R501RESOLUTION NO. 501
A RESOLUTION ADOPTING AN AMENDED CITY OF KENNEDALE
INVESTMENT POLICY
WHEREAS, on September 13, 2001, City Council adopted the document entitled,
"Investment Policy," a framework that provides the guidelines by which the City of Kennedale will
maintain the minimum amount of cash in its bank accounts to meet daily needs, and to provide protection
for its principal and liquidity while receiving the highest yield possible from investing all temporary
excess cash; and
WHEREAS, this serves to satisfy the statutory requirements of defining and adopting a formal
investment policy and is authorized by the Public Funds Investment Act as amended; and
WHEREAS, the City Council has reviewed the City's Investment Policy.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF KENNEDALE, TEXAS:
The City Council of the City of Kennedale, Texas hereby approves the amended Investment
Policy dated October 17, 2016, attached hereto as "Exhibit A." ,
PASSED, ADOPTED AND APPROVED by the City Council of the City of Kennedale,
Texas, this the 17th day of October, 2016.
Mayor,
ATTEST:
City Secretary, Leslie Galloway
Johnson
4 j A
CITY OF KENNEDALE
KENNEDALE
Finance Department
INVESTMENT POLICY
ORIGINALLY ADOPTED BY CITY COUNCIL: SEPTEMBER 13, 2001
PREFACE
State and local public laws govern the investment process for City funds. Laws cannot ensure that
public officials manage public funds in a disciplined and prudent manner. The actions of public
officials responsible for investing public funds must be guided by knowledge, skills, systems, policies,
procedures and confidence that can be described only as professional discipline.
It is the policy of the City of Kennedale, that giving due regard to safety and risk of investments, all
available funds shall be invested in conformance with these legal and administrative guidelines. All
City funds shall be invested, to the maximum extent possible, at the highest rates obtainable at the
time of the investment.
Effective cash management is recognized as essential to good fiscal management. An aggressive cash
management and investment policy will be pursued. To that end, investment interest will be used as a
viable and material revenue source for all City funds. Earnings from investments will be used in a
manner that will best serve the interest of the City of Kennedale.
The City's portfolio shall be designed and managed in a manner responsive to the public trust and
consistent with state and local law.
SUBSEQUENT REVIEW & ADOPTION
SEPTEMBER 12, 2002
OCTOBER 9, 2003
SEPTEMBER 9, 2004
SEPTEMBER 13, 2005
SEPTEMBER 14, 2006
SEPTEMBER 13, 2007
NOVEMBER 13, 2008
NOVEMBER 5, 2009
NOVEMBER 17, 2011
OCTOBER 3, 2012
OCTOBER 1, 2013
OCTOBER 13, 2014
OCTOBER 19, 2015
OCTOBER 17, 2016
Pa
I. PURPOSE
Chapter 2256 of the Government Code, as amended from time to time by the Texas State
Legislature ( "Public Funds Investment Act ") requires each city to adopt rules governing its
investment practices and to define the authority of the investment official. The Investment
Policy addresses the methods, procedures and practices which must be exercised to ensure
effective and prudent fiscal management of the City of Kennedale funds.
II. SCOPE
The Investment Policy applies to the investment and management of all funds under direct
authority of the City of Kennedale.
A. These funds are accounted for in the City's Annual Financial Report (CAFR) and include
the following:
1) General Fund;
2) Special Revenue Funds;
3) Capital Project Funds;
4) Enterprise /Proprietary Funds;
5) Trust and Agency Funds, to the extent not required by law or existing contract to
be kept segregated and managed separately;
6) Debt Service Funds, including reserves and sinking funds to the extent not
required by law or existing contract to be kept segregated and managed
separately; and
7) Any new fund created by the City, unless specifically exempted from this policy
by the City or by law.
This investment policy shall apply to all transactions involving the financial assets and
related activity of all the foregoing funds.
B. This policy excludes:
1) Employee Retirement and Pension Funds administered or sponsored by the City.
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2) Defeased bond funds held in trust escrow accounts.
C. Review & Amendment The City Council is required by state statute and by this
investment policy to review this investment policy and investment strategies not less
than annually and to adopt a resolution stating the review has been completed and
recording any changes made to either the policy or strategy statements.
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Investments shall be 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.
In determining whether an investment official 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 City.
All participants in the investment program will seek to act responsibly as custodians of the
public trust. Investment officials will avoid any transaction that might impair public confidence
in the City's ability to govern effectively. Investment officials shall recognize that the
investment portfolio is subject to public review and evaluation. The overall program shall be
designed and managed with a degree of professionalism which is worthy of the public trust.
Nevertheless, the City recognizes that in a marketable, diversified portfolio, occasional
measured losses are inevitable and must be considered within the context of the overall
portfolio's investment rate of return.
Investment officials, acting in accordance with written procedures and exercising due diligence,
shall not be held personally responsible for market price changes, provided that these
deviations from expectations are reported immediately to the Director of Finance, the City
Manager and the City Council of the City of Kennedale, and that appropriate action is taken by
the investment officials and their oversight managers to control adverse developments.
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IV. OBJECTIVES
A. Preservation & Safety of Principal Preservation of capital is the foremost objective of
the City. Each investment transaction shall seek first to ensure that capital losses are
avoided, whether the loss occurs from the default of a security or from erosion of
market value.
B. Liquidity The City's investment portfolio will remain sufficiently liquid to enable the
City to meet all operating requirements which can be reasonably anticipated. Liquidity
will be achieved by matching investment maturities with forecasted cash flow
requirements and by investing in securities with active secondary markets.
C. Yield The investment portfolio of the City shall be designed to meet or exceed the
average rate of return on 91 -day U.S. treasury bills throughout budgetary and economic
cycles, taking into account the City's investment risk constraints and the cash flow
characteristics of the portfolio. Legal constraints on debt proceeds that are not exempt
from federal arbitrage regulations are limited to the arbitrage yield of the debt
obligation. Investment officials will seek to maximize the yield of these funds in the
same manner as all other City funds. However, if the yield achieved by the City is higher
than the arbitrage yield, positive arbitrage income will be averaged over a five year
period, netted against any negative arbitrage income and the net amount shall be
rebated to the federal government as required by federal regulations.
V. RESPONSIBILITY & CONTROL
A. Delegation Management responsibility to establish written procedures for the
operation of the investment program consistent with this investment policy has been
assigned to the Director of Finance by the City Manager. Such procedures shall include
explicit delegation of authority to persons responsible for the daily cash management
operation, the execution of investment transactions, overall portfolio management and
investment reporting. The Director of Finance may delegate the daily investment
responsibilities to either an internal investment official or an external investment
advisor in combination with an internal investment official. The Director of Finance
and /or his representative(s) will be limited by conformance with all federal regulations,
ordinances, and the statements of investment strategy.
B. Subordinates All persons involved in investment activities shall be referred to as
"Investment Officials." No person shall engage in an investment transaction, except as
provided under the terms of this policy, the procedures established by the Director of
Finance and the explicit authorization by the City Manager to withdraw, transfer,
deposit and invest the City's funds. The Director of Finance shall be responsible for all
transactions undertaken, and shall establish a system of controls to regulate the
activities of subordinate Investment Officials.
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C. Internal Controls Internal controls shall be designed to prevent losses of public funds
arising from fraud, employee error, misrepresentation by third parties, unanticipated
changes in financial markets, or imprudent actions by investment officials. Controls
deemed most important would include: control of collusion, separation of duties, third -
party custodial safekeeping, avoidance of bearer -form securities, clear delegation of
authority, specific limitations regarding securities losses and remedial action, written
confirmation of telephone transactions, minimizing the number of authorized
investment officials, and documentation of and rationale for investment transactions.
In conjunction with the annual independent audit, a compliance audit of management
controls on investments and adherence to the Investment Policy and the Investment
Strategy may be performed by the City's independent auditor.
D. Ethics & Conflicts of Interest An investment officer of the City who has a personal
business relationship with a business organization offering to engage in an investment
transaction with the City shall file a statement disclosing that personal business
interest. An investment officer who is related within the second degree of affinity or
consanguinity to an individual seeking to sell an investment to the City shall file a
statement disclosing that relationship with the Texas Ethics Commission and the City
Council. For purposes of this section, an investment officer has a personal business
relationship with a 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.
Investment officials of the City shall refrain from personal and business activities
involving any of the City's custodians, depositories, broker /dealers or investment
advisors which may influence the officer's ability to conduct his duties in an unbiased
manner. Investment officials will not utilize investment advice concerning specific
securities or classes of securities obtained in the transaction of the City's business for
personal investment decisions, will in all respects subordinate their personal
investment transactions to those of the City, particularly with regard to the timing of
purchase and sales and will keep all investment advice obtained on behalf of the City
and all transactions contemplated and completed by the City confidential, except when
disclosure is required by law.
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E. Investment Training Requirements The Director of Finance and the Investment officials
shall attend at least one ten hour training session relating to their investment
responsibilities within 12 months after assuming their duties. In addition to this ten
hour requirement, each investment officer shall receive not less than ten hours of
instruction in their investment responsibilities at least once during each two year period
that begins on October 1 St and consists of the two consecutive fiscal years after that
date. The investment training session shall be provided by an independent source. For
purposes of this policy, an "independent source" from which investment training shall
be obtained shall include a professional organization, an institute of higher learning or
any other sponsor other than a Business Organization with whom the City of Kennedale
may engage in an investment transaction. Such training shall include education in
investment controls, credit risk, market risk, investment strategies, and compliance with
investment laws, including the Texas State Public Funds Investment Act.
VI. AUTHORIZED INVESTMENTS
A. Obligations, including letters of credit, of the United States or its agencies and
instrumentalities.
B. Direct obligations of the State of Texas or its agencies and instrumentalities.
C. Other obligations, the principal and interest of which are unconditionally guaranteed or
insured by, the State of Texas, or the United States or its instrumentalities.
D. Obligations of states, agencies, 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.
E. Joint Investment Pools of political subdivisions in the State of Texas which invest in
instruments and follow practices allowed by current law. A 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.
F. Certificates of Deposit issued by a depository institution that has its main office or
branch office in Texas,
1) and such Certificates of Deposit are:
■ guaranteed or insured by the Federal Deposit Insurance Corporation or
the National Credit Union Share Insurance Fund or their successors; or
■ secured by obligations described in Article VI, sections A through D
above.
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2) or such depository institution contractually agrees to place the funds in federally
insured depository institutions in accordance with the conditions prescribed in
Section 2256.010(b) of the Government Code (Public Funds Investment Act) as
amended.
Certificates of Deposit brokered by an authorized broker /dealer that has its main office
or a branch office in Texas who contractually agrees to place the funds in federally
insured depository institutions in accordance with the conditions prescribed in Section
2256.010(b) of the Government Code (Public Funds Investment Act) as amended.
G. Fully collateralized repurchase or reverse repurchase agreements, including flexible
repurchase agreements (flex repo), with a defined termination date secured by a
combination of cash and obligations of the United States or its agencies and
instrumentalities pledged to the City held in the City's name by a third party selected by
the City. Repurchase agreements must be purchased through a primary government
securities dealer, as defined by the Federal Reserve, or a financial institution doing
business in Texas. The securities received for repurchase agreements must have a
market value greater than or equal to 103 percent at the time funds are disbursed. All
transactions shall be governed by a Master Repurchase Agreement between the City
and the primary government securities dealer or financial institution initiating
Repurchase Agreement transactions.
The term of any reverse security repurchase agreement may not exceed 90 days after
the date the reverse security repurchase agreement is delivered. Money received
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.
H. No -load money market mutual funds if the mutual fund:
1) is registered with and regulated by the Securities and Exchange Commission;
2) has a dollar- weighted average stated maturity of 90 days or fewer; and
3) includes in its investment objectives the maintenance of a stable net asset value
of one dollar for each share.
I. Investment instruments not authorized for purchase by the City of Kennedale include
the following:
1) Banker's Acceptances;
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2) "Bond" Mutual Funds;
3) Collateralized Mortgage Obligations of any type; and
4) Commercial Paper, except that the City can invest in local government
investment pools and money market mutual funds that have commercial paper
as authorized investments. A local government investment pool or money
market mutual fund that invests in commercial paper must meet the
requirements of Article VI, Sections E and H above.
J. If an investment in the City's portfolio becomes an unauthorized investment due to
changes in the Investment Policy or the Public Funds Investment Act, or an authorized
investment is rated in a way that causes it to become an unauthorized investment, the
investment officials of the City shall review the investment and determine whether it
would be more prudent to hold the investment until its maturity, or to redeem the
investment. Officials shall consider the time remaining until maturity of the
investment, the quality of the investment, and the quality and amounts of any
collateral which may be securing the investment in determining the appropriate steps
to take.
VII. PORTFOLIO AND INVESTMENT ASSET PARAMETERS
A. Bidding Process for Investments It is the policy of the City to require competitive
bidding for all investment transactions (securities and bank C.D.'s) except for:
1) transactions with money market mutual funds and local government investment
pools (which are deemed to be made at prevailing market rates); and
2) treasury and agency securities purchased at issue through an approved
broker /dealer.
At least three (3) bids or offers must be solicited for all other investment transactions.
In a situation where the exact security being offered is not offered by other dealers,
offers on the closest comparable investment may be used to establish a fair market
price of the security. Security swaps are allowed, as long as maturity extensions, credit
quality changes and profits or losses taken are within the other guidelines set forth in
this policy.
B. Maximum Maturities The City of Kennedale will manage its investments to meet
anticipated cash flow requirements. Unless matched to a specific cash flow, the City
will not directly invest in securities maturing more than five (5) years from the date of
purchase.
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C. Maximum Dollar - Weighted Average Maturity Under most market conditions, the
composite portfolio will be managed to achieve a one -year or less dollar- weighted
average maturity. However, under certain market conditions investment officials may
need to shorten or lengthen the average life or duration of the portfolio to protect the
City. The maximum dollar- weighted average maturity based on the stated final
maturity, authorized by this investment policy for the composite portfolio of the City
shall be three (3) years.
D. Diversification The allocation of assets in the portfolios should be flexible depending
upon the outlook for the economy and the securities markets. In establishing specific
diversification strategies, the following general policies and constraints shall apply.
1) Portfolio maturities and call dates shall be staggered in a way that avoids undue
concentration of assets in a specific sector. Maturities shall be selected which
provide for stability of income and reasonable liquidity.
2) To attain sufficient liquidity, the City shall schedule the maturity of its
investments to coincide with known disbursements. Risk of market price
volatility shall be controlled through maturity diversification such that aggregate
realized price losses on instruments with maturities exceeding one (1) year shall
not be greater than coupon interest and investment income received from the
balance of the portfolio.
3) The following maximum limits, by instrument, are established for the City's total
portfolio:
■ Certificates of Deposit ...................................... ............................25%
■ Local Government Investment Pools (See D.(5) below) .........
100%
■ Money Market Mutual Funds (See D.(5) below) .....................100%
■ Obligations of states, agencies, cities & other political subdivisions of any
state .................................................................... ............................25%
■ Repurchase Agreements (See D. (4) below) . ............................50%
■ State of Texas Obligations & Agencies .......... ............................25%
■ US Treasury & US Agency Callables ............... ............................25%
■ US Government Agencies & Instrumentalities ........................100%
■ US Treasury Notes / Bills ..... ............................... ...........................100%
4) The City shall not invest more than 50% of the investment portfolio in
repurchase agreements, excluding bond proceeds and reserves.
5) The investment committee shall review diversification strategies and establish
or confirm guidelines on at least an annual basis regarding the percentages of
the total portfolio that may be invested in securities other than U.S.
Government Obligations. The investment committee shall review quarterly
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investment reports and evaluate the probability of market and default risk in
various investment sectors as part of its consideration.
VIII. AUTHORIZED BROKER /DEALERS & FINANCIAL INSTITUTIONS
A. Investment officials will maintain a list of financial institutions and broker /dealers
selected by credit worthiness, who are authorized to provide investment services to the
City. These firms may include:
1) all primary government securities dealers; and
2) those regional broker /dealers who qualify under Securities and Exchange
Commission Rule 15C3- 1(uniform net capital rule), and who meet other financial
credit criteria standards in the industry.
The investment officials may select up to six (6) firms from the approved list to conduct
a portion of the daily City investment business. These firms will be selected based on
their competitiveness, participation in agency selling groups and the experience and
background of the salesperson handling the account. The approved broker /dealer list
will be reviewed and approved along with this investment policy at least annually by the
investment committee.
B. All financial institutions and broker /dealers who desire to become qualified bidders for
investment transactions must supply the investment officials with the following:
1) Audited financial statements;
2) Proof of National Association of Securities Dealers (N.A.S.D.) certification, unless
it is a bank;
3) Resumes of all sales representatives who will represent the financial institution
or broker /dealer firm in dealings with the City; and
4) An executed written instrument, by the qualified representative, in a form
acceptable to the City and the business organization substantially to the effect
that the business organization has received and reviewed the investment policy
of the City and acknowledges that the business organization has implemented
reasonable procedures and controls in an effort to preclude investment
transactions conducted between the City and the organization that are not
authorized by the City's investment policy, except to the extent that this
authorization is dependent on an analysis of the makeup of the City's entire
portfolio or requires an interpretation of subjective investment standards.
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IX. SAFEKEEPING & CUSTODY OF INVESTMENT ASSETS
All security transactions, including collateral for repurchase agreements entered into by the
City shall be conducted using the delivery vs. payment (DVP) basis. That is, funds shall not be
wired or paid until verification has been made that the correct security was received by the
safekeeping bank. The only exceptions to DVP settlement shall be wire transactions for money
market funds and government investment pools. The safekeeping or custody bank is
responsible for matching up instructions from the City's investment officials on an investment
settlement with what is wired from the broker /dealer, prior to releasing the City's designated
funds for a given purchase. The security shall be held in the name of the City or held on behalf
of the City in a bank nominee name. Securities will be held by a third party custodian
designated by the investment officials and evidenced by safekeeping receipts or statements.
The safekeeping bank's records shall assure the notation of the City's ownership of or explicit
claim on the securities. The original copy of all safekeeping receipts shall be delivered to the
City. A safekeeping agreement must be in place which clearly defines the responsibilities of the
safekeeping bank.
X. COLLATERAL
The City's depository bank shall comply with Chapter 2257 of the Government Code, Collateral
for Public Funds, as required in the City's bank depository contract.
A. Market Value The Market Value of pledged Collateral must be equal to or greater than
102% of the principal and accrued interest for cash balances in excess of the Federal
Deposit Insurance Corporation (FDIC) or National Credit Union Share Insurance Fund
(NCUSIF) insurance coverage. The Federal Reserve Bank and the Federal Home Loan
Bank are designated as custodial agents for collateral. An authorized City
representative will approve and release all pledged collateral. The securities comprising
the collateral will be marked to market on a monthly basis using quotes by a recognized
market pricing service quoted on the valuation date, and the City will be sent reports
monthly.
B. Collateral Substitution Collateralized investments often require substitution of
collateral. The Safekeeping bank must contact the City for approval and settlement.
The substitution will be approved if its value is equal to or greater than the required
collateral value.
C. Collateral Reduction Should the collateral's market value exceed the required amount,
the Safekeeping bank may request approval from the City to reduce Collateral.
Collateral reductions may be permitted only if the collateral's market value exceeds the
required amount.
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D Letters of Credit Letters of Credit, as defined in Article VI (A), are acceptable collateral
for Certificates of Deposit. Upon the discretion of the City, a Letter of Credit can be
acceptable collateral for City funds held by the City's bank depository.
XI. INVESTMENT REPORTS
A. Reporting Requirements The investment officials shall prepare a quarterly investment
report in compliance with section 2256.023 of the Public Funds Investment Act of the
State of Texas. The report shall be submitted to the City Council and the Investment
Committee within 30 days following the end of the quarter.
B. Investment Records An investment official designated by the City Manager shall be
responsible for the recording of investment transactions and the maintenance of the
investment records with reconciliation of the accounting records and of investments
carried out by an accountant. Information to maintain the investment program and the
reporting requirements, including pricing or marking to market the portfolio, may be
derived from various sources such as: broker /dealer research reports, newspapers,
financial on -line market quotes, direct communication with broker /dealers, market
pricing services, investment software for maintenance of portfolio records, spreadsheet
software, or external financial consulting services relating to investments.
C. Auditor Review The City's independent external auditor may formally review the
quarterly investment reports annually to ensure compliance with the State of Texas
Public Funds Investment Act, and any other applicable State Statutes.
XII. INVESTMENT COMMITTEE
A. Members An Investment Committee, consisting of the City Manager or designee and
the Director of Finance, shall review the City's investment strategies and monitor the
results of the investment program at least quarterly. This review can be done by
reviewing the quarterly written reports and by holding committee meetings as
necessary. The committee will be authorized to invite other advisors to attend
meetings as needed.
B. Scope: The Investment Committee shall include in its deliberations, such topics as
economic outlook, investment strategies, portfolio diversification, maturity structure,
potential risk to the City's funds, evaluation and authorization of broker /dealers, rate of
return on the investment portfolio, review and approval of training providers and
compliance with the investment policy. The Investment Committee will also advise the
City Council of any future amendments to the investment policy that are deemed
necessary or recommended.
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XIII. INVESTMENT STRATEGY STATEMENTS
The City of Kennedale portfolio will be structured to benefit from anticipated market
conditions and to achieve a reasonable return. Relative value among asset groups shall be
analyzed and pursued as part of the investment program within the restrictions set forth by
the investment policy. The City of Kennedale maintains portfolios which utilize four specific
investment strategy considerations designed to address the unique characteristics of the fund
groups represented in the portfolios.
A. Operating Funds
1) Suitability - All investments authorized in the Investment Policy are suitable for
Operating Funds.
2) Preservation & Safety of Principal - All investments shall be high quality
securities with no perceived default risk.
3) Li uidit - Investment strategies for the pooled operating funds have as their
primary objective to assure that anticipated cash flows are matched with
adequate investment liquidity. The dollar- weighted average maturity of
operating funds, based on the stated final maturity date of each security, will be
calculated and limited to one year or less. Constant $1 NAV investment pools
and money market mutual funds shall be an integral component in maintaining
daily liquidity. Investments for these funds shall not exceed an 18 -month period
from date of purchase.
4) Marketability - Securities with active and efficient secondary markets will be
purchased in the event of an unanticipated cash requirement.
5) Diversification - Maturities shall be staggered throughout the budget cycle to
provide cash flows based on anticipated needs. Investment risks will be reduced
through diversification among authorized investments.
6) Yield - The City's objective is to attain a competitive market yield for comparable
securities and portfolio constraints. The benchmark for Operating Funds shall
be the 91 day Treasury bill.
B. Reserve & Deposit Funds
1) Suitability - All investments authorized in the Investment Policy are suitable for
Reserve and Deposit Funds.
2) Preservation & Safety of Principal - All investments shall be high quality
securities with no perceived default risk.
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3) Liquidity - Investment strategies for reserve and deposit funds shall have as the
primary objective the ability to generate a dependable revenue stream to the
appropriate reserve fund from investments with a low degree of volatility.
Except as may be required by the bond ordinance specific to an individual issue,
investments should be of high quality, with short -to- intermediate -term
maturities. The dollar- weighted average maturity of reserve and deposit funds,
based on the stated final maturity date of each security, will be calculated and
limited to three years or less.
4) Marketability - Securities with active and efficient secondary markets will be
purchased in the event of an unanticipated cash requirement.
5) Diversification - Maturities shall be staggered throughout the budget cycle to
provide cash flows based on anticipated needs. Investment risks will be reduced
through diversification among authorized investments.
6) Yield - The City's objective is to attain a competitive market yield for comparable
securities and portfolio constraints. The benchmark for Reserve and Deposit
Funds shall be the 91 day Treasury bill.
C. Bond & Certificate Capital Project Funds & Special Purpose Funds
1) Suitability - All investments authorized in the Investment Policy are suitable for
Bond and Certificate Capital Project Funds and Special Purpose Funds.
2) Preservation & Safety of Principal - All investments shall be high quality
securities with no perceived default risk.
3) Li uidit - Investment strategies for bond and certificate capital project funds,
special projects and special purpose funds portfolios will have as their primary
objective to assure that anticipated cash flows are matched with adequate
investment liquidity. The stated final maturity dates of investments held should
not exceed the estimated project completion date or a maturity of no greater
than five years. The dollar- weighted average maturity of bond and certificate
capital project funds and special purpose funds, based on the stated final
maturity date of each security, will be calculated and limited to three years or
less.
4) Marketability - Securities with active and efficient secondary markets will be
purchased in the event of an unanticipated cash requirement.
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5) Diversification - Maturities shall be staggered throughout the budget cycle to
provide cash flows based on anticipated needs. Investment risks will be reduced
through diversification among authorized investments.
6) Yield - The City's objective is to attain a competitive market yield for comparable
securities and portfolio constraints. The benchmark for Bond and Certificate
Capital Project Funds and Special Purpose Funds shall be the 91 day Treasury
bill. A secondary objective of these funds is to achieve a yield equal to or
greater than the arbitrage yield of the applicable bond or certificate.
D. Debt Service Funds
1) Suitability - All investments authorized in the Investment Policy are suitable for
Debt Service Funds.
2) Preservation & Safety of Principal - All investments shall be high quality
securities with no perceived default risk.
3) Liquidity - Investment strategies for debt service funds shall have as the primary
objective the assurance of investment liquidity adequate to cover the debt
service obligation on the required payment date. Securities purchased shall not
have a stated final maturity date which exceeds the debt service payment date.
The dollar- weighted average maturity of debt service funds, based on the stated
final maturity date of each security, will be calculated and limited to one year or
less.
4) Marketability - Securities with active and efficient secondary markets will be
purchased in the event of an unanticipated cash requirement.
5) Diversification - Maturities shall be staggered throughout the budget cycle to
provide cash flows based on anticipated needs. Investment risks will be reduced
through diversification among authorized investments.
6) Yield - The City's objective is to attain a competitive market yield for comparable
securities and portfolio constraints. The benchmark for Debt Service Funds shall
be the 91 day Treasury bill.
XIV. ANNUAL REVIEW
The Director of Finance shall, at a minimum, submit proposed amendments of this policy to the
City Council annually.
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APPENDIX A
CITY OF KENNEDALE, TEXAS
TEXAS PUBLIC FUNDS INVESTMENT ACT
CERTIFICATION BY BUSINESS ORGANIZATION
This certification is executed on behalf of the City of Kennedale, Texas and
(the Business Organization) pursuant to the Public Funds
Investment Act, Chapter 2256, Texas Government Code, (the Act) in connection with investment
transactions conducted between the Investor and the Business Organization.
The undersigned Qualified Representative of the Business Organization hereby certifies on behalf of
the Business Organization that:
The undersigned is a Qualified Representative of the Business Organization offering to enter an
investment transaction with the City of Kennedale, Texas (as defined in the Act); and
The Qualified Representative of the Business Organization has received and reviewed the Investment
Policy furnished by the City of Kennedale, Texas; and
The Qualified Representative of the Business Organization has implemented reasonable procedures
and controls in an effort to preclude investment transactions conducted between the Business
Organization and the City of Kennedale, Texas that are not authorized by the investment policy of the
City of Kennedale, Texas, except to the extent that this authorization is dependent on an analysis of
the makeup of the City of Kennedale, Texas entire portfolio or requires an interpretation of subjective
investment standards.
Qualified Representative of the Business Organization
Name
Title
Date
17