HomeMy WebLinkAboutRES 951114-DDq511
RE SOLUTION NO,
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
GEORGETOWN, TEXAS, AMENDING THE EXISTING CITY OF
GEORGETOWN INVESTMENT POLICY EFFECTIVE NOVEMBER 14,
1995.
WHEREAS, the goal of the City of Georgetown is to implement an investment policy that
utilizes all current municipal investment practices, while ensuring the safety and availability of all
funds entrusted to the City in compliance with state federal, state and local laws; and
WHEREAS, the Public Funds Investment Act (the Act) was amended during the most recent
state legislative session and became effective September 1, 1995; and
WHEREAS, the City Council of the City of Georgetown wishes to amend its Investment
Policy (as last amended November 22, 1994) to reflect changes in the "Act"; and
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF GEORGETOWN, TEXAS, THAT:
SECTION 1. The facts and recitations contained in the preamble of this resolution are hereby
found and declared to be true and correct, and are incorporated by reference herein and expressly
made a part hereof, as if copied verbatim. The City Council hereby finds that this resolution
implements Finance Policy 1 of the Century Plan - Policy Plan Element, which states: "The City will
Conduct All Municipal Operations in an Efficient Business -Like Manner"; and further finds that the
adoption of this resolution is not inconsistent or in conflict with any other Century Plan Policies, as
required by Section 2.03 ) of the Administrative Chapter of the Policy Plan.
SECTION 2. The Investment Policy attached as Exhibit "X' is hereby adopted by the City
Council of the City of Georgetown, Texas.
I
SECTION 3, This resolution shall be effective immediately upon adoption.
RESOLVED this 14th day of November, 1995,
ATTEST,: THE Y OF GEORGETOWN:
Sandra Lee By: LEO WGOD- E��- ri5 "tri
City Secretary Mayor Frc, 1(L111
APPROVED AS TO FORM:
Marianne Landers Banks
City Attorney
Investment Resolution No. 1l 1
Page 1 of,?
CITY OF GEORGETOWN, TEXAS
INVESTMENT POLICY
The City gfGeorgetown has historically done only limited investing in U.S. government backed
securities, Certificates ofDeposit (CD's)and investment pools. Several events have occurred over
the last year that need tobereflected inour investment policy.
The Orange County, California bankruptcy inDecember 19Q4and the Texpool controversy caused
the Texas Legislature to reconsider the Public Funds Investment Act (the The Act was
expanded significantly and provides much more detailed requirements for investing by local
governments. The Act also has specific reporting requirements on the status of each entity's
portfolio and compliance with investment policies, ]Daddition, the City's growth, including the Sum
City project, has increased the cash and investment management requirements. Numerous bond
issuances, large infrastructure projects and increased fee, utility and tax nswsnueo require staff to
more proactively monitor cash requirenOents.
As a result of these changes, staff recommends a major revision of the City's investment policy.
Most of the revisions are made to show d8Br compliance with State |avV The policy has been
codified for easier reference and updating. Several sections have also been added toreflect the
more complicated nature of the City's Cash management and reflect current prudent practice.
However, none of the proposed revisions make a@ignificant change in current
investment philosophy Qr practice. The City continues b]have aconservative and effective
cash and investment management program.
Section 1.3Objectives. clarify the City's objectives and word them
consistently with the Act. The final statement onthe City's policy of investing to maturity is important
to the relatively low risk associated with the City's program.
Section 2'2Ethics & Conflict ofInterest. Although this standard lsunderstood, the policy did not
specifically address this point.
Section 3:INVESTMENT STRATEGIES. This section isnew to the policy ` and is required by the
Act. The policy must specify the investment strategy of each fund group including liquidity
requirements, yield, maturity restrictions, marketability if the need arises to liquidate investments
before maturity and diversification. The categories were determined by types of funds and bond
covenants. Each of the strategies is consistent with current practice and investment policies.
Section 4.1.1 Certificates of Deposit. This language is expanded to specify collateralization
requirements. The language requiring C[)rates 'to exceed U.S.treasuries isdeleted because there
restrictions on bond proceeds. For example, proceeds from the Series 1995 Utility Revenue Bonds
are yield restricted at 4.996 and current U.S. treasury securities are yielding more than 5%.
Therefore, these funds are invested in a CD at 4.74%.
Section 4.1.3Investment Pools & Section 41.4Money Market Mutual Funds. The authority to
invest in these two instruments was previously combined into one section. They are segregated and
the requirements reworded hzbe consistent with authorizing language inthe Act. The Act now has
very specific requirements for these types ofinvestments. The language does not change thaiDhent
or practical application of the previous policy, but is aornmvuhat more restrictive. The City's current
investments inTexpocd and FG|C Public Trust are not affected since these entities already nnot the
more restrictive requirements.
Section 4.2 Compliance with State Law. This section states the intent to comply with state law.
Section 4.4 Length of Investments. A statement on maximum length of maturities is added to
comply with the Act.
Section 5i1Authorized Dealers. This section isamended toprovide clearer and more meaningful
guidelines on eligible brokers. The geotkzD also adds the new state |evv requirement for all
broker/dealers to sign a certification form stating their understanding of our policies before they are
eligible to do business with the City.
Section 5.2Authorized Financial Institutions. The policy was silent onthis area. This language
is added to reflect current prudent practice.
Section 5.4 Safekeeping. The policy was silent on this area. This language isadded 10 reflect
current prudent practice.
Section 5.5Collateralization. The policy was silent onthis area. This language is added ioreflect
current prudent practice.
Section 6.1 Quarterly Reporting. This section is added to comply with new reporting requirements
of the Act to report specific information to the governing body of a public entity at least quarterly. All
of the requirements are items already provided in the annual report to Council. Staff will begin
submitting quarterly reports to Council on investment activities beginning with the quarter ending
December 31.1BB5-
Section 6.3 Performance Standard. This section iSadded tOrequire benchmark comparison Vf
the City's portfolio yield. The comparison is important to help staff and Council determine the
appropriateness of the City's investment program.
Section 6.4 Compliance. This section isadded to meet requirements of the Act to provide an
annual audit oncompliance with the investment policy and state law. This audit will beperformed"
inconjunction withth8Citv's annual financial audit. The compliance audits will begin with the fiscal
year ending September 30, 1996.
Section 7: POLICY REVIEW AND AMENDMENTS. This section is added to reflect the new
requirement for Council to review the City's investment policy at least annually. This isconsistent
with current practice.
Investment Policy Changes ' November 1SQ5 Page
CITY OF GEORGETOWN, TEXAS
INVESTMENT POLICY
Table of Contents
ql: •- �=!
1.1 Scope
1.2 Statement of Cash Management Philosophy
1.3 Objectives
Section 2: STANDARD OF CARE
2.1 Prudence
2.2 Ethics & Conflict of Interest
2.3 Delegation of Authority
Section 3: INVESTMENT STRATEGIES
3.1
Operating Funds
3.2
Contingency Reserves (or operating reserves)
3.3
Debt
5.4
3.3.1 Reserves
5.5
3.3.2 Interest & Sinking
3.4
Bond Proceeds (capital improvement funds)
Section 4: AUTHORIZED INVESTMENTS
4.1 Allowable Investments
4.1.1 Certificates of Deposit
4.1.2 US Treasuries and Agencies
4.1.3 Investment Pools
4.1.4 Money Market Mutual Funds
4.1 .5 Other Investments
4.2 Compliance with State Law
4.3 Cash on Hand
4.4 Length of Investments
Section 5: SAFEKEEPING AND CUSTODY
5.1
Authorized Dealers
5.2
Authorized Financial Institutions
5.3
Internal Controls
5.4
Safekeeping
5.5
Collateralization
I. �-ea �* IIIIIIIIII11=00 I �*-. I I I
6.1
Quarterly Reporting
6.2
Annual Reporting
6.3
Performance Standards
6.4
Compliance
CITY OF GEORGETOWN, TEXAS
INVESTMENT POLICY
November 14,1995
This investment policy applies to all financial assets of the City of Georgetown, Texas, held ioall
funds.
The City of Georgetown will maintain e comprehensive cash management narn to include the
effective collection of all accounts reoeivob|e, the prompt deposit of receipts to the City's bank
accounts, the payment ofobligations toconnp|ywithstate\BvvandinacoVrdwithvendorinvoioes,
and the prudent investment of idle funds in accord with this policy.
The City's investment program will be conducted to accomplish the following objectives, listed in
priority order:
1S4fe�Y..,,',,T.h*Cit ill, -give,, priority, to Ahe prese,rvatlo' n safety of the principal
invested. Investments will be made , i1n a maln I nelf I thafwilFl� I hiti gate, c1r . e dit , and
2. 'Liqqiq�ty., ,The, City will maintain, the availability of sufficient cash to pay obligations
of the City when they are due.
3. cash at the highest possible rate of
return, consistent with state and local laws and the two objectives
|istedgbova-
Itisa|smtheo of the City of Georgetown to diversify its investments to eliminate the risk of
loss resulting fro i specificinvest its f0hdit6"maturity.
class of securities. It'is the,inteht of the City of G6orget I
o 11
Investments will bemade with judgment and care, under circumstances then prevailing, that persons
of prudence, discretion, and intelligence exercise in the management mftheir own affairs, not for
specu|2dion, 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 ofthe overall portfolio's investment return, provided that adequate diversification has
been implemented.
2'3 DELEGATION {jFAUTHORITY
The Director of Finance and Adndnist:sdon, as the City's chief financial officer, is responsible for
overall management ofthe City's investment program and is designated as the City's Investment
Officer. Accordingly, the [Vnootor of Finance and Administration is 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
with thispollicy,�
Ensure that all investments are adequately secured; -and
Council in the Annual Operating Plan, Contingency, Reserve b�lante�-ma�,lbe""us�ed,�,t,o,to.ver any
cash operating shortfalls due.the t1im,ing,of bond issL�-(�-s,'revenue.receiptl�,li�t'cl.,,'I Inyestmen'ts-,of1thes:e
funds may exceed 24 months with priorlapproval of,the. City,Managpr*,if short ',term -6a,shjIlow, Peeds
are not evident. Involuntary liquidation of Contingenc ReseNe-,ihvestments:is��Onlik6I "'due"tolh6ir
City ofGeorgetown Investment Policy Page
3.4 BOND PROCEEDS (capital improvement funds)
Bond proceed funds are defined as those funds, received from the sales of:City',of Geoq
or; notes andnot otherwise set, aside for debt'. service or,reserve .purposes.. These J
are' limited pertinent, Proiect draw requirements and taxlawls,limi,ting,,earnings
Involuntary liquidation'of investmentis highly u,nlike_ly. Bond proc,eed--:investments will
includ6C.D.'s, U.S. treasuries and agenciesjnvestment poolsandmoney,
market
MINNIF-341 fw
The City of Georgetown funds may be invested in the following instruments:
4.1.1 Certificates of Deposit. Certificates of Deposit issued by the City's Depository/Depositories.
-:11- --te3 or bends for a si
licaving an interest rate exeeedii-lig the yield Of "J.rs. Lwljj,, 111JL W
fflatunity at the tirne af4SStt1-- All certificates of1de'posit's'in excess .of the FDIC I insured ,amount -must
City of Georgetown Investment Policy Page 3