, 10, eff. Sept. 1, 1999.
Sec. 2256.016. AUTHORIZED INVESTMENTS: INVESTMENT POOLS.
(a) An entity may invest its funds and funds under its control
through an eligible investment pool if the governing body of the
entity by rule, order, ordinance, or resolution, as appropriate,
authorizes investment in the particular pool. An investment pool
shall invest the funds it receives from entities in authorized
investments permitted by this subchapter. An investment pool may
invest its funds in money market mutual funds to the extent permitted
by and consistent with this subchapter and the investment policies and
objectives adopted by the investment pool.
(b) To be eligible to receive funds from and invest funds on
behalf of an entity under this chapter, an investment pool must
furnish to the investment officer or other authorized representative
of the entity an offering circular or other similar disclosure
instrument that contains, at a minimum, the following information:
(1) the types of investments in which money is allowed to
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11 F
be invested;
(2) the maximum average dollar -weighted maturity allowed,
based on the stated maturity date, of the pool;
(3) the maximum stated maturity date any investment
security within the portfolio has;
(4) the objectives of the pool;
(5) the size of the pool;
(6) the names of the members of the advisory board of the
pool and the dates their terms expire;
(7) the custodian bank that will safekeep the pool's
assets;
(8) whether the intent of the
pool is to maintain a net
asset value
of one dollar and the risk of
market price fluctuation;
E
(9) whether the only source of
payment is the assets of
the pool at
market value or whether there
is a secondary source of
payment, such
as insurance or guarantees,
and a description of the
secondary source
of payment;
(10) the name and address of the
independent auditor of
the pool;
(11) the requirements to be satisfied for an entity to
deposit funds in and withdraw funds from the pool and any deadlines or
other operating policies required for the entity to invest funds in
and withdraw funds from the pool; and
(12) the performance history of the pool, including yield,
average dollar -weighted maturities, and expense ratios.
(c) To maintain eligibility to receive funds from and invest
funds on behalf of an entity under this chapter, an investment pool
must furnish to the investment officer or other authorized
representative of the entity:
(1) investment transaction confirmations; and
(2) a monthly report that contains, at a minimum, the
following information:
(A) the types and percentage breakdown of securities
in which the pool is invested;
(B) the current average dollar -weighted maturity,
based on the stated maturity date, of the pool;
(C) the current percentage of the pool's portfolio in
investments that have stated maturities of more than one year;
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1 '111 1111, 111� 1,111 1 1111111111 1 is q Mill -1 W
1-15:11"I"MI WIMMI), 10MON TIM
(D) the book value versus the market value of the
pool's portfolio, using amortized cost valuation;
(E) the size of the pool;
(F) the number of participants in the pool;
(G) the custodian bank that is safekeeping the assets
of the pool;
(H) a listing of daily transaction activity of the
entity participating in the pool;
(I) the yield and expense ratio of the pool,
including a statement regarding how yield is calculated;
(J) the portfolio managers of the pool; and
(K) any changes or addenda to the offering circular.
(d) An entity by contract may delegate to an investment pool
E
the authority to hold legal title as custodian of investments
purchased with its local funds.
(e) In this section, "yield" shall be calculated in accordance
with regulations governing the registration of open-end management
investment companies under the Investment Company Act of 1940, as
promulgated from time to time by the federal Securities and Exchange
Commission.
(f) To be eligible to receive funds from and invest funds on
behalf of an entity under this chapter, a public funds investment pool
created to function as a money market mutual fund must mark its
portfolio to market daily, and, to the extent reasonably possible,
stabilize at a $1 net asset value. If the ratio of the market value
of the portfolio divided by the book value of the portfolio is less
than 0.995 or greater than 1.005, portfolio holdings shall be sold as
necessary to maintain the ratio between 0.995 and 1.005. In addition
to the requirements of its investment policy and any other forms of
reporting, a public funds investment pool created to function as a
money market mutual fund shall report yield to its investors in
accordance with regulations of the federal Securities and Exchange
Commission applicable to reporting by money market funds.
(g) To be eligible to receive funds from and invest funds on
behalf of an entity under this chapter, a public funds investment pool
must have an advisory board composed:
(1) equally of participants in the pool and other persons
who do not have a business relationship with the pool and are
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IN lill�wl� I ii - F, 1, 1 JIFIJ IS
qualified to advise the pool, for a public funds investment
pool created under Chapter 791 and managed by a state agency; or
(2) of participants in the pool and other persons who do
not have a business relationship with the pool and are qualified to
advise the pool, for other investment pools.
(h) To maintain eligibility to receive funds from and invest
funds on behalf of an entity under this chapter, an investment pool
must be continuously rated no lower than AAA or AAA-m or at an
equivalent rating by at least one nationally recognized rating service.
(i) If the investment pool operates an Internet website, the
information in a disclosure instrument or report described in
<
Subsections (b), (c)(2), and (f) must be posted on the website.
4t
(j) To maintain eligibility to receive funds from and invest
E
funds on behalf of an entity under this chapter, an investment pool
must make available to the entity an annual audited financial
statement of the investment pool in which the entity has funds
invested.
(k) If an investment pool offers fee breakpoints based on fund
balances invested, the investment pool in advertising investment rates
must include either all levels of return based on the breakpoints
provided or state the lowest possible level of return based on the
smallest level of funds invested.
Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995;
Acts 1997, 75th Leg., ch. 1421, Sec. 9, eff. Sept. 1, 1997.
Amended by:
Acts 2011, 82nd Leg., R.S., Ch. 1004, Sec. 7, eff. June 17, 2011.
Sec. 2256.017. EXISTING INVESTMENTS. An entity is not required
to liquidate investments that were authorized investments at the time
of purchase.
Added by Acts 1995, 74th Leg., ch. 76, Sec. 5.46(a), eff. Sept. 1,
1995; Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995.
Amended by Acts 1997, 75th Leg., ch. 1421, Sec. 10, eff. Sept. 1, 1997.
Sec. 2256.019. RATING OF CERTAIN INVESTMENT POOLS. A public
funds investment pool must be continuously rated no lower than AAA or
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KNOWN Iiiii III i:ll!i Ii 11 MEMO 11
AAA-m or at an equivalent rating by at least one nationally
recognized rating service.
Added by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995.
Amended by Acts 1997, 75th Leg., ch. 1421, Sec. 11, eff. Sept. 1, 1997.
Amended by:
Acts 2011, 82nd Leg., R.S., Ch. 1004, Sec. 8, eff. June 17, 2011.
Sec. 2256.020. AUTHORIZED INVESTMENTS: INSTITUTIONS OF HIGHER
EDUCATION. In addition to the authorized investments permitted by
this subchapter, an institution of higher education may purchase,
sell, and invest its funds and funds under its control in the
<
following:
E
(1) cash management and fixed income funds sponsored by
organizations exempt from federal income taxation under Section 501
(f), Internal Revenue Code of 1986 (26 U.S.C. Section 501(f));
(2) negotiable certificates of deposit issued by a bank
that has a certificate of deposit rating of at least 1 or the
equivalent by a nationally recognized credit rating agency or that is
associated with a holding company having a commercial paper rating of
at least A-1, P-1, or the equivalent by a nationally recognized credit
rating agency; and
(3) corporate bonds, debentures, or similar debt
obligations rated by a nationally recognized investment rating firm in
one of the two highest long-term rating categories, without regard to
gradations within those categories.
Added by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995.
Sec. 2256.0201. AUTHORIZED INVESTMENTS; MUNICIPAL UTILITY.
(a) A municipality that owns a municipal electric utility that is
engaged in the distribution and sale of electric energy or natural gas
to the public may enter into a hedging contract and related security
and insurance agreements in relation to fuel oil, natural gas, coal,
nuclear fuel, and electric energy to protect against loss due to price
fluctuations. A hedging transaction must comply with the regulations
of the Commodity Futures Trading Commission and the Securities and
Exchange Commission. If there is a conflict between the municipal
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WIF11111101 gi -,&, 6-mirl: IIIIIIrl 11 IrIIIIIIIII; IIIIISI 1111 1: 111 111 1
charter of the municipality and this chapter, this chapter
prevails.
(b) A payment by a municipally owned electric or gas utility
under a hedging contract or related agreement in relation to fuel
supplies or fuel reserves is a fuel expense, and the utility may
credit any amounts it receives under the contract or agreement against
fuel expenses.
(c) The governing body of a municipally owned electric or gas
utility or the body vested with power to manage and operate the
municipally owned electric or gas utility may set policy regarding
hedging transactions.
(d) In this section, "hedging" means the buying and selling of
fuel oil, natural gas, coal, nuclear fuel, and electric energy futures
or options or similar contracts on those commodities and related
transportation costs as a protection against loss due to price
fluctuation.
Added by Acts 1999, 76th Leg., ch
Amended by:
Acts 2007, 80th Leg., R.S.,
405, Sec. 48, eff. Sept. 1, 1999.
Ch. 7, Sec. 1, eff. April 13, 2007.
Sec. 2256.0202. AUTHORIZED INVESTMENTS: MUNICIPAL FUNDS FROM
MANAGEMENT AND DEVELOPMENT OF MINERAL RIGHTS. (a) In addition to
other investments authorized under this subchapter, a municipality may
invest funds received by the municipality from a lease or contract for
the management and development of land owned by the municipality and
leased for oil, gas, or other mineral development in any investment
authorized to be made by a trustee under Subtitle B, Title 9, Property
Code (Texas Trust Code).
(b) Funds invested by a municipality under this section shall
be segregated and accounted for separately from other funds of the
municipality.
Added by Acts 2009, 81st Leg., R.S., Ch. 1371, Sec. 1, eff. September
1, 2009.
Sec. 2256.0203. AUTHORIZED INVESTMENTS: PORTS AND NAVIGATION
DISTRICTS. (a) In this section, "district" means a navigation district
E
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R� iq&� I'' , 1� 111-10101111 111 WHOM% mff!��
organized under Section 52, Article III, or Section 59, Article
XVI, Texas Constitution.
(b) In addition to the authorized investments permitted by this
subchapter, a port or district may purchase, sell, and invest its
funds and funds under its control in negotiable certificates of
deposit issued by a bank that has a certificate of deposit rating of
at least 1 or the equivalent by a nationally recognized credit rating
agency or that is associated with a holding company having a
commercial paper rating of at least A-1, P-1, or the equivalent by a
nationally recognized credit rating agency.
Added by Acts 2011, 82nd Leg., R.S., Ch. 804, Sec. 1, eff. September <
4t
1, 2011. E
Sec. 2256.0204. AUTHORIZED INVESTMENTS: INDEPENDENT SCHOOL
DISTRICTS. (a) In this section, "corporate bond" means a senior
secured debt obligation issued by a domestic business entity and rated
not lower than "AA-1' or the equivalent by a nationally recognized
investment rating firm. The term does not include a debt obligation
that:
(1) on conversion, would result in the holder becoming a
stockholder or shareholder in the entity, or any affiliate or
subsidiary of the entity, that issued the debt obligation; or
(2) is an unsecured debt obligation.
(b) This section applies only to an independent school district
that qualifies as an issuer as defined by Section 1371.001.
(c) In addition to authorized investments permitted by this
subchapter, an independent school district subject to this section may
purchase, sell, and invest its funds and funds under its control in
corporate bonds that, at the time of purchase, are rated by a
nationally recognized investment rating firm "AA-" or the equivalent
and have a stated final maturity that is not later than the third
anniversary of the date the corporate bonds were purchased.
(d) An independent school district subject to this section is
not authorized by this section to:
(1) invest in the aggregate more than 15 percent of its
monthly average fund balance, excluding bond proceeds, reserves, and
other funds held for the payment of debt service, in corporate bonds;
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or
(2) invest more than 25 percent of the funds invested in
corporate bonds in any one domestic business entity, including
subsidiaries and affiliates of the entity.
(e) An independent school district subject to this section may
purchase, sell, and invest its funds and funds under its control in
corporate bonds if the governing body of the district:
(1) amends its investment policy to authorize corporate
bonds as an eligible investment;
(2) adopts procedures to provide for:
(A) monitoring rating changes in corporate bonds
<
acquired with public funds; and
4t
(B) liquidating the investment in corporate bonds; and
E
(3) identifies the funds eligible to be invested in
corporate bonds.
(f) The investment officer of an independent school district,
acting on behalf of the district, shall sell corporate bonds in which
the district has invested its funds not later than the seventh day
after the date a nationally recognized investment rating firm:
(1) issues a release that places the corporate bonds or
the domestic business entity that issued the corporate bonds on
negative credit watch or the equivalent, if the corporate bonds are
rated "AA-'1 or the equivalent at the time the release is issued; or
(2) changes the rating on the corporate bonds to a rating
lower than "AA-'1 or the equivalent.
(g) Corporate bonds are not an eligible investment for a public
funds investment pool.
Added by Acts 2011, 82nd Leg., R.S., Ch. 1347, Sec. 1, eff. June 17,
2011.
Sec. 2256.0205. AUTHORIZED INVESTMENTS; DECOMMISSIONING TRUST.
(a) In this section:
(1) "Decommissioning trust" means a trust created to
provide the Nuclear Regulatory Commission assurance that funds will be
available for decommissioning purposes as required under 10 C.F.R.
Part 50 or other similar regulation.
(2) "Funds" includes any money held in a decommissioning
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trust regardless of whether the money is considered to be
public funds under this subchapter.
(b) In addition to other investments authorized under this
subchapter® a municipality that owns a municipal electric utility that
is engaged in the distribution and sale of electric energy or natural
gas to the public may invest funds held in a decommissioning trust in
any investment authorized by Subtitle B, Title 9, Property Code.
Added by Acts 2005, 79th Leg., Ch. 121, Sec. 1, eff. September 1, 2005.
Sec. 2256.021. EFFECT OF LOSS OF REQUIRED RATING. An
investment that requires a minimum rating under this subchapter does <
4t
not qualify as an authorized investment during the period the E
a)
investment does not have the minimum rating. An entity shall take all
prudent measures that are consistent with its investment policy to
liquidate an investment that does not have the minimum rating.
Added by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995.
Sec. 2256.022. EXPANSION OF INVESTMENT AUTHORITY. Expansion of
investment authority granted by this chapter shall require a risk
assessment by the state auditor or performed at the direction of the
state auditor, subject to the legislative audit committee's approval
of including the review in the audit plan under Section 321.013.
Added by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995.
Amended by Acts 2003, 78th Leg., ch. 785, Sec. 42, eff. Sept. 1, 2003.
Sec. 2256.023. INTERNAL MANAGEMENT REPORTS. (a) Not less than
quarterly, the investment officer shall prepare and submit to the
governing body of the entity a written report of investment
transactions for all funds covered by this chapter for the preceding
reporting period.
(b) The report must:
(1) describe in detail the investment position of the
entity on the date of the report;
(2) be prepared jointly by all investment officers of the
entity;
(3) be signed by each investment officer of the entity;
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ii NO MCI IN% [Flill il Eillillills Hill i ill Fill
(4) contain a summary statement of each pooled fund group
that states the:
(A) beginning market value for the reporting period;
(B) ending market value for the period; and
(C) fully accrued interest for the reporting period;
(5) state the book value and market value of each
separately invested asset at the end of the reporting period by the
type of asset and fund type invested;
(6) state the maturity date of each separately invested
asset that has a maturity date;
(7) state the account or fund or pooled group fund in the
state agency or local government for which each individual investment
was acquired; and
E
(8) state the compliance of the investment portfolio of
the state agency or local government as it relates to:
(A) the investment strategy expressed in the agency's
or local government's investment policy; and
(B) relevant provisions of this chapter.
(c) The report shall be presented not less than quarterly to
the governing body and the chief executive officer of the entity
within a reasonable time after the end of the period.
(d) If an entity invests in other than money market mutual
funds, investment pools or accounts offered by its depository bank in
the form of certificates of deposit, or money market accounts or
similar accounts, the reports prepared by the investment officers
under this section shall be formally reviewed at least annually by an
independent auditor, and the result of the review shall be reported to
the governing body by that auditor.
Added by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995.
Amended by Acts 1997, 75th Leg., ch. 1421, Sec. 12, eff. Sept. 1, 1997.
Amended by:
Acts 2011, 82nd Leg., R.S., Ch. 1004, Sec. 9, eff. June 17, 2011.
Sec. 2256.024. SUBCHAPTER CUMULATIVE. (a) The authority
granted by this subchapter is in addition to that granted by other
law. Except as provided by Subsection (b), this subchapter does not:
(1) prohibit an investment specifically authorized by
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gil q fluirlip mpil
L W1 1101 1! � iI � I III' ii 11 1 i ,
other law; or
(2) authorize an investment specifically prohibited by
other law.
(b) Except with respect to those investing entities described
in Subsection (c), a security described in Section 2256.009(b) is not
an authorized investment for a state agency, a local government, or
another investing entity, notwithstanding any other provision of this
chapter or other law to the contrary.
(c) Mortgage pass -through certificates and individual mortgage
loans that may constitute an investment described in Section 2256.009
(b) are authorized investments with respect to the housing bond
programs operated by: <
(1) the Texas Department of Housing and Community Affairs E
or a nonprofit corporation created to act on its behalf;
(2) an entity created under Chapter 392, Local Government
Code; or
(3) an entity created under Chapter 394, Local Government
Code.
Added by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995.
Sec. 2256.025. SELECTION OF AUTHORIZED BROKERS. The governing
body of an entity subject to this subchapter or the designated
investment committee of the entity shall, at least annually, review,
revise, and adopt a list of qualified brokers that are authorized to
engage in investment transactions with the entity.
Added by Acts 1997, 75th Leg., ch. 1421, Sec. 13, eff. Sept. 1, 1997.
Sec. 2256.026. STATUTORY COMPLIANCE. All investments made by
entities must comply with this subchapter and all federal, state, and
local statutes, rules, or regulations.
Added by Acts 1997, 75th Leg., ch. 1421, Sec. 13, eff. Sept. 1, 1997.
Sec. 2256.051. ELECTRONIC FUNDS TRANSFER. Any local government
may use electronic means to transfer or invest all funds collected or
http://www.statutes.legis.state.tx.us/Does/GV/htm/GV.2256.htin 1/9/2013
controlled by the local government.
Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995.
Sec. 2256.052. PRIVATE AUDITOR. Notwithstanding any other law,
a state agency shall employ a private auditor if authorized by the
legislative audit committee either on the committee's initiative or on
request of the governing body of the agency.
Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995.
Sec. 2256.053. PAYMENT FOR SECURITIES PURCHASED BY STATE. The <
comptroller or the disbursing officer of an agency that has the power E
to invest assets directly may pay for authorized securities purchased
from or through a member in good standing of the National Association
of Securities Dealers or from or through a national or state bank on
receiving an invoice from the seller of the securities showing that
the securities have been purchased by the board or agency and that the
amount to be paid for the securities is Dust, due, and unpaid. A
purchase of securities may not be made at a price that exceeds the
existing market value of the securities.
Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995;
Acts 1997, 75th Leg., ch. 1423, Sec. 8.67, eff. Sept. 1, 1997.
Sec. 2256.054. DELIVERY OF SECURITIES PURCHASED BY STATE. A
security purchased under this chapter may be delivered to the
comptroller, a bank, or the board or agency investing its funds. The
delivery shall be made under normal and recognized practices in the
securities and banking industries, including the book entry procedure
of the Federal Reserve Bank.
Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995;
Acts 1997, 75th Leg., ch. 1423, Sec. 8.68, eff. Sept. 1, 1997.
Sec. 2256.055. DEPOSIT OF SECURITIES PURCHASED BY STATE. At
the direction of the comptroller or the agency, a security purchased
under this chapter may be deposited in trust with a bank or federal
reserve bank or branch designated by the comptroller, whether in or
http://v;ww.statutes.legis.state.tx.us/Does/GV/htmJGV.2256.htm 1/9/2013
outside the state. The deposit shall be held in the entity's
name as evidenced by a trust receipt of the bank with which the
securities are deposited.
Amended by Acts 1995, 74th Leg., ch. 402, Sec. 1, eff. Sept. 1, 1995;
Acts 1997, 75th Leg., ch. 1423, Sec. 8.69, eff. Sept. 1, 1997.
E
http://vvww.statutes.legis.state.tx.us/Does/GV/htm/GV.2256.htm 1/9/2013
City of Georgetown, Texas
January 22, 2013
SUBJECT:
Presentation and discussion on statewide cable franchise, PEG (public, education, government) channels, and
the GTV and Video Programming Plan -- Paul E. Brandenburg, City Manager and Keith Hutchinson, Public
Communications Manager
ITEM SUMMARY:
On February 11, 2013, the City of Georgetown's local cable franchise agreement with Suddenlink
Communications will expire. As directed by Senate Bill 5 passed by the Texas Legislature in 2006, the City
will transition to the statewide cable franchise agreement upon the expiration of the local franchise. The
statewide franchise provides funding to support an expanded public communications program.
Statewide cable franchise provisions include: 1) a franchise fee of 5 percent of gross revenues payable to the
city in which the franchisee operates, 2) a 1 percent PEG fee (in addition to the overall 5 percent) for capital
costs related to PEG channel operations, and 3) up to three PEG channels for a municipality with a
population of at least 50,000.
The City of Georgetown finance department has projected annual revenues from the 1 percent PEG fee of
approximately $140,000. The 1 percent PEG fee revenue can be used only for the purchase of capital items
related to cable operations, such as cameras, microphones, other video equipment, computers and software
used for video production, and studios or facilities for video production.
City staff is proposing a new media specialist position starting in January 2014 to create video news stories
and informational spots for GTV, City websites, and social media sites. Funding for the salary of the media
specialist position could be provided from increased 5 percent cable franchise revenue.
FINANCIAL IMPACT:
Projected 1 percent PEG fee revenue of approximately $140,000 for capital costs
Salary cost for media specialist
SUBMITTED BY:
Cover Memo
Item # B
City of Georgetown, Texas
January 22, 2013
SUBJECT:
Sec. 551.071: Consultation with Attorney
- Advice from attorney about pending or contemplated litigation and other matters on which the attorney has
a duty to advise the City Council, including agenda items
- LCRA Update
- Airport Tenants
- Rivery Development
- GenTex Contract Discussion
ITEM SUMMARY:
FINANCIAL IMPACT:
SUBMITTED BY:
Jessica Brettle, City Secretary
Cover Memo
Item # C
City of Georgetown, Texas
January 22, 2013
SUBJECT:
Sec. 551.072: Deliberation about Real Property
- 1460 Inner Loop Right of Way
- Albertson's Building
ITEM SUMMARY:
FINANCIAL IMPACT:
SUBMITTED BY:
Jessica Brettle, City Secretary
Cover Memo
Item # D
City of Georgetown, Texas
January 22, 2013
SUBJECT:
Sec 551.074: Personnel Matters
- Acting City Attorney, Bridget Chapman
ITEM SUMMARY:
FINANCIAL IMPACT:
SUBMITTED BY:
Jessica Brettle, City Secretary
Cover Memo
Item # E
City of Georgetown, Texas
January 22, 2013
SUBJECT:
Sec. 551.086: Competitive Matters
- Electric Rate Review
ITEM SUMMARY:
FINANCIAL IMPACT:
SUBMITTED BY:
Jessica Brettle, City Secretary
Cover Memo
Item # F