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HomeMy WebLinkAboutORD 1491 - ORD Adopting and Re-Adopting Investment Policies ORDINANCE NUMBER 1491 AN ORDINANCE ADOPTING AND RE-ADOPTING INVESTMENT POLICIES FOR THE CITY OF WEST UNIVERSITY PLACE, TEXAS; AMENDING THE CODE OF ORDINANCES OF SAID CITY; CONTAINING FINDINGS AND PROVISIONS RELATING TO THE SUBJECT; AND DECLARING AN EMERGENCY. WHEREAS, the City Council desires to adopt and re-adopt investment policies; NOW THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF WEST UNIVERSITY PLACE, TEXAS: Section 1. The Code of Ordinances of the City of West University Place, Texas, is hereby amended by adding a Division 2 to article III of Chapter 2 of said Code, which Division 2 shall read as follows: DIVISION 2. INVESTMENT POLICIES See. 2-41. Generally. (a) Application. This division applies to activities of the City with regard to investing the fmancial assets of all funds, including the following: General Fund Special Revenue Funds Capital Projects Funds Enterprise Funds Debt Service Funds Special Assessment Funds Internal Service Funds Trust and Fiduciary Funds (b) Laws and Objectives. Funds of the City will be invested in accordance with Chapter 105, TEX. LOCAL GOVERNMENT CODE and Chapter 2256, TEX. GOVERNMENT CODE (as amended from time to time), other applicable state laws, the City Charter, IRS arbitrage regulations, bond covenants and this code. The City's objectives in managing its investment portfolio are as follows: (1) Safety - The first and Foremost consideration of any custodian of public funds must be safety of the principal amount involved. (2) Liquidity - The City must have cash or "near cash" on hand to meet current bills. (3) Legality - Any investment should clearly be legal under State Law, City charter, and Internal Revenue Service arbitrage regulations. (4) Income - The City shall invest local funds in investments that yield the highest possible rate of return while providing necessary protection of the principal consistent with the terms set forth in this policy. (5) Flexibility - This means not only the ability to convert and investment to cash, but also the option to convert a security to a higher rate of interest, a better maturity, or both. See. 2-42. Investment Officer. (a) The Director of Finance is designated the investment officer for the City and is responsible for the investment decisions and activities. The investment officer shall have the authority to execute sale and purchase transactions in accordance with this code and to transfer funds between authorized investments. The state Treasurer and those employees of Treasurer's office who are authorized to execute transactions for Texpool, shall be the City's investment officer for funds held by Texpool. When requested to do so by the Director of Finance, The City manager or the Accounting Supervisor may act as investment officer. (b) The standard of prudence to be applied by the investment officer shall be the "prudent investor" rule, which states, "Investments shall be made with judgment and care, under circumstances then prevailing, which persons of prudence, discretion and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of their capital as well as the probable income to be derived. II The prudent investor rule shall be applied in the context of managing the overall portfolio. In the event a specific security's credit risk or market price changes, provided that these deviations are reported immediately and that appropriate action is taken to control adverse developments and the security is not inconsistent with state laws or these policies, the investment officer, acting in accordance with written procedures and exercising due diligence, shall not be held personally responsible. (c) The investment officer will routinely monitor the contents of the portfolio, the available markets and the relative values of competing instruments, and will adjust the portfolio accordingly. Sec. 2-43. Internal Controls. The Director of Finance shall establish a system of written internal controls, which shall be reviewed annually by the independent auditor. The controls shall be designed to prevent loss of public funds due to fraud, error, misrepresentation, theft, unanticipated market changes or imprudent actions. I I Sec. 2-44. Investment Instruments. (a) State Law Limits. The City will invest only in investments authorized by Chapter 2256, TEX. GOVERNMENT CODE, (as amended from time to time) or the Texas Local Government Investment Pool managed by the State Treasurer and authorized by the Interlocal Cooperation Act (provided that such pool contain only investment instruments authorized by said Chapter 2256). (b) Maturities. If a specific maturity date is required, either for cash flow purposes or for conformance to maturity guidelines, bids will be requested for instruments which meet the maturity requirement. If no specific maturity is required, a market trend (yield curve) analysis will be conducted to determine which maturities would be most advantageous. ( c) Certificates of Deposit. In the case of the certificates of deposit, oral or written bids will be requested from financial institutions in accordance with Chapter 2256, TEX. GOVERNMENT CODE. The City will accept the bid which provides the highest rate of return within the maturity required and within the parameters of these policies. (d) Types of Instruments. The exact types of investment instruments shall be specified in administrative guidelines developed by the Director of Finance and approved by City Council by motion or resolution. Sec. 2-45. Qualified Institutions. The Director of Finance shall maintain a listing of fmancial institutions which are approved for investment purposes. Each bank approved must have entered into a depository contract with the City prior to certificates of deposit/deposits being place. These institutions will be evaluated from time to time, as circumstances dictate to assure their creditworthiness. All security dealers used must be approved by the Director of Finance and City Manager. Sec. 2-46. Safekeeping. (a) Third-Party Safekeeping. All investment securities purchased directly by the City shall be held by the City or in third-party safekeeping by an institution designated as custodian by the City Council. A safekeeping receipt shall be issued to the City listing the specific instrument, rate, maturity and other pertinent information. II (b) Collateral. Deposit-type securities (i.e. certificates of deposit shall be collateralized at a minimum of one hundred percent (100%) of the face value of the certificate of deposit excluding FDIC or FSLIC coverage and is to be held at an independent third-party bank. Market value of the collateral security will be used to determine coverage. The collateral must be pledged under and agreement approved by the City Council. Sec. 2-47. Reports. I The Director of Finance shall generate daily and monthly reports for management purposes. All investment transactions will be fully documented and reported. The investment officers shall present once a year a signed report to the City Council describing in detail the investment position of the City and complying with Chapter 2256, TEX. GOVERNMENT CODE. Section 2. This ordinance takes the place of investment polices heretofore adopted or observed ,by the City. Section 3. All ordinances and parts of ordinances in conflict herewith are hereby repealed to the extent of the conflict only. Section 4. If any word, phrase, clause, sentence, paragraph, section or other part of this ordinance or the application thereof to any person or circumstance, shall ever be held to be invalid or unconstitutional by any court of competent jurisdiction, the remainder of this ordinance and the application of such work, phrase, clause, sentence, paragraph, section or other part of this ordinance to any other persons or circumstances shall not be affected hereby. Section 5. The City Council officially fmds, determines and declares that a sufficient written notice of the date, hour, place and subject of each meeting at which this ordinance was discussedy considered or acted upon was given in the manner required by the Open Meetings Law, Chapter 551, Texas Local Government Code, as amended, and that each such meeting has been open to the public as required by law at all times during such discussion, consideration and action. The City Council ratifies, approves and confIrms such notices and the contents and posting thereof. Section 6. signature. This ordinance shall take effect immediately upon its adoption and Section 7. The public importance of this measure and the requirements of the law create and emergency and an urgent public necessity requiring that this Ordinance be passed and take effect as an emergency measure, and a state of emergency is hereby declared, and this ordinance is accordingly passed as an emergency measure and shall take effect and be in force on the tenth day following its publication, as required by Section 2.12 of City Charter. ATTEST: a lynn Holloway City Secretary PASSED AND APPROVED this tile 7 ~ day o~ 994. Voting Aye: Voting Nay: Absent: Signed: &~~ Bill Watson Mayor APPROVED AS TO FORM: J~ James Dougherty, Jr. City Attorney