R38CITY SECRETARY
OFFICIAL FILE (30PY
RESOLUTION NO. 38
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
KENNEDALE, TEXAS, ADOPTING A WRITTEN INVESTMENT POLICY
AND DESIGNATING THE FINANCE DIRECTOR AS THE CITY
INVESTMENT OFFICER.
WHEREAS, Section 2256.005 (a) of the Public Funds Investment Act (the "Act ")
directs the governing body of an investing entity to adopt by rule, order, ordinance, or
resolution, as appropriate, a written investment policy regarding the investment of its funds
and funds under its control;
WHEREAS, the Act has been amended and certain of the amendments necessitate
the revision of the City's existing Investment Policy; and
WHEREAS, the Act requires the governing body of an investing entity to designate,
by rule, order, ordinance, or resolution, as appropriate, one or more officers or employees
of the state agency, local government, or investment pool as Investment Officer to be
responsible for the investment of its funds.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF KENNEDALE, TEXAS:
SECTION 1.
The City Council of Kennedale hereby adopts the Investment Policy dated
October , 1995, as attached to this resolution. This Policy Investment shall supersede
the Policy adopted in March 10, 1988
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SECTION 2.
The City Council hereby designates Ms. Vicki Thompson as Investment Officer, and
charges her to diligently carry out the duties of investment officer in compliance with the
Investment Policy and other applicable state and local guidelines and statutes. Said
designation shall be effective until rescinded by City Council or upon termination of the
person's employment with the City of Kennedale.
SECTION 3.
This resolution shall be effective immediately upon adoption.
APPROVED this 12 day of October , 1995.
&V
Mayor
Attest:
City Secret ry
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1 City of Kennedale
2 Investment Policy
3 October 1995
4
5
6
7 01.0 Policy:
8
9
It is the policy of the
City of Kennedale to
invest public
funds in a manner
10
which will provide highest
investment return without safety
or liquidity risk
11
while meeting the daily
cash flow demands of
the City and
conforming to all
12
provisions of the Public
Funds Investment Act
(HB 2459).
13
14 02.0 Scope:
15
16 This investment policy applies to all financial assets of the City of
17 Kennedale. These funds are accounted for in the City of Kennedale's Annual
18 Financial Audit.
19 02.1 Funds:
20 02.1.1 General Fund
21 02.1.2 Enterprise Funds (Water /Sewer Fund and Ambulance Fund)
22 02.1.3 Special Revenue Funds
23 02.1.4 General Obligation Interest and Sinking Fund
24 02.1.5 Any new fund created by Council, unless specifically
25 exempted)
26
27 03.0 Prudence:
28
29 Investments shall be made with judgment and care - -under circumstances then
30 prevailing - -which persons of prudence, discretion and intelligence exercise in
31 the management of their own affairs, not for speculation, but for investment,
32 considering the probable safety of their capital as well as the probable
33 income to be derived.
34 03.1 The standard of prudence to be used by investment officials shall
35 be the "prudent person" standard and shall be applied in the context of
36 managing an overall portfolio. Investment officers acting in accordance
37 with written procedures and the investment policy and exercising due
38 diligence shall be relieved of personal responsibility for an individual
39 security's credit risk or market price changes, provided deviations from
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40 expectations are reported in a timely fashion and appropriate action is
41 taken to control adverse development.
42
43 04.0 Objective:
44
45 The primary objectives in priority order, of the City of Kennedale investment
46 activities shall be:
47 04.1 Safety: Safety of principal is the foremost objective of the
48 investment program. Investments of the City of Kennedale shall be
49 undertaken in a manner that seeks to ensure the preservation of capital
50 in the overall portfolio. To attain this objective, diversification is
51 required in order that potential losses on individual securities do not
52 exceed the income generated from the remainder of the portfolio.
53 04.2 Liquidity: The City of Kennedale's investment portfolio will
54 remain sufficiently liquid to enable the City to meet all operating
55 requirements which might be reasonably anticipated.
56 04.3 Yield: The City of Kennedale's investment portfolio shall be
57 designed with the objective of attaining a rate of return throughout
58 budgetary and economic cycles, commensurate with the City's investment
59 risk constraints and the cash flow characteristics of the portfolio.
60
61 05.0 Delegation of Authority:
62
63 Management responsibility for the investment program is hereby delegated to
64 the Director of Finance under the direct supervision of the City
65 Administrator. The Director of Finance shall serve as the City's Investment
66 officer. The Director of Finance shall establish written procedures for the
67 operations of the investment program consistent with this investment policy.
68 Procedures should include reference to: safekeeping, repurchase agreements,
69 wire transfer agreements, banking service contracts and collateral /depository
70 agreements. Such procedures shall include explicitly delegation of authority
71 to persons responsible for investment transactions. No person may engage in
72 an investment transaction except as provided in the terms of this policy and
73 the procedures established by the Director of Finance, under the supervision
74 of the City Administrator. The Director of Finance, under the supervision of
75 the City Administrator shall be responsible for transactions undertaken and
76 shall establish a system of controls to regulate the activities of subordinate
77 officials.
78
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79 06.0 Ethics and Conflicts of Interest:
80
81 Officers and employees involved in the investment process shall refrain from
82 personal business activity that could conflict with proper execution of the
83 investment program or which could impair their ability to make impartial
84 investment decisions. Employees and investment officials shall disclose to
85 the City Administrator any material financial interests in financial
86 institutions that conduct business within this jurisdiction, and they shall
87 further disclose any large personal financial /investment positions that would
88 be related to the performance of the City of Kennedale, particularly with
89 regard to the time of purchases and sales.
90
91 07.0 Authorized and Suitable Investments:
92
93 The City of Kennedale is empowered by HB 2459 to invest in the following types
94 of securities:
95 07.1 Certificates of Deposit by a state or national bank domiciled in
96 the State of Texas and meeting the requirements of HB 2459, Sec
97 2256.010.
98 07.2 Mortgage Backed Securities directly issued by a federal agency or
99 instrumentality that have a market value of not less than the principal
100 amount of the certificates and meeting the requirements of HB 2459, Sec
101 2256.009(a).
102 07.3 Repurchase Agreements fully collateralized and meeting the
103 requirements of HB 2459, Sec 2256.011.
104 07.4 Bankers' Acceptances meeting the requirements of HB 2459, Sec
105 2256.012,
106 07.5 Commercial Paper meeting the requirements of HB 2459, Sec
107 2256.013.
108 07.6 Mutual Funds meeting the requirements of HB 2459, Sec 2256.014.
109 07.7 Guaranteed Investment Contracts meeting the requirements of HB
110 2459, Sec 2256.015.
111 07.8 Investment Pools as authorized by ordinance, resolution or other
112 council action and meeting the requirements of HB 2459, Sec
113 2256.016,.017,.018,.019.
114
115 08.0 Collateralization:
116
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117 Collateralization will be required on two types of investments: certificates
118 of deposit and repurchase (and reverse) agreements. In order to anticipate
119 market changes and provide a level of security for all funds, the
120 collaterization level will be not less than 102% of market value of principal
121 and accrued interest.
122
123 The City of Kennedale chooses to limit collateral to securities that are
124 backed by the full faith and credit of the federal government and items listed
125 in HBO 2459.
126
127 Collateral will always be held by an independent third party with whom the
128 City has a current custodial agreement. All clearly marked evidence of
129 ownership (safekeeping receipt) must be supplied to the entity and retained.
130
131 The right of collateral substitution is granted subject to compliance with
132 applicable federal laws.
133
134 09.0 Safekeeping and Custody:
135
136 All security transactions, including collateral for repurchase agreements,
137 entered into by the City of Kennedale shall be conducted on a delivery- versus-
138 payment (DVp) basis. Securities will be held by a third party custodian
139 designated and evidenced by safekeeping receipts.
140
141 10.0 Diversification:
142
143 The City of Kennedale will diversify its investments by security type and
144 institution. No more than 50% of the City's total investment portfolio will
145 be invested in a single security type with the exception of investment pool
146 securities. No more than 50% of the City's total investment portfolio will be
147 invested in any one specific investment pool.
148
149 In order to facilitate the transfer of significant amounts of City funds, the
150 City's Investment Officer, may for a period not to exceed two (2) business
151 days consolidate City funds in excess of 50% of the City's total investment
152 portfolio in any one specific investment pool. The City's investment officer
153 shall make diligent efforts to minimize the number and duration of times that
154 more than 50% of the City's total investment portfolio is invested in a single
155 investment pool.
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156 11.0 Maximum Securities:
157
158 To the extent possible, the City of Kennedale will attempt to match its
159 investments with anticipated cash flow requirements. Unless matched to a
160 specific cash flow, the City will not directly invest in securities maturing
161 more than two years from the date of purchase. However, the City may
162 collateralize its repurchase agreements using longer -dated investments not to
163 exceed 5 years to maturity.
164
165 Reserve funds may be invested in securities exceeding 2 years if the maturity
166 of such investments are made to coincide as nearly as practicable with the
167 expected use of the funds.
168
169 12.0 Internal Control:
170
171 The Director of Finance shall establish an annual process of independent
172 review by an external auditor. This review will provide internal control by
173 assuring compliance with policies and procedures.
174
175 13.0 Performance Standards:
176
177 The investment portfolio shall be designed with the objective of obtaining a
178 rate of return throughout budgetary and economic cycles, commensurate with the
179 investment risk constraints and the cash flow needs.
180
181 14.0 Reporting:
182
183 The Director of Finance is charged with the responsibility of including a
184 market report on investment activity and returns to Council not less than
185 quarterly. Reports shall:
186 15.01 Describe in detail, the investment position of the City on the
187 date of the report;
188 15.02 Be prepared jointly by the Director of Finance and City
189 Administrator;
190 15.03 Signed by the Director of Finance and City Administrator;
191 15.04 Contain a summary statement of each pooled fund group;
192 15.05 State the book value and market value of each separately invested
193 assets at the beginning and end of the reporting period by the type of
194 asset and fund type invested;
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195 15.06 State the maturity date of each separately invested asset that has
196 a maturity date;
197 15.07 State the account or fund or pooled group fund in the City for
198 which each individual investment was acquired; and
199 15.08 State the compliance of the investment portfolio as it relates to
200 the investment strategy expressed in this policy and relevant provisions
201 of the Public Funds Investment Act.
202
203 15.0 Training:
204 Investment officer must receive training within 12 months after taking the
205 position or assuming duties. Training must include education in investment
206 controls, security risks, strategy risks, market risks, and compliance with
207 the Public Funds Investment Act. Officers employed on September 1, 1995 must
208 attend this training session not later than September 1, 1997.
209
210 16.0 Interested Parties:
211
212 The City must present a written copy of the investment policy to any person
213 seeking to sell it an authorized investment. The registered principal of the
214 business organization seeking to sell an authorized investment shall execute a
215 written instruments substantially to the effect that the registered principal
216 has:
217 16.01 received and thoroughly reviewed the investment policy of the
218 City; and
219 16.02 acknowledged that the organization has implemented reasonable
220 procedures and controls in an effort to preclude imprudent investment
221 activities arising out of investment transactions conducted between the
222 City and the organization.
223
224 17.0 Annual Review and Adoption:
225
226 The City council will adopt by rule, order, ordinance, or resolution, as
227 appropriate, the investment policy and strategies of its funds and funds under
228 its control not less than annually. In conjunction with its annual financial
229 audit, the City shall perform a compliance audit of management controls on
230 investments and adherence to the City's Investment Policy.
231
232
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I City of Kennedale
2 Investment Strategy
3 Fiscal Year 1995/1996
4
5
6 The Investment Strategy for the City of Kennedale will address all funds as
7 listed in the Investment Policy, Section 02.1. All funds, fund groups, or
8 pooled funds will have a foremost objective of: first, safety of principal;
9 second, liquidity; and third, yield. Investment decisions concerning the
10 investment portfolio of the City of Kennedale will not be based upon an
11 obligation to meet or exceed revenue projections.
12
13 Funds will be combined or "pooled" for investment purposes, but will remain as
14 separate accounts on the General Ledger. Pooled funds will have interest
15 credited on a percentage basis, based on the percent of moneys a particular
16 fund has invested in any one investment.
17
18 The city's total combined investment portfolio will attempt to maintain 90%
19 of available funds invested in government backed securities or investment
20 pools. The remaining 10% will be placed in overnight sweep accounts in a
21 effort to gain return on idle funds. Investment decisions will be based on
22 cash flow requirements of each individual fund. The Director of Finance shall
23 insure that instruments used for these investments are fully marketable if
24 cash needs occur prior to the maturity date of an investment.
25
26 General Fund:
27
28 General funds include operating funds, designated funds, and reserve funds.
29 These funds will be combined for investment purposes.
30
31 Operating funds will remain primarily in a "liquid" position with emphasis on
32 cash requirements. Investment pools and overnight sweep accounts are best
33 suited for these funds. However, after peak tax collections, these funds may
34 be invested in a form of government backed securities as authorized in the
35 Investment Policy. Weighted average to maturity will not exceed 90 days.
36
37 Reserve and designated funds will be invested in investment pools and
38 government backed securities with weighted average to maturity not to exceed
39 one year.
40
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41 General fund moneys will be pooled with other funds in investment pools and
42 other investments to gain maximum yield without jeopardizing safety or
43 liquidity.
44
45 Water Fund:
46
47 Water funds include operating funds, designated funds, and reserve funds.
48 These funds will be combined for investment purposes.
49
50 Operating funds will remain primarily in a "liquid" position with emphasis on
51 cash requirements. Investment pools and overnight sweep accounts are best
52 suited for these funds. However, reserve moneys in this fund is more readily
53 identifiable and may be invested in longer -term government backed securities
54 with a weighted average to maturity not to exceed one year.
55
56 Ambulance Fund:
57
58 Ambulance funds include operating funds, designated funds, and reserve funds.
59 These funds will be combined for investment purposes.
60
61 Due to the nature of the Ambulance Fund, investments will remain in a liquid
62 state. Cash flow demands is the primary focus for this fund. Investment
63 pools and overnight sweeps are best suited to this fund. Weighted average to
64 maturity will not exceed 90 days on this fund.
65
66 Ambulance fund moneys will be pooled with other funds in investment pools to
67 gain maximum yield without jeopardizing safety or liquidity.
68
69 Debt Service Fund:
70
71 This fund is used to retire debt incurred by the City. Predetermined payments
72 and pay dates are readily identifiable. Funds will be invested in government
73 backed securities, investment pools, and overnight sweeps in such a manner
74 that will coincide with debt service obligations. Weighted average to
75 maturity will not exceed one year.
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