R297
RESOLUTION N0.297
A RESOLUTION ADOPTING AN AMENDED CITY OF KENNEDALE
INVESTMENT POLICY
WHEREAS, the City Council of the City of Kennedale, Texas is required to review the
City"s investment policy and investment strategies annually; and
WHEREAS, this review is authorized by the Public Funds Investment Act, as amended;
and
WHEREAS, the City Council has reviewed the City's investment policy and investment
strategi ~ s; and
WHEREAS, the City Council now desires not to change the current investment policy
adopted on September 13, 2007.
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 Investment
Policy dated November 5, 2009, attached hereto as "Exhibit A."
PASSED, ADOPTED AND APPROVED by the City Council of the City of Kennedale,
Texas, this the 5th day of November 2009.
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APPROVED:
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Mayor, Bryan Lankhorst
Kathy ~ I ~u er, City Secretary
CITY OF KENNEDALE
INVESTMENT POLICY
ADOPTED BY CITY COUNCIL: SEPTEMBER 13, 2001
KE/VNEDALE
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
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I. INTRODUCTION AND OBJECTIVES
The investment policy of the City of Kennedale shall be to have all available funds invested, to
the maximum extent possible, at the highest rates obtainable at the time of investment. This is
in compliance with legal and administrative guidelines, including Chapter 2256 of the
Government Code ("Public Funds Investment Act"). The investments shall be consistent with
state and local laws and shall be made in accordance with the following hierarchy of objectives:
A. Safety of principal and security of investments and City funds and preservation of
capital;
B. Maintenance of sufficient liquidity to meet operating needs;
C. Diversification of investments to avoid unreasonable risks, thus earning public trust
from prudent investment activities;
D. Maximization of interest earnings on the portfolio.
Cash management is the process of managing monies in order to ensure maximum cash
availability and maximum yield on short-term investments of idle cash. A cash management
program and investment policy will be pursued by the Director of Finance to take advantage of
investment interest as a viable and material revenue for all operating and capital funds. The
City's portfolio shall be designed and managed in a manner responsive to the public trust.
Earnings from investments will be used in a manner that will best serve the interests of the City
of Kennedale.
The City is required by the Public Funds Investment Act to adopt a formal written Investment
Policy. This policy sets forth the investment objectives of tl-~e City.
II. DEFINITIONS:
The following definition of terms shall apply in interpreting this investment policy, and in the
implementation of this investment policy:
A. "City" means the City of Kennedale, and the Kennedale Economic Development
Corporation.
B. "Bond Proceeds" means the proceeds from the sale of bonds, notes, and other
obligations issued by the City and reserves and funds maintained by the City for debt
service purposes.
C. "Debt Service Funds" means those funds which by ordinance or law must be
accumulated and are restricted to the payment of debt.
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D. "Reserve Funds" means those funds which by ordinance or law must be accumulated
and are restricted to the payment of debt in the event debt service funds are
insufficient to meet debt service obligations.
E. "Book Value" means the face or par value of an investment plus accrued interest or
minus amortization or plus accretion.
F. "Funds" means public funds in the custody of the City that the City has the authority to
invest.
G. "Investment Pool" means an entity created under Public Funds Investment Act to invest
public funds jointly on behalf of the entities that participate in the pool and whose
investment objectives in order of priority are:
1) Preservation and safety of principal;
~) Liquidity; and
3} Yield.
H. "Market Value" means the face or par value of an investment multiplied by the price
quoted on the valuation date.
"Pooled Fund Group" means an internally created fund of the City in which one or more
institutional accounts (accounting funds) are invested.
J. "Separately Invested Asset" means an account or fund (accounting fund) of the City
that is not invested in a pooled fund group.
K. "Investment" means an individual security or pari.icipation in an investment pool or
qualified mutual fund.
III. DELEGATION AND RESTRICTION OF INVESTMENT AUTHORITY
This investment policy and the outlining of investment practices and authorities is compiled in
accordance with the Public Funds Investment Act, which requires the adoption of rules
governing investment of funds and the designation of an investment officer.
The Director of Finance will serve as the investment officer under the direct supervision of the
City Manager. The Director may, when necessary, designate additional investment officers.
Responsibility and authority for daily investment transactions and cash management reside
with the Director of Finance. The Director of Finance is also responsible for considering the
quality and capability of staff involved in investment management and procedures. The
Director of Finance will insure that staff, which is involved in the investment function, complies
with all training requirements established by the Public Funds Investment Act. Acceptable
sources of training include the Governmental Treasurer's Organization of Texas, the Municipal
Treasurer's Association, the Governmental Finance Officers Association, the Governmental
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Finance Officers Association of Texas, the Texas Municipal League and Texas Society of
Certified Public Accountants (CPA). All participants in the investment process shall seek to act
responsibly as custodians of public trust.
IV. ACCEPTABLE INVESTMENT INSTRUMENTS
A. Obligations of the United States or its agencies and instrumentalities;
B. Direct obligations of the State of Texas or its agencies;
C. Other obligations, the principal of and interest on which are unconditionally guaranteed
or insured by, or backed by the full faith and credit of, the State of Texas or the United
States or their respective agencies and instrumentalities;
D. Obligations of states, agencies, counties, cities, and other political subdivisions of any
state rated as to investment quality by a national!; recognized investment rating firm
not less than A or its equivalent;
E. Commercial Paper that has a stated maturity of 270 days or fewer from the date of
issuance and is rated not less than A-1 or P-1 or an equivalent rating by at least two
nationally recognized credit rating agencies;
F. Certificates of Deposit issued by state and national banks domiciled in the State of
Texas and collateralized or fully insured by FDIC or US Government securities;
G. Direct repurchase agreements with primary security dealers having a defined
termination date, and secured by U.S. Government or federal agency securities,
provided that the ownership of collateral for the repurchase agreement is transferred
to the City, and deposited with the City's safekeeping agent for the duration of the
contract and a signed master repurchase agreement has been executed with the
counterparty;
H. SEC-registered and regulated, no-load money market mutual funds with a dollar-
weighted average portfolio maturity of 90 days or less whose assets comply with the
Public Fund Investment Act and whose investment objectives include seeking to
maintain a stable net asset value of $1 per share. Investment in mutual funds shall be
limited to a maximum of eighty percent (80%) of the City's operating funds.
The Public Funds Investment Act authorizes municipalities and other political subdivisions of
the State of Texas to invest their public funds jointly through investment pools that complies
with the requirements of the Public Funds Investment Act. A decision to participate in an
investment pool requires a Participation or Interlocal Agreement to be executed with the State
or Interlocal Authority for the investment pool. Participation in these Investment Pools is
approved subject to the following conditions:
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Execution of a Participation or Interlocal Agreement;
J. Any investment pool that is created to function as a money market mutual fund must
maintain a stable asset value as defined in the Public Funds Investment Act;
K. The investment pool maintains a AAA rating by one of the rating agencies;
L. Any investment pool that is created to function as a money market mutual fund must
maintain a maximum average dollar weighted maturity does not exceed 90 days;
M. Any investment pool that does not meet the requirements of one that is created to
function as a money market mutual fund must maintain a maximum average dollar
weighted maturity that does not exceed 365 days, or 366 days in the case of a leap
year, and must provide a fixed interest rate and fixed maturity term for each pool
position;
N. The investment pool continues compliance with the remaining provisions of the Public
Funds Investment Act.
The Investment Officers will, in general, maintain a passive investment portfolio in which
securities will be purchased with the intent to own the securities until maturity. Safety of
principal with due consideration of liquidity is the foremost objective of this investment policy.
Each investment transaction shall seek to avoid capital losses from security defaults or erosion
of market value.
The City will practice competitive bidding orally, by telephone, electronically, by rate
comparisons from financial publications, or in any combination of these methods when
purchasing an investment to help strengthen the investment process. All investments, other
than the placement of funds in Investment Pools, will, when possible, be competitively bid and
placed with vendors guaranteeing the highest rate of return. The City reserves the right to
reject the most financially favorable bid if it is potentially d+sruptive to its investment strategy.
When appropriate, actual risk of default shall be minimized by adequate collateralization.
Market risk shall be minimized by diversification. Diversification shall be directed towards
investment instruments, varying maturities, and multiple investment pools and securities
dealers.
V. UNACCEPTABLE INVESTMENT INSTRUMENTS
The following securities, although authorized by the Public Funds Investment Act, are not
eligible investments for the City of Kennedale:
A. Collateralized mortgage obligations directly issued by a federal agency;
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B. Banker's acceptances;
C. Reverse repurchase agreements;
D. No-load mutual funds other than no-load money market mutual funds;
E. Guaranteed investment contracts;
F. Share certificates of qualifying credit unions.
The following securities, are not authorized by the Public Funds Investment Act:
G. Interest-only or principal-only strips of obligations with underlying mortgage-backed
security collateral;
H. Collateralized mortgage obligations with an inverse floating interest rate.
VI. DIVERSIFICATION
A. Securities Dealers, Investment Consultants and Banks
Competitive bidding of all investments among securities dealers will assure that the City
receives the highest yield on its investments. The City shall seek to conduct its
investment transactions with several competing, reputable investment securities
dealers and brokers to protect principal while achieving full advantage of the market.
It is the policy of the City to purchase securities only from those institutions on the
City's approved list of broker\dealers, investment consultants, and banks. All securities
dealers must be registered with and certified by the Texas State Securities Commission,
National Association of Security Dealers (NASD) and Securities and Exchange
Commission (SEC) and must execute the Certification By Business Organization Form
(Appendix A).
The Director of Finance will submit financial institutions, broker/dealers and consultants
to the City Council for approval. Prior to submission, the Director of Finance shall
evaluate the soundness of financial institutions, broker/dealers and consultants to the
extent he/she considers necessary. Investigation may include review of rating agency
reports, review of call reports, and analysis of management, profitability, capitalization,
and asset quality. Financial institutions, broker/dealers, and consultants with whom the
City wishes to conduct business shall provide the financial data requested by the City.
The Director of Finance shall review the information and decide on the soundness of a
financial institution, broker/dealer, or consultant before submitting the institution to
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the City Council for approval.
An institution must be approved by the City Council and added to the approved list
before any business may be transacted with the City. The Director of Finance will
submit the list for approval at least once per year. Additional institutions may be
submitted as needed. The City Council shall also be able to limit the number of
authorized securities dealers/banks/consultants doing business with the City as
required.
All banks will be Federal Reserve member banks approved by the City Council. No
investments will be placed with savings and loan institutions.
Repurchase Agreements will be done only with primary dealers.
The master repurchase agreement of the Bond Market Association (BMA) shall be
executed between the City and any primary dealer with which the City transacts
repurchase agreements.
Regardless of reporting status, all securities purchased shall require same day delivery
(on settlement date) to the City's safekeeping agent on a delivery versus payment (DVP)
basis. By doing so, City funds are not released until the City has received, through the
Federal Reserve wire, the securities purchased.
B. Investment Type
Market risk shall be minimized by diversification of investment types. The following
limits, exclusive of funds placed in Investment Pools, by instrument, are established for
the City's total portfolio and will be implemented after adoption of this investment
policy.
1) Repurchase Agreements ..........................................................................50%
2) Certificates of Deposit ..........................................................................100%
3) U.S. Treasury Notes/Bonds/Bills ...........................................................100%
4) U.S. Agencies/Instrumentalities (U.S. Agencies) ..................................100%
5) Investment Pools ..................................................................................100%
6) Money Market Mutual Funds ....................................80% of Operating Funds
7) Repurchase Agreements ........................ Collateral Subject To Above Limits
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8) Commercial Paper .........................................................................................30%
No more than 50% of the City's total investment portfolio will be invested in any one
specific investment pool.
To allow efficient and effective placement of proceeds from bond sales, the limit on
repurchase agreements may be exceeded for a maximum of five days following the
receipt of bond proceeds.
C. Investment Strategies
The City of Kennedale maintains the following portfolios which will utilize the specific
investment strategy considerations designed to address the unique characteristics of
the pooled fund groups or separately held investment assets represented in the
portfolios:
1) Debt Service Funds
The City will maintain one separate debt service fund. Additional debt service
funds will be established as required by ordinance or law. These funds will be
operated as separately invested assets, with the exception that, for
administrative purposes, funds may be commingled with the Consolidated Cash
Fund (described below) on a temporary basis. 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. Eligible securities and maximum composition of the portfolio include
Certificates of Deposit (100%), U.S. Treasury Notes/Bonds/Bills (100%), U.S.
Agencies (100%), Investment Pools (100%), and Repurchase Agreements (limited
to above percentages on transferred collateral). Securities purchased shall not
have a stated final maturity date that exceeds the corresponding debt service
payment date.
2) Reserve Funds
The City has no reserve funds at this time. Reserve funds will be established as
required by ordinance or law. Investment strategies for debt service reserve
funds shall have as the primary objective the assurance of investment liquidity
adequate to cover the debt service obligations not funded by debt service funds
on the required payment date. Investment of reserve funds are controlled by
their ordinance, resolution or indenture, and Federal and State law. Bond
documents must be examined for each issue, for potential differences with this
policy concerning investment instruments, maximum maturity or average life
restrictions, call dates or sinking fund redemptions, and applicable arbitrage
yields and rebate liability. Provisions contained in the bond documents will
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supersede provisions of this policy.
Reserve funds will be invested using a more conservative approach than the
current standard investment strategy when arbitrage rebate rules require
refunding excess earnings. All excess earnings received will be segregated to
allow a proper determination of interest income to be used in the arbitrage
calculation.
Maturity limitations for single issue reserve funds shall not exceed the call
provisions of the Bond Ordinance and shall not exceed the final maturity of that
bond issue. Eligible securities and maximum composition of the portfolio
include Certificates of Deposit (100%), U.S. Treasury Notes/Bonds/Bills (100%),
U.S. Agencies (100%), Investment Pools (100%), and Repurchase Agreements
(limited to above percentages on transferred collateral). The maximum stated
final maturity for investments shall be ten years.
3) Special Project or Special Purpose Funds
Special project or special purpose funds may be maintained as separately
invested assets or, unless prohibited by controlling ordinances, be commingled
in the Consolidated Cash Fund (described below). Should controlling ordinances
require segregation of the Fund's assets for investment purposes, the Fund's
assets, for administrative purposes, may be commingled with the Consolidated
Cash Fund (described below) on a temporary basis. Investment strategies for
special projects or special purpose fund portfolios will have as their primary
objective to assure that anticipated cash flows are matched with adequate
investment liquidity. Eligible securities for portfolios maintained as separately
invested assets and maximum composition of the portfolio include Certificates
of Deposit (100%), U.S. Treasury Notes/Bonds/Bills (100%), U.S. Agencies
(100%), Investment Pools (100%), Money Market Mutual Funds (80%-subject to
Public Fund Investment Act limitations), and Repurchase Agreements (limited to
above percentages on transferred collateral). The stated final maturity dates of
securities held should not exceed the estimated project completion date.
Funds in excess of defined construction payments schedules shall be limited to a
weighted average days to maturity of three years and a maximum final maturity
date of five years.
4) Consolidated Cash Fund
The Consolidated Cash Fund shall operate as a pooled fund group and consists
of all City funds not designated as another Fund. The investment strategies for
the Consolidated Cash Fund have as their primary objective to assure that
anticipated cash flows are matched with adequate investment liquidity. The
secondary objective is to create a portfolio structure that will experience
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minimal volatility during economic cycles. This may be accomplished by
purchasing securities that will complement each other in a laddered or barbell
maturity structure. Eligible securities and maximum composition of the
portfolio include Certificates of Deposit (100%), U.S. Treasury Notes/Bonds/Bills
(100%), U.S. Agencies (100%) Investment Pools (100%), Money Market Mutual
Funds (80%-subject to Public Fund Investment Act limitations) and Repurchase
Agreements (limited to above percentages on transferred collateral). The dollar
weighted average maturity of the 365 days or less will be calculated using the
stated final maturity dates of each security. The maximum maturity date using
the stated final maturity date for an individual security is three years.
VII. SAFEKEEPING
The laws of the State of Texas and prudent financial management require that all purchased
securities shall be held in safekeeping by either a City account in a third party financial
institution, or the City's safekeeping account in its designated depository bank, or in a Federal
Reserve Bank. The safekeeping requirement does not apply to Certificates of Deposit that are
FDIC insured.
Transfers of securities in safekeeping shall be processed with written confirmations. The
confirmations will be used for documentation and retention purposes. The Director of Finance
must approve release of collateral prior to its removal from the safekeeping account.
VIII. COLLATERALIZATION
Consistent with the requirements of State law, the City requires all bank deposits to be
federally insured or collateralized with securities approved for investment under Section IV of
this policy. Financial institutions serving as City depositories will be required to sign a
depository agreement with the City and the City's safekeeping agent or the Federal Reserve
Bank. The safekeeping 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:
A. The agreement must be in writing;
B. The agreement has to be executed by the depository and the City contemporaneously
with the acquisition of the asset;
C. The agreement must be approved by the board of directors or the loan committee of
the depository and a copy of the meeting minutes must be delivered to the City,
specifically to the Director of Finance;
D. The agreement must be part of the depository's "official record" continuously since its
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execution.
The City considers repurchase agreements as simultaneous sales and purchases of securities
rather than collateralized loans. However, securities underlying repurchase agreements are
referred to as "collateral" for the purpose of this policy.
Bank demand deposits and certificates of deposit plus accrued interest up to $100,000 per
bank do not need to be collateralized pursuant to this policy as long as FDIC insurance is
provided.
The Public Funds Investment Act provides that the City may invest in certificates of deposit that
are fully guaranteed by the FDIC.
Acceptable forms of collateral are limited to investments a!_!thorized in Section IV of this policy.
Collateral is valued at current market value plus interest accrued through the date of the
valuation. Bank demand deposits, certificates of deposit (including accrued interest) and
repurchase agreements (par value plus accrued interest) shall be secured by pledged collateral
with a market value equal to or not less than 102% of deposits. Evidence of the pledged
collateral shall be maintained by the Director of Finance and held by an independent third
party financial institution.
Collateralized investments often require substitution of collateral. Any broker or financial
institution requesting substitution of collateral must contact the Director of Finance or, in
his/her absence, the City Manager for approval and settlement. The substituted collateral's
value will be calculated and the substitution approved if its value is equal to or greater than the
original collateralization level.
The Director of Finance or the City Manager must give immediate notification of the decision
to the bank or third party holding the collateral. Substitution is allowed for all transactions, but
should be limited, if possible, to minimize potential administrative problems and transfer
expense. The Director of Finance may limit substitution and assess appropriate fees if
substitution becomes excessive or abusive.
Collateral shall be audited at least annually by the City's independent audit firm, and may be
audited by the City at any time during normal business hours of the safekeeping party.
The financial institutions with which the City invests and/or maintains other deposits shall
provide, as requested by the City, a listing of the City's certificates of deposit and other
deposits at the institution and a listing of collateral pledged to the City marked to current
market prices. The listing shall include total pledged securities with the following:
• Name
• Type/Description
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• Par Value
• Current Market Value
• Maturity Date
• Moody's or Standard & Poor's Rating (Both If Available)
Under state law, Chapter 105 of the Local Government Code, substitution and release of
collateral must be approved by the governing body. The City Council hereby delegates this
responsibility and authority to release and substitute collateral as deemed necessary and
reasonable within the guidelines of this policy to the Director of Finance.
IX. INVESTMENT REPORTING
Each quarter, the Director of Finance and investment officers designated by the Director of
Finance shall prepare and submit to the City Council a written report of all investment
transactions. The report will include the following information: 1) a detailed description of the
investment position of the City at the end of the quarter; 2) a summary statement of each
pooled fund group that states a) beginning market value for the quarter, additions and changes
to the market value during the period, and ending market value for the period; 3) state the
book value and market value of each separately invested asset at the beginning and end of the
quarter by the type of asset and fund type invested; 4) state the maturity date of each
separately invested asset that has a maturity date; 5) state the fund or pooled group fund for
which each individual asset was acquired; 6) state fully accrued interest for the reporting
quarter; and 7) demonstrate compliance with the investment strategy established in this policy
and by the Public Funds Investment Act. Authorized sources of market values included in the
report include the Wall Street Journal and First Southwest Company. This report must be
prepared jointly and signed by all investment officers of the City and the City Manager.
X. PRUDENCE AND ETHICAL STANDARDS
The standard of prudence used by the City of Kennedale sFiall be the "prudent person rule" and
shall be applied in the context of managing the overall portfolio. The prudent person rule is
restated as follows:
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
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 is consistent with this
investment policy.
Investment Officers shall notify the City Council of any conflicts of interest, as defined in the
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Public Funds Investment Act, no later than the next regularly scheduled City Council meeting.
It is the City's policy that the Investment Officers perform their duties in accordance with the
policies and procedures set forth in this manual. Investment Officers acting in good faith and
in accordance with these policies and procedures shall be relieved of personal liability.
XI. ARBITRAGE
The Tax Reform Act of 1986 places limitations on the City's yield from investing certain tax-
exempt general obligation and revenue bond proceeds, debt service funds and reserve funds.
These new arbitrage rebate provisions require that the City compute earnings on investments
from certain issues of bonds on a periodic basis to determine if a rebate is required.
To determine the City's arbitrage position, the City is required to calculate the actual yield
earned on the investment of the funds and compare it to the yield that would have been
earned if the funds had been invested at a rate equal to the yield on the applicable bonds sold
by the City. The rebate provisions state that periodically (not less than once every five years,
and not later than sixty days after maturity of the bonds), the City is required to pay the U.S.
Treasury a rebate of any excess earnings. These restrictions require extreme precision in the
monitoring and recordkeeping of investments, particularly in computing yields to ensure
compliance. Failure to comply can dictate that the bonds become taxable, retroactively from
the date of issuance.
The City's investment position relative to the new arbitrage restrictions is to continue pursuing
the maximum yield on applicable investments while ensuring the safety of capital and liquidity.
It is a fiscally sound position to continue maximization of yield and to rebate excess earnings, if
necessary.
XII. DEPOSITORIES
Chapter 105 of the Local Government Code prescribes procedures for selection of a city
depository designating that both general-law and home-rule cities are "authorized to receive
applications (as depository) for the custody of city funds from any banking corporation,
association, or individual banker doing business within the city." This clause indicates that
cities are not required to designate one central depository.
The City of Kennedale will, through a request for applications process, designate one or more
banks as its primary depository. This centralization is designed to maximize investment
capabilities and minimize banking cost. The depository designation does not limit investment
activity to one financial institution.
The evaluation criteria the City of Kennedale will use to consummate a banking services
contract will include:
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A. Full service capabilities;
B. Submission of financial statements and availability schedules;
C. Collateralization of the total City funds on deposit in the bank;
D. Statement of staff experience and equal opportunity employment practices;
E. Cost of banking services.
Obtaining competitive applications on the City's depository specifications will be the
responsibility of the Director of Finance. Selection of the depository shall be based on the
institution's offering the most favorable terms and conditions for the handling of City funds
(Chapter 105 of the Local Government Code) and the services available to the City.
State law permits a contract period of five years or less. The City's contract shall not exceed
this five (5) year contract period. Annual performance reviews of the contract will be
conducted by the Director of Finance. Special banking needs may be contracted for by the City
outside this policy if approved by the Director of Finance. If a depository does not meet the
City's requirements in the banking services contract, the bank will be required to meet the
requirements within six months or lose the depository contract.
XIII. COMPLIANCE AUDITS
The City, in conjunction with its annual financial audit, will require the audit firm to conduct a
compliance audit of the management controls on investments and adherence to investment
policies.
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
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